Charity Campaigns vs. Charity Donations

Over the past few years, I’ve had canvassers coming to my home in Toronto on behalf of a wide range of non-profits - including hospitals and mental health and homeless support organizations. The fundraisers all “wear” a noticeable post secondary student vibe. That’s hardly news.

But curiously, no matter what they’re collecting for, every last one of them uses the exact same methodology. That is, they refuse to take a one-time donation, instead insisting I sign up for six (not seven, and definitely not five) monthly payments. They don't want me donating online through the organization's website (explaining that they wouldn’t get credit for that). They do expect me to enter my basic information on a high-end tablet they’re carrying. When that’s done, they’ll use their smartphones to make a call to a remote agent who would take my financial information.

I only completed the process once - for the Hospital for Sick Children (SickKids) in Toronto. But that was mostly because, at the time, they were in the middle of quite literally saving my granddaughter's life. I couldn’t very well say no.

Because of the paranoia that comes with my background in IT systems administration, I generally don’t participate, explaining that I never share financial information on a call I didn’t initiate. At the same time, these campaigns are not fraudulent and, with the possible exception of UNICEF, they all represent legitimate organizations. Nevertheless, they all come with the clear fingerprints of a third-party, for-profit company. Which makes me curious.

After a little digging, it became clear that a company called Globalfaces Direct was the most likely employer of the face-to-face (F2F) canvassers I’m seeing. It’s also obvious that those canvassers are paid at least partially through revenue-based commissions.

Estimating how much of your donations are actually used for charitable work can be difficult. For once thing, in the case of SickKids, it’s not even clear which organization the money is going to. There at least three related non-profit accounts registered with CRA: The Hospital for Sick Children, The Hospital for Sick Children Foundation, and the SickKids Charitable Giving Fund.

But even where there isn’t such ambiguity we have only limited visibility into an organization’s finances. Covenant House, for instance, issued receipts for $26 million in donations for 2024, but there’s no way to know how much of that came through Globalfaces Direct F2F campaigns. And there’s certainly no public record indicating how much of that $26 million was spent on commissions and overhead. CRA filings for Covenant House do report fundraising costs of $9.4 million in 2024, which was 22 percent of their total spending and 32 percent of all donations.

It’s likely that their $9.4 million in fundraising costs includes Globalfaces Direct’s canvasser commissions and overhead costs. But those are only some of the costs - which likely include events, direct mail, and other in-house efforts. In fact, it’s not unreasonable to assume that only 20-30 percent of each dollar raised through F2F canvassing is actually spent on charity work.

From the perspective of the non-profit, hiring F2F companies can generate new sources of stable, long-term income that would have been otherwise unattainable. Especially if the F2F agreement specifies withholding a percentage of what’s collected rather than charging a flat fee, then a non-profit has nothing to lose. Why wouldn’t SickKids or Covenant House sign up for that?

Of course, a lot of that will depend on how you think about the numbers. Taken as a whole, an organization that spends just 32 percent of their donations on fundraising activities is well within CRA guidelines: “Fundraising is acceptable unless it is a purpose of the charity (a collateral non-charitable purpose).” But if we just looked at the money raised through a F2F campaign, that percentage would likely be a lot higher.

Similarly, CRA also expects that: “Fundraising is acceptable unless it delivers a more than incidental private benefit.” In other words, if a private company like Globalfaces Direct were to realize financial gain that’s “more than incidental”, it might fail to meet CRA guidelines.

Unfortunately, there’s no easy way for donors to assess the numbers on those terms. So regular people who prefer to direct as much of their donation as possible to the actual cause will generally be far better off donating through an institution’s website or, even better, through a single CRA-friendly aggregator like CanadaHelps.org.

But it would be nice if CRA reporting rules clearly broke those numbers down so we could judge for ourselves.