Vol. 2, #5 – The Voluntary Sector – The Funding Challenge

May 1998

Decreasing Funding

The previous Community Dispatch: The Voluntary Sector – Sustaining a Civil Society (Vol. 2. No. 4) identified the serious funding challenge facing the voluntary sector. Apart from religious organizations, the voluntary sector has relied on support for their core funding from various government sources, foundations and United Ways. These revenues are being seriously reduced as all levels of government have cut their expenditures on social programs.

Government grants and payments constitute the largest portion of revenues for most charitable organizations in Canada. Charities providing health, social or community services received an average of 64% of their revenue from government sources in 1994. Eleven per cent of these revenues were allocated directly from Ottawa, while 84% were provided by the provinces and 5% by local levels of government.

Since 1995, the federal transfer payments made available to each province for the purposes of supporting health, post-secondary education and welfare programs have been cut dramatically. The $18 billion the federal government redistributed to the provinces in 1994-95 has been decreased down to $12.5 billion – a 35% reduction in constant dollars. By the year 2000, the cumulative reduction will be more than $25 billion (relative to pre-1995 levels).
Source: The Voluntary Sector – Trends, Challenges and Opportunities for the New Millennium. Volunteer Vancouver. Sept. 1997

Unfortunately, cuts to federal transfer payments to the provinces will entail cuts in provincial spending on welfare, health, education and to the community and therefore, to charitable organizations involved in those fields. Furthermore, provincial governments will no doubt continue the practice of reducing their transfer payments to regional and municipal governments. This, too, will mean fewer direct grants, contributions and contracts for charitable organizations.
Source: Browne, Paul Leduc. Love in a Cold War? The Voluntary Sector in an Age of Cuts. Ottawa: Canadian Centre for Policy Alternatives, 1996.

Impacts

More than half of the community service agencies surveyed in Metropolitan Toronto experienced government funding cuts in 1996, even though 60% of them encountered an increase in demand for their programs. Thirty-three community agencies shut down in 1996, twenty-one were closed in 1995 and over 300 programs have been discontinued in areas such as child care, shelters, counselling, crisis and immigration settlement services. It is estimated that Metro has lost $1 billion from the cuts over the past several years. Across the province, six volunteer Centres were forced to close in 1996, with several more likely to follow soon. Volunteer Ontario, representative of Volunteer Centres throughout Ontario, was forced to close its doors last month due to the lack of funding.

In the summer of 1996 the Halton Social Planning Council and Volunteer Centre researched the impact of financial restraint and deficit reduction on Halton agencies in Meeting Human Need: The Impact of Funding Restraint on Halton Agencies. Of the 43 agencies that provided financial information, the net loss of funding from 1995-96 and 1996-97 was nearly a half a million dollars. The report concludes that community-based agencies receive about 60% of their funding from provincial sources. Of the 59 community-based organizations in the report, 75% of the agency activities were carried out by volunteers.

Not-for-profit organizations have been exploring a variety of avenues to raise more funds, increase efficiency and reduce expenses to offset the cutbacks. Merging with related organizations to reduce overhead and produce more effective fundraising is one option. But many organizations have also had to eliminate programs and reduce services. The cutbacks can be especially hard on rural organizations which do not have a large donor base to draw from to compensate.

It is unrealistic to expect the sector to simply draw upon volunteers to fill the void. Volunteers need to be screened, trained and managed, so it actually costs the majority of organizations money to bring volunteers on board. A recent paper prepared by the Ontario Ministry of Citizenship, Culture and Recreation concludes, “Overall, the evidence is that changes in total government funding patterns are likely to lead to fewer people deciding to volunteer …it is estimated that a one percent decrease within expenditures will lead to a 1.5% decrease in volunteers”.
(Source: Ministry of Citizenship, Culture and Recreation, Ontario. Background Paper on Volunteering and Voluntarism. Government of Ontario, April 1997.)

Fewer volunteers, of course, often translates into a reduction in services. But a shortage of staff and volunteers can also result in an unforeseen ripple effect: a reduction in the amount of independent fundraising that organizations can do for future programs. Thus, although the intention of government cutbacks may be to induce agencies to do more with less, the net effect may actually double the loss of funding and resultant service delivery.
Source: The Voluntary Sector – Trends, Challenges and Opportunities for the New Millennium. Volunteer Vancouver. Sept. 1997

Why Fund the Voluntary Sector?

As mentioned in the previous Community Dispatch, some six million volunteers contribute one billion hours of their time every year to provide society with $13 billion of unpaid service. According to an Easter Seals study, this selfless devotion accounts for 8% of Canada’s Gross Domestic Product.

Just as there is a significant cost associated with hiring and training new staff in private industry, there are costs attached to recruiting and training volunteers.

Volunteers in any organization, like employees working for business, have specific skills, interests and considerations that need to be taken into account when volunteers are placed.

Managers of volunteers must fill the shoes of many professionals: administrator, program planner, human resource manager, policy analyst and psychologist. Managers of volunteers must also be able to �read� their volunteers and understand what motivates them to help others. Yet volunteer management is virtually unknown and unappreciated in Canada.

Without managers, volunteer positions can remain unfilled, volunteers can become dissatisfied with their work, (resulting in high turnover), and volunteer programs can be underdeveloped.

Despite the higher expectations and demand on volunteer managers, as the need for volunteers grows, most are facing reduced budgets and in some cases, job instability.

Managers of volunteers are perplexed as demand for volunteers increases. Without the resources to pay people to provide necessary and essential services, managers of volunteers must use their instincts and know how to understand and recognize the efforts of their volunteers – and keep them coming back for more.
Source: Volunteer Beat. Volunteer Canada. April 1998.

Flashback to the ’70’s

In 1978 Prime Minister Trudeau was quoted as saying: “The not-for-profit and voluntary sectors of our societies could be made to flourish. Historically, they have been the source of the humanizing social movements which were the life-blood of our liberal democracies. They have employed the creative energies of many of our people. Their decline has been inevitably reflected in the growth of government and commercial services. It has resulted in a loss of a sense of community. Surely we need this sector. We need to develop alternate styles of work and leisure and we need to demonstrate that there are other ways of doing the communities work. On a broad second front we must give encouragement and sustenance to these efforts. There is no threat here, only boundless opportunity”.

Produced by the Community Development Halton
860 Harrington Court
Burlington, Ontario L7N 3N4
(905) 632-1975, (905) 878-0955; Fax: (905) 632-0778; E-mail: office@cdhalton.ca