Charitable giving is declining in Canada for the first time in more than 20 years, and charities are placing a new focus on bequests and other strategies in order to maintain donations.

The philanthropic landscape has changed as a result of economic pressures, according to Malcolm Burrows, head of philanthropic advisory services at Scotia Private Client Group, who spoke at a philanthropic advisory forum in Vancouver on Wednesday.

“After unprecedented growth in receipted donations from 1995 to 2007, charitable giving is on the downswing, something we haven’t seen since the early 1980s,” said Burrows. “To survive in this economic climate, charities and foundations can’t afford to stick to the status quo.”

Burrows expects that some Canadian not-for-profits will go out of business during the next three years, and noted that charities are pursuing a variety of new strategies in order to survive.

Also speaking at the forum was Janet Austin, CEO of YWCA Vancouver, who agreed that new approaches are key.

“It is important for charities to develop a more entrepreneurial mindset by embracing change,” she said. “This requires the ability to be flexible so we can move quickly and decisively to take advantage of new opportunities.”

One current area of focus for charities, in the aftermath of the steep market downturn of the past year, is the establishment or review of an Investment Policy Statement. Assets in Canadian charity endowments declined an estimated 10% to 30% in 2008 due to the market crash, according to John Cairns, regional vice-president of investment management services for B.C. and the Prairie Region at Scotia Private Client Group.

“It has never been more important for foundation boards or investment committees to create or review their Investment Policy Statement,” said Cairns at Wednesday’s forum. “An effective IPS will optimize a foundation’s risk-return trade-off while taking into account unique circumstances and objectives.”

Another area of focus for charities amid the current challenging operating environment includes bequests, according to the speakers. With major gifts on the decline and growth in private foundations and donor advised funds flattening, charities are being forced to place a renewed emphasis on planned gifts, the panelists said.

“Canada’s aging population, the trend to smaller families and greater affluence point to increased funding through estate plans,” they noted.

The speakers also noted that Canadians who consistently donate a portion of the income to charity are less likely to scale back donations in an economic downturn. Older donors, in particular, tend to be more consistent in their giving patterns, they said.

Going forward, online donations are expected to be a key area of growth for charities. Since they tend to involve one-time donors, charities are working on developing stronger loyalty tools.

IE