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The Virtue of Small Charities

the top 1% account for 59% of revenues received; 42% of the charities have revenues of less than $30,000 and collectively account for just 1% of revenues; 40% of charities have no paid staff 37% have just 1-5 employees 64% of charities operate in local communities with local mandates Last week Cardus submitted a brief to the House of Commons Finance Committee regarding tax incentives for charitable giving.

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Topics: Business, Foreign Policy, Civic Core, Institutions
The Virtue of Small Charities February 1, 2012  |  By Ray Pennings
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Of Canada's 161,000 incorporated non-profit and voluntary organizations . . .

  • the top 1% account for 59% of revenues received;
  • 42% of the charities have revenues of less than $30,000 and collectively account for just 1% of revenues;
  • 40% of charities have no paid staff
  • 37% have just 1-5 employees
  • 64% of charities operate in local communities with local mandates

Most Canadian charities are pretty humble outfits.

Last week Cardus submitted a brief to the House of Commons Finance Committee regarding tax incentives for charitable giving. While preparing that brief, I came across the stats above from Statistics Canada data.

A short blog doesn't provide space to tell these charities' stories. A small board of four or five dedicated persons support the driving leadership of a couple of individuals. Their work, whether in focusing on some neighbourhood need or raising funds for a well in Africa, is supported by a community of a few hundred people who write cheques in response to appeals, who cry and pray when told of the hurt that needs healing, and who shed tears of joy when modest successes are realized. Many of these charities have no profile beyond the few hundred people in their network of support, or beyond the few thousand people who they may help over the lifetime of the charity.

In the context of Canadian public policy, charitable work amounts to a fraction of a decimal point of our collective efficacy, a rounding error. In the lives of those involved, though, whether in giving or receiving (and are they not sometimes indistinguishable?), the work of these charities can be definitive, life-altering.

Small charities are mostly overshadowed by high-profile campaigns, such as those by health, education, or international relief foundations. In making this point, I am neither denigrating the merits of high-profile campaigns nor agreeing with the too-easy criticism that charitable dollars raised by professional fundraising campaigns invalidates the worthiness of their cause. I don't doubt there are some "bad apples" among charities large and small, as there are in every sector. However if I need to take a side in arguing the value offered to society for any government line item, I would be quite prepared to argue that the tax expenditure line for charitable giving probably offers Canadians the greatest return on investment of any line in the government estimates.

There is more to my argument than the nostalgic "small is beautiful" argument. (When it comes to things like flying, car-making, or building office-towers, I am much more likely to prefer big over small organizations. Even in the charitable sector, there are many activities more effectively administered by big charities.) Still, let's not overlook the virtue and unique contribution of the small charity.

Smaller organizations can often leverage the commitment of volunteers and spend the greatest proportion of their resources directly on their mission in a way that accomplishes a great deal with very little. Because they are locally focused on a particular local manifestation of a problem, they are able to customize and focus their energies on responses that are best for the particular situation.

Smaller charities are also better able to accommodate diversity. With each focusing on the needs of their local communities, a particularly charity may be less diverse in its composition but the cumulative service of several small charities is likely to be more diverse and sensitive to local needs than would be the impact of a larger charity with the same reach.

The most compelling argument, however, is that of subsidiarity. Having charities closely connected to their grassroots provides accountability and an ownership that can rarely be matched in a larger charity. It reflects a healthier model of social architecture that is often overlooked in our drive for efficiency.

We need the contributions of charities, both large and small. As the Finance Committee considers how best to incentivize charities, they need to be particularly attentive to small charities, given the trends that are putting them at a particular disadvantage. They may be easily overlooked, but they punch above their weight in terms of impact and so should not be forgotten.

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