Keywords

Canadians famously derive our national identity by contrasting our institutions and values with those of the United States (see Michael Adams, 2009). Given this tendency, during the sea change of welfare state restructuring in the 1990s and early 2000s, Canadian fundraisers could not help but look to the U.S. and make comparisons. For example, after ten years of fundraising for environmental causes, Allison took on work as an independent consultant, giving her more opportunity to work in the United States. Approximately half her clients were American environmental nonprofit organizations, which she travelled to support. This cross-border experience led her to see the two fundraising contexts as different: “For me it seems like the U.S. is—what’s the right word?—almost, like, ahead of us in terms of their fundraising programs and the way they fundraise and the way that donors work with them.” She attributed Canada’s fundraising lag to differences in the welfare state: “Probably because they [Americans] don’t have the same government support, so they’ve always had to be more oriented towards private sector giving and towards building big endowments and just having a more ambitious attitude towards fundraising.”

Over time, Allison noticed Canadian fundraisers starting to adopt these ambitious American approaches as they were increasingly inspired by the amounts being raised south of the border: “The [Canadian] groups that I work with, they are getting more and more willing to be ambitious and to work with individual donors and to ask for large gifts and be more (pause) direct (laughs) in their fundraising.” However, Allison doubted that fundraising approaches in the two countries would ever converge, saying, “I think we're still pretty different than the United States.”

This theme of Canadian fundraisers wanting to emulate their American peers despite the perceived and actual structural differences between the two countries recurred in my conversations. How Canadian fundraisers evaluated these national differences ranged. For some, the state of fundraising in Canada was evaluated neutrally, if not positively, whereas others pressed the need to Americanize. These assessments reflected fundraisers’ political values, which responded to wider neoliberal cultural shifts.

The Generosity Gap

As success in fundraising is tied to generosity, fundraisers were intrigued by the question of which country exhibits greater generosity. Historically, this question has hinged on how generosity is defined. In post-war Canada, the political left asserted that Canada was the more generous nation on account of Canada’s more comprehensive social safety net, publicly funded universal medical insurance, and public support of education, the arts, and other social institutions. This soft nationalist stance cemented support for policies of income redistribution through tax-funded, state-run social programmes. As those policies were dismantled in the 1980s and 1990s, Canada’s positive self-image along these lines weakened. By the mid-1990s, arguments about Canada having a “social advantage” relative to the U.S. no longer held. Cuts to social spending at all levels of government reduced the public sector by about one-fifth within a few years and shrank the percentage of social programme spending relative to GDP by one-quarter (Stanford, 1998).Footnote 1 Economist Jim Stanford explained how these changes diminished Canadians’ claims to being a generous society based on the relative public generosity of the Canadian state.

It is hard to imagine how Canada’s reputation as a ‘kinder, gentler’ society will be sustained. Even relative to the United States, the real role of government in our economy is shrinking dramatically: In 1992 total government program spending as a share of GDP was two-thirds higher in Canada than in the United States, but by 1998 this ‘social advantage’ would shrink to barely one-quarter. (Stanford, 1998, p. 45)

As Canada’s public generosity was called into question due to public sector restructuring and cuts to direct government expenditure on social programmes, the political right began to shine a spotlight on Canadians’ private generosity compared to the United States. This new analysis of generosity revealed Canadians to be less generous than Americans in terms of individual charitable behaviour. In other words, the leftist conception of generosity as a collective attribute, observable on the national level in the form of social programmes, was replaced by an individualized definition of generosity as personal charitable giving and volunteering.

The term “generosity gap” originated with the Fraser Institute, a neoliberal think tank, which took on the project of comparing charitable giving in Canada and the United States. Starting in 1999, the Fraser Institute issued annual reports called the Private Charitable Generosity Index (Clemens & Samida, 1999). Using data from income tax filers in both countries, these reports calculated an index of generosity for both countries and for each Canadian province and territory and each U.S. state, where “generosity” referred to personal tax-receipted donations to registered charities. The index was composed of two measures: the percent of tax filers reporting charitable donations (the “extent” of generosity) and the percent of aggregate personal incomes donated to charity (the “depth” of generosity).

