In a world that seems increasingly volatile, it’s safe to say that the Canadian nonprofit sector is concerned and paying close attention to the current political and economic climate. Perhaps most concerning, at least economically, are the tariffs the United States is threatening against Canada that will potentially take effect on April 2. Considering these tariffs could lead to impacts such as higher-priced goods for Canadian consumers, as well as job losses, it is clear the nonprofit sector will be affected on at least two fronts: lower donations as households across the country tighten their belts to deal with higher expenses, and a further increase in demand for services as even more Canadians find themselves unable to afford even the basic necessities.
Given this growing concern and considering the sector is already dealing with inflationary pressures and an unprecedented demand for services, it’s essential for Canadian nonprofits to take proactive steps to mitigate these impacts. Here are three key actions that nonprofit leaders — executive directors, board members, and program staff — should consider taking to protect their organizations from the adverse effects of the US tariffs.
1. Diversify funding sources and seek new revenue streams
To weather the financial storm caused by tariffs, nonprofit organizations must focus on diversifying their funding sources. Here are a few approaches to consider:
- Tap into Grants: While it is true that competition for grant funding may increase, it still remains an important funding stream for many Canadian nonprofits. Grants may be offered by private or public foundations, all levels of government, or corporations. There is a possibility that, should tariffs be enacted and Canadian workers begin to suffer, new grant programs will be initiated by the government and other funders. Keep an eye out for funding announcements that may come in response to tariffs or other economic concerns.
- Strengthen Relationships with Local Donors and Funders: While large grants or partnerships can be a game-changer, building stronger ties with local community members, businesses, and individual donors is equally crucial for long-term sustainability. Local donors may be inclined to contribute when they see the direct, tangible impact of their support within their own communities, and monthly giving programs have been shown to provide organizations with reliable funding during uncertain times.
- Explore Social Enterprise Models: Many nonprofits have incorporated a social enterprise model into their organization, where a portion of their revenue comes from the sale of products or services. By diversifying their sources of income, nonprofits can better shield themselves from shifting economic conditions, although it is important to note that social enterprise must be entered into carefully, given it comes with specific legal requirements, not to mention business risk.
- Pro Tip: Listen to sector experts from across the country discuss alternative forms of revenue, including social enterprise, in this podcast episode.
2. Optimize program delivery and explore cost-effective alternatives
With the potential of increasing costs due to tariffs, alongside lower donations and higher service needs, it is essential that nonprofits take a careful look at the efficiency of their program delivery. This may require rethinking resource allocation, adjusting programs, or even exploring new ways to deliver services without sacrificing quality. Here are some strategies for optimizing program delivery:
- Leverage Partnerships and Collaborations: Collaboration with other nonprofits, community organizations, and even businesses may help reduce program and administrative costs. Sometimes, sharing resources, expertise, and infrastructure, can help multiple organizations maintain their service offerings while streamlining their expenses. This might include co-hosting events, moving into shared office space, or developing joint programs that allow for cost-sharing.
- Pro Tip: Read this article to learn what groundwork must be put in place to consider a successful merger, collaboration, or partnership.
- Reassess Program Priorities and Focus on Core Services: Now is the time to strategically assess your program offerings. What are the most critical services that you provide? Where have you started to drift from your mission? What programs are struggling to have a tangible impact? While it can be difficult to consider cutting programs, these questions may help to guide you through some difficult choices.
- Pro Tip: Consider ethical alternatives before cutting programs, as outlined in this article.
- Implement Virtual or Hybrid Program Models: In some cases, switching to a virtual or hybrid model for programs may reduce costs for the organization and increase accessibility for participants. While this won’t be a fit for all programs or for all organizations, it’s also true that during the COVID-19 pandemic, we saw many different types of programming switch to a virtual model with great success. Take a hard look at the expenses and return on investment for in-person client programming, as well as for fundraising and administrative activities, such as board meetings or multi-location get-togethers, and consider whether there are opportunities to create better experiences for participants by going virtual.
3. Leverage technology to improve efficiency and reduce costs
Particularly in times of economic uncertainty, finding ways to become more efficient and cost-effective is key to both an organization’s ability to survive and its ability to meet service demands and create more impact. Even with an upfront investment both financially and with staff time, leveraging technology can significantly streamline operations and reduce overhead costs. Here are a few ways nonprofits can leverage technology to improve efficiency:
- Automate Administrative Processes: Many nonprofits still rely on manual processes for tasks like data entry, accounting, and reporting. By investing in automation tools, AI, databases, and cloud-based software, organizations can reduce the time and labour spent on administrative work, freeing up resources to focus on program delivery. While each organization must carefully consider its approach to using AI, there are many ways that this technology can help staff focus their time where it really matters.
- Pro Tip: Learn how to simplify your grant writing process using ChatGPT in this webinar recording.
- Adopt Remote and Hybrid Work Models: Like making the move to virtual programming and events, adopting or maintaining remote and hybrid work models may help you reduce overhead costs, while also encouraging flexibility for your employees. In addition to potential savings for the organization, staff may also find they can spend less on getting to and from work, which could help with employee retention.
- Use Your Data: Data-driven decision-making should be your go-to anyway, but it’s particularly important during difficult times. Getting knowledgeable about your data will help you to make informed decisions about resource allocation, identify new ways to engage donors, and assist with your strategic planning as you prioritize the most essential programs and services.
- Pro Tip: If your small nonprofit is struggling to integrate insights from your data, you’re not alone! This article can help you turn things around.
Conclusion
The current uncertainty around US tariffs and the impact they will have on the Canadian economy, and subsequently on Canadian nonprofits and charities, is undoubtedly a further strain on an already stretched sector. However, by diversifying funding sources, optimizing program delivery, and leveraging technology, organizations can proactively work to mitigate the economic challenges that may be headed our way.