What might a 25% tariff imposed by the Trump administration on Canadian goods mean for Canadian nonprofits and charities? With ongoing negotiations, pauses and delays in implementation, and uncertainty about what the future may hold, the very fluidity of the situation requires Canadian nonprofits and charities be aware of future impacts and begin to prepare.
With that in mind, we’re outlining some key areas your organization should be paying attention to, along with comments from sector experts for additional context.
1. Increased Costs for Goods and Services.
Most nonprofits and charities are already stretched to the limit when it comes to maximizing how their funding and revenue can serve their communities. An increase in the cost of goods and services will have an immediate impact on how much money organizations can direct to essential programming. Everything from office supplies to the fresh produce sourced by food banks could rise in price, resulting in organizations having to, once more, do more with less as they continue to grapple with high demand for services. Additionally, it is possible that supply chain disruptions could occur, which may throw an additional wrench in the works for some nonprofits.
What can be done? Organizations should consider reaching out to suppliers now to better understand what impacts tariffs may have on the goods and services they purchase. It may be possible to renegotiate contracts and lock in pricing. Additionally, organizations may want to create partnerships with other nonprofits and charities to increase negotiation and buying power, while also potentially taking advantage of bulk savings.
2. Funding Challenges. While nonprofits and charities are busy dealing with price hikes, they may also find themselves facing reduced funding. Corporate donations, grants, government programs, and individual donations may fall as businesses, governments, and individual Canadians find themselves in a new economic reality.
Here’s Nicole Danesi, Senior Manager, Strategic Communications and Brand at CanadaHelps, to explain more: “I think it’s quite easy or safe to assume that, if there is a recession in Canada, we’re going to feel it in two different ways in the charitable sector. On the one hand, we likely will see demand increase as people potentially lose jobs, as money gets tighter. And on the flip side, of course, there’s your donors. And at Canada Helps, through our giving report for the last several years, we have reported on the fact that we are seeing fewer Canadians [donating to charity].”
What can be done? Kishone Roy, Executive Director of The Federation of Community Social Services of BC, explains how some of their member organizations are taking proactive steps: “I know our members are actively preparing for it and the more sophisticated organizations are responding by doing everything they can to diversify their revenue streams, which does mean some capacity building internally and some questions and strategic planning about where you would like to take funds and revenues, but it also, for the first time in many cases, means saying no to some projects because governments in their responses are inclined to offer contracts to local agencies that are underfunded from the beginning and won’t be successful. And so how many of those can an organization take on before it realizes that it’s subsidizing essential services?”
Niti Bhotoia, Vice President at capitalW, recommends getting started on revenue diversification right away: “Generally speaking, when we look at assessing revenues for organizations in our sector, we look at bundling them in three different ways. We look at government funding, philanthropy, and earned revenue sources. And if for an organization, a significant amount of funding is coming from one particular area, it’s important that they really understand that. Or if it’s too much revenue in one particular area, it may pose a risk. And then the question becomes, how can the organization mitigate that particular risk? Your revenue assessment will tell you a couple of things. It will tell you where you’re doing well and therefore where you have opportunity to grow. And it’s also going to tell you where you may not be doing well. But there could be potential opportunity, a gateway to new sources of revenue, if you will.”
3. Increased Demand for Certain Services. If tariffs lead to a significant economic downturn or recession, as many economists are predicting, or if there are widespread job losses, such as in highly affected sectors like manufacturing, there will be a greater demand for social services at a time when many of these organizations are already at the breaking point when it comes to a rising demand for service. The impact will be disproportionately higher on already vulnerable communities, which may also lead to further service increases.
What can be done? Advocacy for government support may be one of the most important actions that organizations can take, and certainly governments have already shown an initial commitment to trying to ease economic impacts on Canadian workers, for instance, by potentially loosening EI requirements.
Christopher Holz, Government Relations Advisor at capital, explains the potential for increased government support in some areas: “While funding may be reduced by government, especially at the federal level, there may be new funding that’s available, quite candidly, because of some of the changes that we can foresee. Some of this is pretty clear…from a support for workers perspective, there will be up-skilling opportunities and funding that will be needed.”
4. Reduced Corporate Support from Multinational Companies. While not necessarily directly connected with tariffs, organizations who rely on corporate support from US companies should be prepared for a potential reduction in funding. Pride Toronto, as reported by CBC News, has lost three long-term, major sponsors due to a “shift in mandate”, something that Pride Toronto directly connects to the rollbacks on DEI initiatives directed by the Trump administration. Additionally, Canadian companies impacted by tariffs will very likely have less money available for traditional fundraising or sponsorship initiatives, even, perhaps, having to put a (hopefully temporary) end to long-standing support.
What can be done? Again, revenue diversification is vitally important. Nicole Danesi offers the following advice: “One of the things right off the bat is taking this moment in time to figure out and audit your revenue sources…really trying to take an audit and an assessment of your revenue sources and consider that if you were to lose one of those revenue sources, A, what are the other revenue sources that you would have to turn to in order to make up for that loss, or B, what would you need to do in terms of turning that revenue source back on, so to speak?”
Nicole goes on to emphasize the power of a monthly giving program that can help you diversify your revenue. “If your organization does not have a monthly giving strategy, it is imperative that now is the time to make that happen…it is a reliable, financial foundation to allow for charities to make sure that they know what money is coming in to them month after month after month. And they’re not crossing their fingers that they’re going to get a big donation next month. The other thing I’ll add to the monthly giving discussion is consumers are used to this. I can think of in my family, the Netflix subscription, the Disney+ subscription. I have my Spotify subscription that I probably can never give up. And we are used to these monthly charges and this subscription model. It’s, it’s common practice now. So charities really need to own that – and it’s particularly helpful for younger donors as well, who want to budget their giving.”
Conclusion: What Lies Ahead?
Unfortunately, it’s nearly impossible to speculate on what will happen next, given the daily back-and-forth positioning by the Trump administration, and ongoing negotiations by Canadian political leaders. However, what is clear is that the secondary effects of these tariffs would directly challenge nonprofit and charitable organizations’ ability to carry out their important work in Canada, not to mention their ability to support vulnerable communities who will also be hit hard by impacts from a trade war.
But Nicole Danesi reminds us that our sector has been through intense challenges in the past and are still standing. “I think at this moment, even though there is a number of reasons to be on edge and feeling that uncertainty, the first realistic step is really to just take a deep breath, I think. And that is important for any leader in the charitable sector or outside of the charitable sector to have in mind. And I think that particularly for leaders in the sector, people are looking to you. Donors, supporters, individuals who receive support, for example, and then from your organization, staff, volunteers, they are all looking to you to steer this ship. And I think that it’s in times of challenges or crisis, for example, where we really need that leadership to step up.
“We have seen at the beginning of COVID, the number of in-person fundraisers that were canceled and charities had to absolutely scramble. And that of course is further in the rear view mirror, but more recently in the rearview mirror was the Canada Post Strike, for example. So we’ve seen these, I hesitate to sort of say relatively consistent blips, but these very unique and unprecedented blips in the last several years that have really caught charities off guard. And I think that if I was to say anything to a charitable leader today it is to sit down with your finance team and figure out where your money is coming in and try to figure out ways to understand if one of those funding sources goes down, what are the other doors that you can potentially open to try to make up for that funding loss? And I think that is really important.”
Want to hear more on this subject? In our recent podcast, we spoke with sector experts and leaders from social service and immigration charities to find out how they are dealing with political and economic upheaval – and to get their advice on how your organization can survive such difficult times. Listen to the podcast episode, and access full interviews with each of our podcast guests, by clicking here.