The Generosity Index consistently revealed a “substantial generosity gap” between Canada and the U.S. (Gainer et al., 2008). Authors of the 2008 Index, for example, using data from 2006 tax records, found that approximately 5% more American tax filers reported a donation (29.7% in the U.S. compared to 24.7% in Canada), and the percent of aggregate income that Americans donated to charity was just over double that of Canadians (1.66% compared to 0.76%). Based on these findings, the report concluded that “private monetary generosity in Canada is considerably lower than in the United States. This generosity gap limits the power and potential of charities to improve the quality of life in Canada” (p. 9).

Early editions of the Generosity Index set out to confront the idea that public generosity is a legitimate basis for a positive Canadian self-image:

A common perception, widely held by many Canadians, is that Canada is a kinder, gentler society than is the United States. In debates over social policy, for instance, the size and scope of Canada’s welfare state is often used as an indicator of our more compassionate and generous nature. (LeRoy et al., 2002, p. 13)

Redefining generosity as personal monetary donations and revealing that Canadians, on the aggregate, are less charitable than Americans would have been less shaming if the Fraser Institute had offered more points of international comparison. A report by Imagine Canada and the Rideau Hall Foundation (Lasby & Barr, 2018), with data from the Charities Aid Foundation, compared levels of individual charitable giving as a percentage of gross domestic product (GDP). American charitable donations amounted to 1.44% of the national GDP in 2016, which was the highest donation rate among developed economies in the world. Canada ranked third on this measure, collectively donating 0.77% of GDP, well below the U.S., but only slightly behind second-ranked New Zealand (0.79%) and well above Australia (0.67%), the United Kingdom (0.59%), and all other large economies of Europe and Asia. Omitting this wider international perspective and the complexity it reveals, the Fraser Institute inferred that the Canadian charitable sector would be almost $10 billion richer, if only Canadian social policy came to mirror that of the U.S. (Gainer et al., 2008, p. 4).

Even prior to the first Generosity Index, members of Canada’s business elite began to argue that private charity ought to replace the welfare role of government. Take Hal Jackman, the former Ontario Lieutenant Governor, whose name has appeared on Canadian Business magazine’s list of the 100 wealthiest Canadians since the practice started in 1998. In 1997, Jackman delivered a speech to the Canadian Club that justified cuts of $500 million in government grants to the nonprofit sector on the grounds that the withdrawal of government funding would motivate Canadians to be as generous as Americans (Jackman, 1997). Noting that Americans give almost three times more of their taxable income to charity than Canadians, Jackson attributed this difference to Canadians having “too high expectations of government.” Pointing to a mythologized settler colony which had “no roads, no schools, no hospitals, no government services of any kind,” he imagined that “our [European] ancestors survived because they accepted responsibility to look after each other.” The presumed lack of state provision for these ancestors imbued in them a “spirit of community and citizenship” that Jackman warned we were “in danger of losing.” Government spending was to blame for suppressing personal generosity, as comparison with the U.S. supposedly revealed: “There is a hidden cost to large government programs—because it is obviously apparent that there is a strong correlation between government support and the lack of private-sector support” (Jackman, 1997).

Jackman went on to argue that Canada was bound to regain the “essence of citizenship which defines us as a nation” through renewed volunteering and donating, “once our citizens know there is no big government there to do it for us.” In the 1980s, arguments for cutbacks revolved around the idea that government belt-tightening was imperative to achieve deficit reduction. However, Jackman speaking in the late 1990s turned government retrenchment into a moral creed. He advocated reducing government social spending as a national strategy to get Canadians, “back to that spirit of community which nourished us during our formative years.”

