Canadian Non-Profits in Crisis: The Need for Reform

Abstract

This paper examines recent changes in the relationship between the Canadian state, at both federal and provincial levels, and those non-profit organizations concerned with social welfare. The 1995 federal budget marked a turning point for Canadian non-profit organizations as the federal transfer payments to the provinces were simultaneously restructured and reduced. This, in turn, meant that provincial funds flowing to non-profit organizations would also be cut, or terminated, and restructured as service contracts continued to replace grants. This followed a review of government funding to non-profit agencies initiated the previous year and came on top of a growing critique of non-profits as unaccountable, unrepresentative, professionalized, "special-interest" groups, who used public funds largely to sustain themselves, and pursued causes that should not be subsidized by government. At the same time non-profit organizations were increasingly expected to provide core social welfare services not only on the basis of "more for less" but also through charging for their services and increased corporate and individual fund-raising. All of these events took place in the context of the election to government, in 1993, of the Liberal Party, that had previously been strongly identified with the advance of a Canadian social agenda but now chose to adopt its conservative predecessor’s deficit reduction strategy through public expenditure cuts. For many Canadian commentators, such events have thrown non-profit organizations into crisis and during the past two years there have been attempts to bring together the diverse interests within the sector and build a stronger sense of identity and voice. However, there is also a strong argument to suggest that the vulnerability of such non-profit organizations has resulted, in part, from their over-dependence on government during the previous twenty-five years and the absence of a strong popular base. This paper explores the changing relationships between the Canadian state and non-profit organizations, and highlights what could be very similar dilemmas for their UK counterparts as government increasingly looks to non-profits to fulfil what has during the postwar period been its service-providing role.