The Moment for Transformational Change through Corporate Community Investment in Canada

At a time when we are seeing cataclysmic events in the nonprofit sector such as unprecedented drops in revenue combined with an overwhelming increase in the need for their services, we are also seeing waves of innovation. We are seeing companies deploy unrestricted funds with greater velocity, providing employee giving, and non-financial support through virtual and skills-based volunteering initiatives to address society’s biggest challenges.  What has unfolded in 2020, due to the COVID-19 pandemic, is a moment for transformational change.

Wake Up Call: Navigating New Pathways for Corporate Community Investment in Canada, a product of Imagine Canada’s Caring Companies Program, is business’ response to the COVID-19 pandemic and the opportunities for companies in their investment and engagement with communities.

Imagine Canada is a national, charitable organization whose cause is social good. It works to bolster the charities, nonprofits, and social entrepreneurs that build, enrich, and define Canada and the communities those organizations support around the globe. Corporate community investment is an integral part of Imagine Canada’s vision for a strong and vibrant charitable sector. Imagine Canada’s Caring Company certification encourages companies to adopt a leadership role as investors of at least 1% of pre-tax profit into stronger communities and celebrates that leadership.

The research conducted for Wake Up Call identified ten social shifts impacting community investment. The findings show the need for us to think differently about our organizations, partnerships, and the importance of taking a ‘more-than-money’ approach. The nonprofit and corporate sectors can create innovative, diverse, equitable, and inclusive long-term social changes that are sustainable for generations to come. The ten social shifts identified were:

1. The Uneven Pandemic: Profound inequalities exacerbated by COVID-19

2. Time for Racial Justice: The role of companies in supporting racial equity

3. The Great Cataclysm: Nonprofits during COVID-19

4. The Constant Pivot: COVID-19 reaped a fertile ground for nonprofit innovation

5. Unrestricted Funding during COVID-19: Building on what’s worked

6. Companies Stepped Up: Funding flowed during COVID-19 but could be cut-off

7. Engaging Virtual Employees: New challenges, new opportunities

8. The CEO as Social Advocate: Increasing expectations on Corporate Canada

9. Partnering for Impact: Problems too big to tackle on our own

10. COVID-19 and Climate Change: Learning from the pandemic

Where the Inequities Lie

As stated by the Imagine Canada report, the pandemic has had unequal impacts on Canadian workers, depending on income levels and the industries, jobs, and conditions worked in. Workers from marginalized communities had a higher percentage of layoffs, reductions in hours, and illness, while also being identified as essential workers. The impact was worsened by racial injustice, income inequality, and a whole host of social issues that disproportionately affect these communities. Other exacerbated inequalities found in the report include:

• Rates of food insecurity in Canada rose by at least 39% (14.6% in May 2020 vs. 10.5% in 2017/2018), with Statistics Canada noting that this estimate is conservative and likely significantly understated the increase, while Daily Bread Food Bank reported a 200% increase in new users in June versus February.

• National unemployment almost doubled from 5.6% in February 2020 to 10.2% in August 2020, while youth unemployment hit record highs, increasing from 10.3% to almost 30% at its peak, and declining to the low 20s – which still represents the highest youth unemployment rate observed prior to this year.

• Across the country, it was identified that mental health, specifically depression and anxiety, have increased to truly unprecedented levels. Kids Help Phone’s Crisis Text Line volumes more than tripled at the beginning of the pandemic and have plateaued at these new highs. Declines in mental health have been greater among those with less income and more financial insecurity than those who are financially secure.

A number of funders explained that these growing inequities made them reconsider their giving practices and would reshape their future giving strategies. But where did we see a big change in funding? The Imagine Canada research found that the first six months of 2020 had US corporate funders pledge nearly 18 times more funding to issues around racial equity than in the previous decade combined. This was a result of Anti-Black racism, police brutality, and systemic racism receiving more sustained attention in recent months than at any point in recent history, as protests have swept the globe in the wake of events such as police killings of People of Colour. These protests have brought needed attention to many critical issues facing Black, Indigenous, and People of Colour (BIPOC) communities in both the US and Canada.