How Fundraisers Interpret the Generosity Gap

When I first asked Canadian fundraisers to identify significant trends in both fundraising and philanthropy, comparisons with the U.S. arose frequently. When comparisons were not mentioned spontaneously, I raised the question for any trends they had mentioned. Many of the responses touched on perceived cultural differences. American donors were described as more generous, open about money, and accustomed to and accepting of fundraising. Americans were seen as stronger boosters of their hometowns and colleges, and their attitudes of “give back,” “can-do,” and stalwart self-reliance made them more loyal givers to particular causes. Canadian donors, in contrast, were described as more “polite,” “cautious,” and “conservative” in their reception to fundraising appeals. Canadian fundraisers considered their American colleagues as more “confident,” “ambitious,” “assertive,” “aggressive,” “sophisticated,” and “competitive.” They saw their own kind as “docile,” “nice people,” “soft,” and “delicate” in their approach to fundraising.

Beyond these cultural observations, many fundraisers offered sociological analyses as they sought to understand and take practical lessons from differences in levels of charitable activity. Important explanations for the “generosity gap” were advanced, such as Americans having more vehicles for philanthropic giving and more opportunity for tax filers to report the monetary value of small in-kind donations.

Differences in religiosity were cited as another explanation, given that regular religious attendance is positively correlated with charitable activity and the largest amounts of charitable donations go to religious organizations (Turcotte, 2015). Religious donations have been declining in Canada since 1969, especially in Quebec, which ranks lowest of the provinces on the Fraser Institute’s Generosity Index. For Canada as a whole, between 1969 and 1997 the proportion of households that made charitable donations declined from 78% to 73% (Reed, 2001). According to Reed (2001), this drop, “was due mostly to a marked drop in donations to religious organizations…, from 74% to 64% of total charitable contributions. Both the incidence of donating to religious organizations and the total amount donated to them has declined.” Religiosity in the U.S., although declining, is considerably higher than in Canada (see Pew Research Center, 2019, p. 14; Cornelissen, 2021).

Some fundraisers also drew attention to another basic factor in the generosity gap: the difference in the wealth structure of the two economies. The highest-income groups donate at the highest rates and make the largest donations (Lasby & Barr, 2018). It is worth mentioning in this discussion of generosity, that Canadians with low and moderate incomes donate more as a percentage of their pre-tax household income compared to high-income households (Hall et al., 2009). As income is closely correlated with wealth, it follows that the U.S. has a greater capacity for philanthropy given the higher number of billionaires per capita and the greater magnitude of fortunes of the ultra-rich compared to Canada. Consider that in Canada in 2010, the share of total net wealth owned by the top 10% of households was 50%, whereas in the U.S., the top decile owned 77% of total net wealth (OECD.stat, 2021). Of the top 1% in Canada, the share of total net wealth was 15.5% but 37% in the U.S. Comparisons of personal generosity as a national trait need to take into consideration that the most significant American donor classes have vastly more wealth to give.Footnote 2

Expectations of Government

One of the most common explanations for the generosity gap was differences in the structure of the welfare state, as Allison’s comments above illustrate. A university fundraiser, Larry, took Allison’s reflections a step further by presenting a strategic avenue for fundraising that follows from the “generosity gap” analysis. Reflecting on his 16 years in charge of Advancement for one of Canada’s largest comprehensive universities, Larry identified the biggest change he saw in his career as a shift in the goals of university campaigns: “Our last campaign, we talked about raising money for ‘excellence,’ for ‘the differences,’ for ‘the cream’ type of thing. Now it’s a lot more about raising money for basics, for almost day-to-day operations.” He interpreted the change as reflecting a shift in Canadians’ perception of the welfare state: “I think the realization is that we are no longer, kind of, a totally socialist country, that our taxes don’t pay for everything, and that we’ve got to start paying for things in other ways. And I think philanthropy is one of those ways.”

