As we begin the September 2023 school year, it is essential to be aware of what the economic situation was in the first months of the year and its potential impact on the philanthropic sector. To help you prepare for these challenges, we present a summary of predictions by the National Bank of Canada and Deloitte as well as the potential repercussions for organizations in Canada.
Predictions by the National Bank of Canada and Deloitte
According to the National Bank of Canada’s Economic Weekly of July 28, 2023, the Canadian economy was faced with negative impact resulting from the forest fires and the strike at the port of Vancouver. Additionally, the outlook for GDP growth for 2023 remains modest, with an expectation of an increase of 1.4%, which is expected to decline to 0% in 2024. However, a glimmer of hope lies in the fact that economists are no longer talking of probable recession, but rather of a slowdown in economic growth.
For its part, Deloitte, in its June 2023 Economic Outlook, explained that the slowdown in growth was mainly caused by inflation and the increase in interest rates. The anticipated GDP growth rate for 2023 is 1.3%, with a forecast of 1% for the following year. Inflation should be controlled at 3% by the end of 2023, and the Bank of Canada’s interest rates should stabilize at 5%, with the prospect of decreasing in 2024.
The unemployment rate should experience a slight increase, rising to 5.4% at the end of 2023 according to the National Bank of Canada and to 5.6% according to Deloitte.
Immigration is expected to continue to stimulate the economy and the Canadian population is expected to increase by 2.4% in 2023, the largest increase since 1961.
What is the impact on the philanthropic sector and donations?
Faced with this economic context, it is prudent to anticipate modest growth in philanthropic contributions in 2023 and 2024. Charities will need to be creative to ensure the retention of their existing donors, increase their contributions and attract new benefactors.
The good news is that despite previous concerns around a possible recession, economists are now talking about an economic slowdown. While this may limit the scale of donations, many people should continue to support the causes they care about.
However, climate change, which has become an indisputable reality, creates a new challenge for organizations. Record temperatures, extreme weather events and the collapse of biodiversity are subjects that directly affect Canadians. Raising awareness of the environment, climate change and a more responsible economy is therefore becoming a growing priority among donors.
To stand out in an uncertain economic context and to respond to growing environmental concerns, organizations should focus on sustainable and responsible projects. Highlighting initiatives aimed at mitigating the effects of climate change, protecting biodiversity and promoting a responsible economy could generate increased interest from donors.
Priority of innovation, responsible and sustainable projects
In conclusion, the economic context in the first months of 2023 showed a slowdown in economic growth rather than a recession, but this may lead to modest growth in philanthropic giving. Charities will have to be creative to maintain the support of their donors and to attract new ones. Additionally, growing concern for the environment and climate change should lead donors to attach greater importance to environmental causes.
By remaining adaptable to economic realities, demonstrating innovation and putting forward responsible and sustainable projects, organizations will be able to overcome challenges and continue to make a positive difference in Canadian society.