1 in 5 Ontario non-profits could be forced to shut down by end of year, survey finds

A new survey is painting a dire picture of the financial health of the province's non-profit sector in the midst of the COVID-19 pandemic.

Ontario Non-profit Network survey paints dire picture of sector’s financial health due to COVID-19

Catholic Youth Organization, based in Hamilton, is on the brink of closing. One of the ways the organization used to earn money was through running children's sports programs in partnership with school boards. (A_Lesik/Shutterstock)

After 62 years of operation, Hamilton-based non-profit Catholic Youth Organization could be closed by the new year.

Cut off from revenue earned by running summer camps and sports and nature programs for local school boards by the COVID-19 pandemic, the organization has terminated staff and is now limping along on reserve funds. 

"We've gone through many challenging times financially," said executive director John Spatazzo.

"But this is different." 

Spatazzo, who says he's lived the "darkest days of his professional life" over the last few months, is far from alone. 

A recent survey of organizations run by the Ontario Non-profit Network (ONN) revealed some troubling figures: one in five of the survey's 1,100 respondents say they may have to shut down by the end of December. Another quarter said that 2021 will likely be a greater financial struggle than this year. 

"For a sector that is generally optimistic and resilient, it is very concerning," said ONN executive director Cathy Taylor. 

"If you think of all of the things non-profits and charities … provide in communities, if you take away even 20 per cent of that, it will dramatically affect the quality of life in those communities." 

Cut off from revenue sources 

The ONN report expands on what's pushing some of Ontario's 58,000 non-profits to the brink, including declining donations, the inability to hold their usual fund-raisers, and new costs for things like PPE and the technology needed to work from home.

Take Gilda's Club, an organization that supports people with cancer. 

A signature funding event, normally held in May, used to bring in about $400,000. Not this year. 

"The impact of that is that we have had to consider all the different ways that we could cut costs in order to stay afloat," said Elizabeth Dalgleish, the executive director of Gilda's Club Greater Toronto. 

Stachen Frederick, founder of Braids for Aids, says she's heard from a number of fellow non-profits who fear they can't survive through the year. (Angelina King/CBC)

Braids for Aids, which raises awareness about HIV in Toronto's Black communities, has seen its funding drop by about 60 per cent since the pandemic began and has gone from running five programs to one, says founder Stachen Frederick.

Though she says some money from the city will enable them to get through the year, "the well is dry" when it comes to new funding. 

The long-term future of the Blackstone Foundation Library, which describes itself as an "Afrocentric nonprofit dedicated to promoting Knowledge Of Self through a culture of learning and reading," is also unsure. 

Director Athena Wong says demand for programming has been increasing, but without adequate funding for PPE and technology, programming has been shrinking.

"With limited ability to hold fundraisers and book drives, we are not certain that we will be able to continue our work through the following years to come," wrote Wong in an email. 

Government help doesn't go far enough: ONN

Taylor says programs like rent and wage subsidies from the federal government and the provincial employer health tax premium reduction can apply to non-profits — but not many have been able to take advantage. 

"What we saw for sure is that three quarters of organizations were not accessing those funds," she said. "In most cases they weren't eligible, or they didn't know, or there was an administrative burden for them." 

The Ontario government did step in earlier this month, announcing $83 million in grants through the Ontario Trillium Foundation to support eligible non-profits.

An ONN spokesperson says that money won't go far enough to support groups so deeply in the red they are staying afloat using reserve funds and, according to one out of 10 survey respondents, their own money.

"This is not new funding, but a one-time redirection of current funding," they wrote in an email about the $83 million, adding that "only half the funds will be distributed nine months after the crisis began, and funding decisions will take three months, leaving nonprofits to wait while struggling to keep their doors open." 

The ONN is instead calling for a $680-million provincial stabilization fund, along with an expanded federal wage subsidy, more investment in rural internet to help isolated non-profits get online, and more representation of non-profits at discussion tables with the provincial and federal government.  

In an email, a spokesperson from the Ministry of Children, Community and Social Services stressed COVID-19 relief measures, including a $510 million Social Services Relief Fund that flows through municipalities, but did not comment specifically on the possibility of a new stabilization fund. 

Uncertainty in the future 

Paul Taylor, executive director of Toronto nonprofit FoodShare, says systemic issues in his sector have been exposed by the strain of the pandemic. 

"The government has long dumped solving problems like poverty and homelessness and food insecurity on non-profits, and are seemingly not coming to the table when we're facing the greatest amount of pressure.

That's been really disappointing." 

Paul Taylor is the executive director of Foodshare. He's critical of the role food banks play in food security.Alt Text *
Paul Taylor, executive director of FoodShare, says the financial crisis faced by non-profits highlights an over-reliance on charities to deal with critical problems. (Sandro Pehar)

He says non-profits are also facing huge uncertainty about how much money will be coming in, especially given the chance of a second wave of COVID-19 that brings even greater need for their services. 

With the clock ticking for hundreds of organizations, Cathy Taylor is also making the financial case for a cash infusion. 

"Non-profits and charities do provide those services that the government counts on, so if we're not  there… it's going to leave a huge gap for the government to fill, and at the end of day it's actually going to cost them more money."