The United States provided the counterpoint for his analysis starting with the observation that fundraising in Canada

is very different from how it is in the States, where people in the States, you know, Americans are used to paying for everything. So, very quickly they realize that their philanthropic contributions are an integral part of that, and the government is not going to provide everything for everybody. (Larry)

This was a common argument. Decisions to give are based on donors’ assumptions about need, which in turn are formed by assumptions about the responsibilities of government. Another fundraiser, Sean, with 19 years’ experience working with a health charity, consulting firm, hospital foundation, and environmental charity, put it this way:

Obviously, we’re far more of a socialist society than the U.S. is, and I think our charitable giving on a per capita basis is still significantly less than in the U.S. Part of that is probably because of our expectations of the provision of services by the government. (Sean)

Larry’s university set out to capitalize on the assumption that lowered expectations of government would increase peoples’ willingness to give. “I think people are aware, especially if they read the paper, that the higher education sector is being cut back,” he said. Accordingly, his university’s new campaign for the “basics” instead of the “cream” counted on donors’ concern about how reduced government funding threatened to diminish what universities could offer.

If more private giving was the desired response to the loss of public revenue, government cutbacks also provided an impetus to pursue privatization as an end goal. Larry explained that the university was soliciting prospective donors to contribute to its endowment so the interest on these invested assets could do more than fund scholarships and research chairs. Larry’s vision was that the endowment could reduce the university’s reliance on government grants for operating expenses:

One of the pitches we always make is that it would be really nice to be independent from government funding and that’s why we want to build up our endowment. So that’s a long-term goal to have a buffer there. Now our endowment is growing and has grown substantially over the years. Part of the campaign will be to grow it even more and to be like the Harvards and the Stanfords with huge endowments so that you can sustain your program. (Larry)

The obstacle to attaining such growth, according to Larry, was cultural: “In the States, it’s culturally very different,” with the biggest difference being American graduates’ active commitment to their alma mater.

If you go to school in the States, you graduate with the idea that someone paid for me to be there, I’m going to have to pay for other people to be there, a kind of ‘give back’ attitude. Students come out with that idea already planted. (Larry)

Consequently, compared to Canadian fundraising campaigns, “their [American] participation rates tend to be higher, their engagement of alumni and just the whole relationship of alumni with their university I think is very different.”

Larry envied the scale of fundraising the American alumni relationship enabled: “There are huge campaigns that have just finished in the States or are ongoing in the States with numbers like three billion dollars, three-and-a-half billion dollars, so they are huge!” Canadian university fundraisers were trying to inculcate an attitude of giving back, he said, by impressing this expectation on recent alumni. The message is slow to catch on, however, because “it’s not a message their parents heard if they went to university either. So, it’s not something they are hearing all the time.”

Larry lamented that universities did not serve students well in the era of rapid expansion of higher education in the 1970s and 1980s when, “we turned into a bit of a factory for students.” In the new millennium, Canadian universities began transforming their relationship to students to cultivate loyalty, such as American students show. Increased emphasis on varsity sports has been part of the new approach, but the broader strategy, according to Larry, revolves around, “recognizing that students are, they're our customer. Well, not customer, I don’t like to use that [word] in an academic setting, but we really have to treat them well because if we don't treat them well, they’re not going to treat us well down the road.”

Only a few fundraisers in this study were in a position such as Larry’s to contemplate the privatization of a university, hospital, or other largely publicly funded institution by cultivating relatively affluent students, patients, clients, or arts patrons as future donors. Government funding of the nonprofit sector in the early 2000s accounted for 51% of revenue, with fees and sales of services providing 39%, and philanthropy only 9% (Hall et al., 2005). Excluding universities, colleges, and hospitals from this overview, the largest source of nonprofit sector revenues was fees and sales (48%), followed by government funding (39%) and philanthropy (12%). Social services organizations were the most government-dependent sub-sector, counting primarily on government funding (66%), cost-recovery measures such as fees (23%) and philanthropy (11%) (Hall et al., 2005).Footnote 3 Assuming a nonprofit organization received revenues in approximately these proportions (50% government, 10% individuals’ donations, and 1% corporate philanthropy), every cutback in government funding by a mere 1% for such an organization would require 5% growth in fundraising revenues or a 50% increase in corporate philanthropy to cover the shortfall (Evans et al., 2005). These funding arrangements have been relatively stable over time and demonstrate that fundraising could not replace the contributions of government without enormous change, including disruption to services (Hall & Reed, 1998).Footnote 4