Black-led organizations have historically not received adequate funding, with research showing:

• Leadership in the nonprofit sector is not reflective of the populations served and tends to be older, whiter, and more likely to be Canadian born than the population as a whole.

• Nonprofits that received corporate funding tend to be larger and national, while those focused on racial equity tend to be smaller, local, and grassroots.

Advice from BIPOC leaders to corporate funders suggests:

• Invest in organizations led by BIPOC leaders that serve BIPOC communities.

• Invest in building capacity for grassroots organizations.

• Make funding easy to access, recognizing the limits faced by many BIPOC-led organizations.

• Have a long-term strategy to continue investment in these critical areas.

For corporate funders, there appear to be differing opinions about whether the current focus on BIPOC organizations will lead to comprehensive reform and be a long-term shift or a short-term phenomenon.

Making the Big Shift

A second big shift in funding models was the switch from granting dollars traditionally through project-based, where dollars are restricted for a specific purpose, to streamlined unrestricted funds.  In addition to unrestricted funding, companies also streamlined their applications and reduced reporting requirements with the understanding that the environment required more flexibility, agility, and speed than their typical practices allowed.

Funders gave the decision-making ability to the nonprofits who were in the best position to determine the greatest needs and best use of the funds. This is critical as the financial impacts of the pandemic have been devastating to the nonprofit sector.

The Imagine Canada report provided data from April 2020 that showed a nonprofit revenue decline by over 30%. Revenues decreased due to earned income activities, in-person fundraising, the cancellation of face-to-face events, and in-government funding. The flexibility to use unrestricted funds is a lifeline.

Some nonprofits have pivoted through innovation, significantly outperforming their private sector counterparts in several measures of responsiveness to challenges of the pandemic. Some examples include embracing new technologies, adopting new service delivery methods, and reforming processes to continue operations in order to ensure that clients continued to have access to much-needed services.

Adding to the Funds

In addition to unrestricted funding, funders have stepped up with increased funding. The report cited that while no Canadian-specific data is readily available, the Charities Aid Foundation (CAF) America study, “The Voice of Corporate Philanthropy in Response to COVID-19 Worldwide,” captures international trends. In that survey conducted from June 25^th to July 10^th, 2020, 72% of funders indicated that their funding budget had increased in the last 3 months versus the previous year. Only 8% indicated their funding had declined.  CAF also found that funding was accelerated versus traditionally scheduled for the fall and winter. And 7% of companies had already spent their annual budget by the end of July while 53% had more funding to give.

The Imagine Canada research also showed that the response to COVID-19 mirrored corporate responses to other natural disasters with an initial significant outpouring of support and short-term funding being allocated. But as with other disasters, it can be hard to sustain it long-term. In all the cases found, the authors of the review noticed significant increases in giving, volunteering, attending public meetings, and helping neighbours immediately after a crisis. However, they declined in the longer term. We’ve seen that activation during COVID-19, especially with employees, now working remotely, looking to be engaged, and giving back to their communities. The long-term impact of community investment budgets and volunteer fatigue is to be seen both with companies and their nonprofit partners.

Natural disasters are also occurring more frequently due to climate change, exacerbating inequities. Ice storms, floods, wildfires, and heat waves have the greatest impact on those that cannot afford air conditioning, cannot evacuate, or prepare properly. Those with more resources are better able to cope.  The report reflected that the same practices that companies adapted in response to COVID-19 will also be needed to build resilient organizations capable of responding to the challenges caused by climate change.

These social shifts are clear indicators of the need for change. And not the way things have ‘always been done’. Transformation, innovation, new models, new ideas, and new partnerships are critical to creating real action to resolve society’s biggest challenges. It’s time to take action on a vision where our companies’ future investment and engagement with communities is equitable, sustainable, and prosperous.

If you’d like to watch a digital roundtable discussion surrounding some of these social shifts, hosted by YourCause + Blackbaud Canada, please join our on-demand session, Corporate Social Responsibility: Growing Social Good in Canada here.

Visit the report to dive deeper into Imagine Canada’s findings.