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Apr 12, 2017

Charting a Path Forward

April 12, 2017

Strengthening and Enabling the Charitable Sector in Canada

Charitable and nonprofit sector modernization has been the subject of much recent debate and discussion in Canada. The federal government has signalled significant interest in renewing its relationship with the sector.

Recent consultations with sector stakeholders have resurfaced a recurring theme – the importance of creating an enabling environment for the sector. But what could such an enabling environment look like, how do you get there and where do you start?

This paper is the first in Mowat NFP’s Enabling Environment Series, which explores the different dimensions of an ‘Enabling Environment’ in the relationship between the charitable and non-profit sector and government. The paper defines the current challenge in the relationship between the federal government and the nonprofit and charitable sector; explores what an enabling environment could look like; identifies possible priorities; and presents different ways that the government and the sector can work together.


Over the last two decades, Canada’s nonprofit and charitable sector has evolved significantly, continuing to contribute an essential part of Canada’s social fabric, civic life, and economy.1

Nonprofits and charities provide opportunities for individuals to express their beliefs and values, improve their conditions and create stronger communities through their work in areas such as arts and culture, education, sports and recreation. The sector has proven to be an important partner to governments in providing health, housing, immigration, child welfare and other essential services to Canadians. Charities and nonprofits play a crucial role in shaping policies and laws that reflect the current needs and values of Canadians. In doing so, the sector is a vital partner in maintaining a healthy and productive democracy.

But the sector is at a crossroads. Growing demand for services has put pressure on charities and nonprofit organizations. Canada’s changing demographics– an aging population, increased rural-to-urban migration of indigenous communities, rising income inequality and a record number of immigrants and refugees2 – are all increasing demand for their programs and services.3

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A sluggish economy is putting pressure on governments and affecting how they work with, think about and finance charities and nonprofits. Governments are increasing pressure on organizations to streamline operations, find efficiencies and demonstrate impact.4 But shrinking budgets can impact salaries and other employment conditions, contributing to precarity in the sector, ultimately affecting organizations’ ability to meet the social and environmental needs of their communities.5

The sector has made efforts to evolve to meet rising demands, but Canada’s current systems, structures, policies and legislation could be viewed as risk-averse, outdated and constraining, limiting opportunities for innovation, experimentation, revenue generation and cross-sector collaboration. The resulting mismatch between organizational realities of nonprofits and charities and the current policies and frameworks has strained the government-sector relationship.

The Canada Revenue Agency (CRA)’s political-activity audits of charities are just one recent and public example of the dysfunction in the government-sector relationship.6 The debate over advocacy efforts and definitions of ‘political’ activity brought to the surface systemic problems in the relationship that were brewing for years. The perceived ‘advocacy chill’7 demonstrated the acute need to modernize rules and regulations affecting the sector so that organizations can thrive and engage as active participants in a vibrant, healthy democracy.

The federal government has not moved forward with sector reform since the Voluntary Sector Initiative (VSI)8 ended in 2005. While the VSI made an impact on the federal policy landscape,9 it fell short of its potential in addressing structural, legislative and regulatory barriers impacting the sector. As a result, discontent with the regulatory and policy environment remains.

The current federal government has committed to strengthening the sector by focusing on the issue of public policy engagement, but efforts to reform must not stop there.

Recent consultations with sector stakeholders have consistently surfaced a recurring theme – the importance of creating an “enabling environment.” An enabling environment safeguards public interest and supports the sustainability of charities and nonprofits10 while optimizing the policy landscape for innovation and experimentation.

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Lisa Lalande
Joanne Cave

Release Date

April 2017



Mowat Research

No. 145

This research series from Mowat NFP explores different dimensions of an enabling environment in the relationship between the charitable and non-profit sector and government. The series is intended to help the federal government and the charitable and NFP sector develop a modern federal policy framework that enables the sector and strengthens its ability to improve the quality of life of Canadians and people around the world.
To the Enabling Environment page

Related Reading

  1. Brian Emmett (2016). “Charities, Sustainable Funding and Smart Growth.” Toronto. Imagine Canada. []
  2. Thomas Granofsky, Miles Corak, Sunil Johal and Noah Zon (2015). “Renewing Canada’s Social Architecture Framing Paper.” Toronto: Mowat Centre. []
  3. Brian Emmett (2016). “Charities, Sustainable Funding and Smart Growth.” Toronto. Imagine Canada. []
  4. Brian Emmett (2016). “Charities, Sustainable Funding and Smart Growth.” Toronto. Imagine Canada. []
  5. Jamie Van Ymeren, Lisa Lalande (2015). “Change Work: Valuing decent work in the not-for-profit sector.” Toronto. Mowat NFP. []
  6. In 2012, the federal government allocated $13.4 million to conduct audits of charities’ public policy engagement activities over five years. The issue highlighted the need for clarification of the rules charities operate under, and the legitimate role charities play in the public policy process. []
  7. The advocacy chill refers to the hesitancy of voluntary sector organizations to engage in advocacy work due to fear of sanctions, loss of funding and deregistration by the CRA. See Gareth Kirby (2014) “An uncharitable chill: A critical exploration of how changes in federal policy and political climate are affecting advocacy-oriented charities.” Unpublished Master’s Thesis Manuscript. Cited in Lisa Lalande (2016) “On The Mend: Putting The Spark Back in the Government-Charitable Sector Relationship.” Toronto: Mowat NFP. []
  8. The Voluntary Sector Initiative was a five-year joint partnership between the Government of Canada and the voluntary sector that started in 2000. VSI convened seven joint working groups and resulted in the development of The Accord Between the Government of Canada and the Voluntary Sector, the Code of Good Practice on Funding and the Code of Good Practice on Policy Dialogue. []
  9. Employment and Social Development Canada (2009). “Voluntary Sector Initiative Impact Evaluation: Lessons Learned from the Voluntary Sector Initiative (2000-2005).” []
  10. Elizabeth Mulholland, Matthew Mendelsohn and Negin Shamshiri (2011). “Strengthening the Third Pillar of the Canadian Union.” Toronto: Mowat Centre. []