Majority of charitable revenue flows to top-earning 1 per cent of charities

Charity Matters | November 18, 2019
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According to an analysis by Charitable Impact, charities for health and education receive most of the sector’s revenue. 

About 1% of charities earn roughly 80% of the revenue within the sector, according to Charitable Impact’s analysis of data from the Canada Revenue Agency. This flow of revenue includes government funding, grants from other charities, and grants from individuals and corporations. 

That means 860 charities hold the lion’s share of resources to advance programs, build infrastructure and institutions, and call for charitable revenue to further grow and expand. Looking at who earns 90% of charitable revenue only reduces the concentration to the top-earning 4% of charities—showing that revenue is largely streaming to a minority of the more than 85,000 registered charities across the country.

The Canadian charitable sector is a driving force behind the economy, adding up to 13% of the nation’s GDP and surpassing industries such as real estate, manufacturing, and mining. On average, $16 billion come into the sector every year, supporting services and programs in communities across the country. 

Health and education top earners within charitable sector

Charities within the health and education sectors account for 90.3% of all revenue, earning 49.6% and 40.5%, respectively. The next highest earning charities, at 4.2% of total revenue, are categorized as outreach. These charities meet immediate needs by providing resources such as food, shelter, clothing, and safety to those who might not otherwise have access. 

Charities categorized as supporting causes related to youth, environment, animals, and human rights collectively add up to a very thin sliver of total revenue (0.2%).

Several possible factors are contributing to the uneven landscape within the charitable sector. Principally, social services are likely among the largest receivers in funding within the charitable sector due to societal demand. 

“We know that health and education are pillars within the charitable sector that support major programs and institutions and, as such, receive more funding than other causes,” said Ernesto Peña, Director of Research at Charitable Impact. “We know that donors tend to give only when asked. This means causes with less funding may be competing for donations using fewer resources and with less visibility.”

Governments and donors support different causes

Notably, there are significant differences between how donors and governments choose to give to charity. Charities within the health sector receive 58.4% of funding from government sources, compared with only 19.7% from grants from individuals and corporations. In contrast, outreach organizations only receive 2.6% of funding from government sources, but the number spikes up to 26.8% when looking at revenue from individual donors and corporations. 

This indicates that individual donors and corporations tend to give to charities meeting basic immediate needs such as housing and food. Government funding tends to support large institutions and programs within hospitals, and schools and universities.

Research to inform charitable giving—inspiring more joy in giving

These findings beg the question: what is the impact of revenue largely streaming to a minority of charities? A better understanding of the flow of charitable revenue can inform donors, with possible impacts on their communities and beyond. Charitable giving helps build strong and healthy communities, advances projects and programs, and creates social change.

“People are often surprised to learn how concentrated funding is in the charitable sector and concerned that the accumulation of funding continues to increase,” said John Bromley, Founder and CEO of Charitable Impact. “These conversations naturally lead to important questions about the role of individual and corporate donors, as well as the grassroots and entrepreneurial future of the charitable sector in Canada.”

How are your donations making an impact? Charitable Impact will continue to explore the disbursement of funds within the charitable sector along the lines of industry, sector, geography, and demographics.

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