All About Estates
By Malcolm Burrows
February 20th, 2025
Charities do not exclusively depend on donations, despite popular perceptions to the contrary.
In Canada, government funding and earned revenue contribute more to registered charities than donations. Both these types of low-key funding are under pressure, enough so that we will soon witness some large charities shrink or even collapse.
Now, it’s true that a high percentage of charities get most of their income from donations, but these organizations are typically small, volunteer-run, and local – and religious. Conversely, big charities are facing pressures that many have never experienced. These organizations, which are the largest beneficiaries of government funding, are in sub-sectors like post-secondary education, healthcare, human services, international, and the arts. Trouble is brewing, especially in the US.
The topic of government funding has come to the forefront south of the border due to recent Trump cuts. In January, an executive order effectively shut down the United States Agency for International Development (USAID), cutting 10,000 jobs and freezing vital foreign aid around the world. This cut leaves $500 million of food aid in limbo and is causing severe food shortages in refugee camps in Sudan and other vulnerable settings. The New York Times reports that the cuts are especially hitting aid charities hard, particularly Christian charity groups, and many have Canadian affiliates.
While there was a perception that Christian organizations would be exempt from cuts, Trump nativist creed has little sympathy for non-Americans. Should these cuts go ahead, we may see international organizations under stress – both in US and in affiliate organizations around the world.
The challenge of the estate donor is time travel. A charity named in a will created today may not be in existence tomorrow. This has always been the case with small, volunteer-run charities, but increasingly it may be the case with large institutional charities with mixed revenue streams. In the future, it will be even more important for estate donors and their advisors to monitor the health of charities. And to ensure planning methods consider for the risk of charity failure. Stay tuned.
Malcolm Burrows, Philanthropic Advisor, Scotia Wealth Management