A Discourse of Inevitability

Many fundraisers, including those who appreciated the social role of government, interpreted Canadians’ lower donation rates as being on course to eventually catch up to the United States. This way of interpreting difference, known as economic lag theory, suggests a linear course of change in which the U.S. sets the standard for Canadian developments. Frances, a fundraiser for a social services charity, community foundation, university, and hospital foundation with 25 years’ experience, put it in this way:

I think we’re probably five to 10 years behind the U.S. and that many of the changes that are being seen in Canada now started in the U.S. five or 10 years ago. (Frances)

It is unsurprising that many Canadian trends originate in the United States given that fundraising techniques and models of best practice were passed along through joint educational programmes, conferences, professional organizations, accreditation agencies, and other forms of cross-border affiliation and exchange. However, developmental ideas that the U.S. was “ahead of” Canada, and Canada was “maturing,” “evolving,” or “making progress” in the direction of American fundraising interpreted the U.S. as the singular model towards which Canada was moving.

Some fundraisers also compared Canada with the U.K., Australia, and European countries. Samantha, for instance, president of an international consulting company, who had fundraised in three countries over 12 years, said of the U.K.: “They also have the government crutch as Canada has. They’re starting to break out of that.” Using selective cross-national comparisons to infer a trade-off between public provision and private philanthropy, Samantha and others were convinced of the inevitability of Canada’s neoliberalization.

The Crowding Out Thesis

“Crowding out” refers to the idea that government social spending inhibits personal philanthropy. The most fully developed version of this idea posits an inverse relationship between government social spending and levels of charity: as the social state grows, people donate less; only as the social state recedes, will people step up to meet needs not addressed by government. In a rebuttal of the “crowding out” thesis, tax policy scholar Neil Brooks (2001) argues that the relationship between government action and private giving is statistically positive: “The neo-conservatives have it backwards,” he contends. “The weight of the evidence is that public generosity aids and encourages private generosity” (Brooks, 2001, p. 190). Brooks points to countries such as Japan, which has a small public sector yet little private philanthropy. The historical evidence within Canada of government and nonprofit integration offers another refutation of the crowding out thesis.

The relationship of government to the nonprofit sector in Canada has long been interdependent, with taxation for social spending growing at pace with responses to charitable appeals. Historian Shirley Tillotson’s (2008) study of Community Chests (United Way/Centraide) from 1920 to 1966 shows that broad appeal fundraising expanded in tandem with support for the welfare state and for paying taxes. Tillotson argues that the fundraising campaigns of the community chest movement paved the way for income tax policies, as the fundraisers and welfare state advocates made parallel arguments about the importance of collective provision. The “culture of contribution,” wrote Tillotson, was “the common moral and conceptual framework that links taxation and charity” (p. 21). The twentieth-century advocates of taxation and charity did not see a contradiction between both ways through which citizens could answer social needs.

Another example of uniting philanthropic largess, fundraising, and advocacy for taxes was John Wilson McConnell (b. 1877, d. 1963). McConnell was a newspaper publisher and investor. As one of the wealthiest Canadians in the 1920s, he practiced philanthropy in the tradition of Andrew Carnegie and John D. Rockefeller (Wooster, 2009). He founded Canada’s second private grant-making foundation in 1937, which remained the largest until 2000. McConnell’s philanthropic giving in the fields of religion, education, and medicine grew in the 1920s and continued throughout his life. His major beneficiaries included the United Church, McGill University, and hospitals in Montreal (Fong, 2008).

