Introduction to the nonprofit sector

Steven Ayer, MBAPresident of Common Good Strategies

March 16th, 2013

What is the nonprofit sector? What does the nonprofit sector look like in

Toronto? What trends are shaping the nonprofit

sector? What do you need to know about nonprofits

to act as consultants?

Please ask questions throughout!

Founder and President of Common Good Strategies

Help nonprofits and government do research on the nonprofit sector

Do marketing research and business planning Design technology development projects Have managed or worked on some of the

largest research projects on the Canadian nonprofit sector

Charities are endowed with a license by CRA if they do one of four things under a definition that goes back to early 1600s

Relieve poverty, promote education, promote religion or “other purposes beneficial to the community”

Nonprofits are organizations incorporated as such and do not distribute profits to shareholders

This side was borrowed from Alex Gill of the Mendicant Group’s presentation on this topic from March 24, 2012

Currently work for a nonprofit organization…

Currently serve on the board for a nonprofit organization…

Are a returning Endeavour volunteer…

SERVICE

Health care Education Social services Housing International Development

EXPRESSIVE

Arts and Culture Sports and Recreation Advocacy Interest Representation

(e.g. unions)

A study released last week from John Hopkins University comparing 16 countries with good data on their nonprofit sector found that: Canada had the highest percentage of GDP coming

from our nonprofit sector:

8.1%! (7.1% from paid staff, 1% from volunteers)

85% of our nonprofit sector was service-based (average was 73%)

10% expressive

5% Other

Source: JHU Comparative Nonprofit Sector Project

Money is essential to complete the work of most nonprofits

Most money is spent on compensation

▪ Volunteers are essential but often

insufficient

Many executive directorswere originally accomplishedfundraisers

Buyer and user are not the same! When demand goes up, revenue often does not

Understanding Board Dynamics are Essential Always remain objective when interviewing

clients Be very careful to ascertain how many

resources are genuinely available Be wary of promises of future staff time Make sure your solution is implementable! Do not over-complicate things Engage many stakeholders in the

organization!

10,978 Charities

8829 Operating Charities

2122 Foundations

$37.6 Billion in Total Revenue 270,473 Full-Time Employees 233,814 Part-Time Employees As for nonprofits, no one knows…

City # of Charities

TORONTO 3462

NORTH YORK 1857

MISSISSAUGA 898

SCARBOROUGH 834

ETOBICOKE 669

BRAMPTON 452

Other 64 communities 2806

Total 10,978

Category # of Orgs % of OrgsReligion 4,351 40%Welfare 2,639 24%Education 2,209 20%Benefit to the Community

938 9%

Health 691 6%Other 150 1%

Total 10,978 100%

Rank Name of Organization Total Revenue

1 TORONTO DISTRICT SCHOOL BOARD $2,869,172,3552 THE GOVERNING COUNCIL OF THE UNIVERSITY

OF TORONTO $2,410,292,000

3 UNIVERSITY HEALTH NETWORK $1,589,061,000

4 YORK REGION DISTRICT SCHOOL BOARD $1,211,831,926

5 TORONTO CATHOLIC DISTRICT SCHOOL BOARD $1,043,472,000

6 YORK UNIVERSITY $923,373,854

7DUFFERIN PEEL CATHOLIC DISTRICT SCHOOL BOARD $904,816,000

8 SUNNYBROOK HEALTH SCIENCES CENTRE $847,310,000

9 CANCER CARE ONTARIO $836,437,306

10 THE HOSPITAL FOR SICK CHILDREN $704,417,000

Top 1% 77% of revenue

This data encompasses all Charities in Canada, not just Toronto

(it is about the money)

# OF ORGS BY SIZE OF ORGS

4637

1701

681

662

344

0 2000 4000 6000

< $100,000

$100k - $250k

$250k - $1 mill

$1 million - $10 mill

$10 mill +

TOTAL REVENUE OF ORGS BY SIZE OF ORG

$151

$277

$1,112

$4,096

$31,955

$- $40,000

< $100,000

$100k - $250k

$250k - $1 mill

$1 million -$10 mill

$10 mill +

Millions

$41,882 $39,706 $41,323 $46,687

$52,142 $60,515

$70,757 $78,766

$68,466

$-

$20,000

$40,000

$60,000

$80,000

1 2 to 4 5 to 10 11 to 24 25 to 99 100 to 249

250 to 499

500 to 999

1000+

Number of employees

Average total compensation, full-time employees, by number of full-time employees, all charities, 2010

Source: A report I wrote on compensation for the HR Council yet to be released

Most nonprofits do not have staff Most nonprofits have very little resources Most nonprofit resources are spent on staff Most nonprofits cannot afford a consultant Most nonprofits RELY on volunteers Most small nonprofits are started to solve a

particular on the ground problem that is not being addressed by anyone else

59%

33%

10%11%

31%

63%

0%

10%

20%

30%

40%

50%

60%

70%

< $1 million $1 millon - $10 million

$10 million +

Charities Revenue Category

Fundraising Government

Note: Numbers do not add-up to 100% since other categories are missing

29.4%23.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf

$1,826,887

$8,253,210

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf

+ 352%

$351

$890

0

100

200

300

400

500

600

700

800

900

1,000

199

8

199

9

200

0

200

1

2002

2003

200

4

200

5

200

6

200

7

200

8

200

9

Fifth

Fourth

Third

Second

Top

+153%

Average donations by highest income quintile

The highest income quintile:• +$32,000 / year in after-tax income

The second highest quartile:• +$14,000 / year in after-tax income

The lowest income quartile:• +$4000 / year in after-tax income

28%

55%

0%

10%

20%

30%

40%

50%

60%

% of total charitable giving by tax filers coming from those with more than $80,000 in income, 1997 to 2011

Source: Cansim Table 111-0003

What trends might affect the organization you’re working with?

What might you do about it? Discuss with the group!

Be prepared to share!

Feel free to contact me later:Common Good Strategiessteve@goodstrategy.ca