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March 16th, 2013




Steven Ayer, MBA
President of Common Good Strategies
Introduction to the nonprofit sector
   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                         EXPRESSIVE

   Health care                    Arts and Culture
   Education                      Sports and Recreation
   Social services                Advocacy
   Housing                        Interest Representation
   International Development       (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 directors
  were originally accomplished
  fundraisers
 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!
Introduction to the nonprofit sector
Introduction to the nonprofit sector
   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 Orgs
Religion             4,351        40%
Welfare              2,639        24%
Education            2,209        20%
Benefit to the         938         9%
Community
Health                691         6%
Other                 150         1%
  Total            10,978       100%
Introduction to the nonprofit sector
Rank Name of Organization                       Total Revenue
 1    TORONTO DISTRICT SCHOOL BOARD             $2,869,172,355
 2    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
      DUFFERIN PEEL CATHOLIC DISTRICT SCHOOL
 7    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




  (it is about the money)
      This data encompasses all Charities in Canada, not just Toronto
TOTAL REVENUE OF ORGS BY
# OF ORGS BY SIZE OF ORGS                                  SIZE OF ORG
                                               $10 mill +
     $10 mill +        344                                                     $31,955

$1 million - $10                              $1 million -
                       662                                         $4,096
     mill                                      $10 mill

$250k - $1 mill        681                 $250k - $1 mill        $1,112

 $100k - $250k               1701          $100k - $250k          $277

    < $100,000                      4637      < $100,000          $151

                   0    2000 4000 6000                       $-               $40,000
                                                                         Millions
Average total compensation, full-time employees, by
            number of full-time employees, all charities, 2010

                                                                            $78,766
$80,000                                                           $70,757             $68,466
                                                        $60,515
$60,000                                       $52,142
                                    $46,687
          $41,882 $39,706 $41,323
$40,000

$20,000

    $-
            1     2 to 4 5 to 10 11 to 24 25 to 99 100 to 250 to 500 to 1000+
                                                    249    499    999
                      Number of employees


  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
Introduction to the nonprofit sector
70%
60%                             Fundraising      Government           63%
                    59%
50%
40%                                        33%
30%
20%                                           31%
10%                 11%                                               10%
 0%

          < $1 million           $1 millon - $10           $10 million +
                                    million
                          Charities Revenue Category

      Note: Numbers do not add-up to 100% since other categories are missing
50.0%

 40.0%

 30.0%
            29.4%
                                                               23.4%
 20.0%

 10.0%

  0.0%
           1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf
$9,000,000
                                                              $8,253,210
 $8,000,000
 $7,000,000
 $6,000,000
 $5,000,000
 $4,000,000
 $3,000,000
 $2,000,000
 $1,000,000     $1,826,887                              + 352%
         $-




Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf
1,000
                                                                                     $890
  900      Average donations by highest income                                              Fifth
  800      quintile
  700                                                                                       Fourth
  600
                                              +153%                                         Third
  500                                                                                       Second
  400
           $351                                                                             Top
  300
  200
  100
    0
                                    2002




                                                                       2007
        1998




                                                  2004
                                                         2005
               1999
                      2000
                             2001




                                                                              2008
                                           2003




                                                                2006




                                                                                     2009
 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

% of total charitable giving by tax filers coming from
      those with more than $80,000 in income, 1997 to 2011
60%

50%                                                                                 55%
40%

30%
      28%
20%

10%

0%                                                  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!
Introduction to the nonprofit sector
Feel free to contact me later:
 Common Good Strategies
  steve@goodstrategy.ca

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Introduction to the nonprofit sector

  • 1. March 16th, 2013 Steven Ayer, MBA President of Common Good Strategies
  • 3. 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!
  • 4. 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
  • 5. 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
  • 6. Currently work for a nonprofit organization…  Currently serve on the board for a nonprofit organization…  Are a returning Endeavour volunteer…
  • 7. SERVICE EXPRESSIVE  Health care  Arts and Culture  Education  Sports and Recreation  Social services  Advocacy  Housing  Interest Representation  International Development (e.g. unions)
  • 8. 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
  • 9. Money is essential to complete the work of most nonprofits  Most money is spent on compensation ▪ Volunteers are essential but often insufficient  Many executive directors were originally accomplished fundraisers  Buyer and user are not the same!  When demand goes up, revenue often does not
  • 10. 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!
  • 13. 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…
  • 14. City # of Charities TORONTO 3462 NORTH YORK 1857 MISSISSAUGA 898 SCARBOROUGH 834 ETOBICOKE 669 BRAMPTON 452 Other 64 communities 2806 Total 10,978
  • 15. Category # of Orgs % of Orgs Religion 4,351 40% Welfare 2,639 24% Education 2,209 20% Benefit to the 938 9% Community Health 691 6% Other 150 1% Total 10,978 100%
  • 17. Rank Name of Organization Total Revenue 1 TORONTO DISTRICT SCHOOL BOARD $2,869,172,355 2 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 DUFFERIN PEEL CATHOLIC DISTRICT SCHOOL 7 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
  • 18. Top 1% 77% of revenue (it is about the money) This data encompasses all Charities in Canada, not just Toronto
  • 19. TOTAL REVENUE OF ORGS BY # OF ORGS BY SIZE OF ORGS SIZE OF ORG $10 mill + $10 mill + 344 $31,955 $1 million - $10 $1 million - 662 $4,096 mill $10 mill $250k - $1 mill 681 $250k - $1 mill $1,112 $100k - $250k 1701 $100k - $250k $277 < $100,000 4637 < $100,000 $151 0 2000 4000 6000 $- $40,000 Millions
  • 20. Average total compensation, full-time employees, by number of full-time employees, all charities, 2010 $78,766 $80,000 $70,757 $68,466 $60,515 $60,000 $52,142 $46,687 $41,882 $39,706 $41,323 $40,000 $20,000 $- 1 2 to 4 5 to 10 11 to 24 25 to 99 100 to 250 to 500 to 1000+ 249 499 999 Number of employees Source: A report I wrote on compensation for the HR Council yet to be released
  • 21. 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
  • 23. 70% 60% Fundraising Government 63% 59% 50% 40% 33% 30% 20% 31% 10% 11% 10% 0% < $1 million $1 millon - $10 $10 million + million Charities Revenue Category Note: Numbers do not add-up to 100% since other categories are missing
  • 24. 50.0% 40.0% 30.0% 29.4% 23.4% 20.0% 10.0% 0.0% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf
  • 25. $9,000,000 $8,253,210 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $1,826,887 + 352% $- Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf
  • 26. 1,000 $890 900 Average donations by highest income Fifth 800 quintile 700 Fourth 600 +153% Third 500 Second 400 $351 Top 300 200 100 0 2002 2007 1998 2004 2005 1999 2000 2001 2008 2003 2006 2009
  • 27.  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. % of total charitable giving by tax filers coming from those with more than $80,000 in income, 1997 to 2011 60% 50% 55% 40% 30% 28% 20% 10% 0% Source: Cansim Table 111-0003
  • 29. What trends might affect the organization you’re working with?  What might you do about it?  Discuss with the group!  Be prepared to share!
  • 31. Feel free to contact me later: Common Good Strategies steve@goodstrategy.ca