The financial crisis is hitting everyone, including charities. These organizations can also expect to have a tough time next year as a result of the poor economy, according to the 108 Canadian CEOs recently polled by COMPAS Inc.
The respondents expect the demand for charitable services to increase by 24% next year. Unfortunately, they also expect donations to decrease by 22%, creating a large funding gap.
But charities face more challenges than just a shrinking economy. The CEOs in the survey were asked why high-net-worth individuals aren’t more generous when it comes to making donations. The belief that charities aren’t as accountable as they should be topped the list, followed by the opinion that charities aren’t as effective as they could be. “Too little of the money given to a lot of charities actually gets to the people or service it was meant for,” wrote one CEO. The desire among high-net-worth individuals to keep wealth for themselves and their families rounded out the top three reasons.
A few respondents singled out what they perceive to be high administrative costs. “A not insignificant amount of contributions goes toward administration and does not reach the intended purpose,” wrote one CEO. “Many people feel, rightly or wrongly, that much of what they donate will not make it through to the people who actually need it,” wrote another.
The CEOs were also asked how they would advise a wealthy acquaintance about allocating money for charitable causes. The largest portion should go to helping children living in poverty, according to the respondents, followed by bursaries for children from poor families, and health research in Canada.
But one respondent expressed a kind of charity fatigue. “The more I said yes [to donating], the more frequently the phone would ring until it became an intolerable intrusion,” wrote the CEO. “Unfortunately, the solution was to say no to everyone and eventually the phone didn’t ring as often.”
That CEO was not alone. “During the completion of this survey, I received two requests for charitable donations,” wrote another. “Charities have become a business and thus lost some of the trust that I as a donor once had.”