As a Methodist, McConnell belonged to a tradition that promoted and practiced “systematic giving,” a doctrine that dated from 1882. Systematic giving to missions and the church extended to fundraising campaigns among co-religionists and then the wider community, such as the Montreal YMCA campaign of 1909. McConnell’s commitment to methodical giving dovetailed with his support for income tax and drove his successful lobby for a restaurant tax in Quebec, which was thought to be the model and precedent of Quebec’s welfare system (Fong, 2008). As these examples indicate, there is not a necessary trade-off between tax-supported social spending by government and charitable giving. At least in the twentieth-century welfare era in Canada, taxation and philanthropy were understood as joint political objectives and not in opposition.

Comparisons of the Tax Subsidy of Philanthropy

The neoliberal formula of “less government, more charity” conceals the degree to which philanthropy depends on government support of the charitable sector in the provision of tax incentives for philanthropy. The fundraisers I interviewed frequently compared Canada to the U.S. with respect to the tax treatment of charitable donations. Most fundraisers perceived the U.S. as having more generous tax incentives. As Diane, a major gifts fundraiser for a hospital foundation, argued:

When I say that we don’t have as many tax incentives as the States has, we don’t. They still have even more. … They get so many incentives for donors. Why do you think Harvard and Yale have a gazillion dollar endowment fund? Because they had those incentives there. (Diane)

In fact, the differences between the two tax systems are complex, starting with the differences between the American’s estate tax and Canadians’ capital gains tax. After lobbying by members of fundraising boards, representatives of financial institutions, and nonprofit sector leaders, the charitable tax credit has greatly expanded since the mid-1990s. By 2004, tax scholars and officials in the Department of Finance maintained that Canada’s incentives for philanthropy were at least comparable to those in the U.S., and perhaps more extensive (Proceedings of the Standing Senate Committee on Banking, Trade and Commerce: Issues Dealing with Charitable Giving in Canada, 2004).

The charitable tax credit has a cost to government in terms of foregone revenue. Specifically, in 2008, the projected foregone revenue for the charitable tax credit and non-taxation of capital gains on gifts of publicly traded securities, ecologically sensitive land, and gifts of cultural property was almost $2.7 billion (Department of Finance, 2008). In policy terms, this cost is referred to as “tax expenditure” because it is functionally equivalent to direct government expenditure. Tax expenditures are a policy instrument that subsidizes the charitable sector by, in effect, approximately matching private donations. As a result, the charitable tax credit gives the appearance of a shrinking government, to the extent that tax expenditures reduce the direct expenditure budget.

Moral discourse about eliciting generosity as a national virtue has been applied to arguments for reducing social spending, but not to arguments for limiting tax incentives. In other words, neoliberal discourse represents the state as overly generous when it comes to providing social services, but not generous enough—to donors—when it comes to implementing the tax credit (Brooks, 2001). Ultimately, neoliberal restructuring, through the combination of cutting back direct funding and expanding tax incentives for philanthropy has made the nonprofit sector more, not less integrated with government, but also more competitive for both government contracts and private donations, and more dependent on and responsive to its benefactors.

The cultural redefinition of generosity from public to private facilitated these changes and signified a neoliberal watershed in political culture. Canadian fundraisers, attuned to these clashing views of national generosity, and seeking to emulate their American counterparts’ fundraising success, worried that Canadians’ expectations about the state’s welfare role inhibited charitable donations. As Samantha put it:

I don’t think that Canada by any fault of its own is behind, I think it’s the nature of the two different countries, of Canada up until relatively recently and the continuum of Canada’s history has always been reliant on government. America has always been built from a premise of look after number one, the government ain’t going to bail you out. (Samantha)

American trends persuaded fundraisers to associate less government with more giving. Although comparative and historical evidence contradicts the thesis that government spending “crowds out” philanthropy, the argument has a self-fulfilling quality. Concerns about “crowding out” became another rationale for government retrenchment, which Canadian fundraisers reinforced.