3 thing you can do to advocate for true-cost funding

In the summer of 2023, the Ontario Nonprofit Network (ONN) conducted their fourth annual sector wide survey, to gain data and insights on the state of the non-profit sector in Ontario. Ontario Nonprofit Network’s 2023 State of the Sector report paints a grim picture of the long-term health of non-profits in the province.

The report emphasizes that the nonprofit sector in Ontario is under considerable strain. Costs are rising, funding is stagnant or dropping, and the workforce is burnt out. All of this amidst an undeniable growth in community need due to the affordability crisis and rising calls for justice and equity.

A key takeaway from the report is that government and funders must come together to support Ontario’s social infrastructure. But how can nonprofits use the data from the ONN’s report to tell their story, influence government and funders, and win more sustainable funding?

In this post, we’ll take you through key data from the State of the Sector report and outline three ways you can use this data to advocate for true-cost funding. 

1. Advocate for true-cost funding through demonstrating high demand

A true-cost of a service or program includes both the direct and indirect costs of delivery. Indirect costs are costs incurred that cannot be easily and wholly attributed to a specific service or program. This includes organisational costs like:

• Staff

• Human resources

• IT

• Finance

• Learning and Development

• Building costs

True-cost funding is when the amount funded includes both the direct and indirect costs of service or program delivery.

According to the ONN report “nonprofit financial situations are on a downward spiral” (5).  

• Demand for nonprofit services is at an all-time high over the four year survey period. Since 2020 alone, demand has grown 29% (8). 

• Yet in the same four year period, only half the sector reported marginal increases in revenue, while 90% of respondents reported an increase in expenditures (11-12). 

What you can do:

• Paint this picture for your own organisation. Clearly demonstrate growing need for your services against existing and forecasted funding sources and growing expenditure. 

• If you have not already, develop and communicate clear metrics to demonstrate growing demand.

Image caption: Example of a graph that can be used to communicate growing demand, increasing costs and inadequate forecasted funding.

2. Advocate for true-cost funding through highlighting staff as a benefit, not an overhead

It’s no surprise that the pressure of delivering much needed services with dwindling resources has an impact on staff. Over the last two years, survey respondents have signalled a growing HR crisis in the nonprofit sector due to burnout, stress and calls for wage parity. 

• Over the last two years, 65 per cent of respondents have reported experiencing staffing challenges with recruitment and retention (17).

In order to retain staff, nonprofits have been investing more in flexible working hours, raising salaries, and signing bonuses – but this has contributed to rising organisational costs. 

• 46 per cent of respondents reported their largest source of expense as salaries/benefits (12). 

Staff are not an overhead. Staff are essential to deliver effective social services. 

ONN note that some parts of the sector have been able to advocate successfully for base-funding and wage increases in government funding for some of their workers (20). While systematic changes are needed, these conversations must continue at the funder level. 

To shift the dial from funding programs alone, proposals should highlight staff as critical to program success and advocate for funding to cover these costs.

What you can do:

• Invest in, and highlight staff as part of your program delivery success

• If you have been investing in your staff, do you have data to show the positive impacts on retention? Use this in funding proposals to highlight the stability and skillset of your team as a key factor in program delivery.

• If you don’t have internal data to understand staff well-being and retention, take steps to build this data set. 

3. Advocate for true-cost funding through emphasizing disproportionate impacts

Some communities, organisations, and sectors are harder hit than others. Vulnerable communities, already disproportionately impacted by the pandemic, are again more adversely impacted by subsequent crises in affordability and basic needs. For example:

• Over the past two year, Black and Indigenous nonprofits have reported consistently high levels of demand for their programs and services (9).

• Similarly, organisations in the Peel region, still recovering from being one of the hardest hit during the pandemic, are also experiencing high demand as communities also navigate the current affordability crisis (10). 

What you can do

• When using the wider data points from ONN’s survey to describe the current crisis, call out the impacts on your community specifically.  

• Use quantitative and qualitative data to tell the story of how your communities are adversely impacted, and why demand is stronger.

Bringing it all together – do you have the data you need?

The report confirms what many in the sector have known for a long time. Nonprofits nationwide are struggling to operate under increasingly difficult circumstances. 

ONN’s research in this area is invaluable. Both ONN and Imagine Canada are actively advocating for sustainable funding, systemic change and government recognition of the vital nature of the sector as a whole. 

At an individual nonprofit level this data is also valuable in, shifting funding conversations to include true costs. 

Organisations need to tell the story of these true-costs effectively. Ensuring your organisation has the data it needs to paint the picture of rising demand, rising costs, and staff retention will help show funders the true costs of program delivery.

We hope this post has been helpful to you!