October 2000 Fraser Forum: Is Charity-Based Provision of Welfare Possible?
The welfare reforms enacted by the US Congress in 1996 have generated a great deal of interest. These reforms essentially ended welfare as an entitlement program and returned much of the power and control of welfare provision to the states. The 1996 reforms have ushered in a period of experimentation with welfare provision, including the integration of employment and training programs, for-profit service delivery, and general education programs.
Perhaps one of the most interesting and controversial aspects of the 1996 reform initiative allowed charities and other community-based organizations to directly deliver welfare programs. Rather than simply funnel money to recipients through local government welfare agencies, the reform allows resources to be directed to local charities in exchange for their provision of welfare programs. One of the more contentious aspects of charity-based welfare delivery has been faith-based welfare provision whereby charities representing a particular religious faith are contracted to provide welfare-related programs.
The intent of the reforms is to encourage the development of programs that more effectively deal with the underlying causes of individuals’ problems. Those problems may involve a lack of marketable skills or more deep-seated difficulties.The overarching goal of reform is to improve the welfare delivery system by removing disincentives to work and recovery.
The experiments being undertaken across the US have varied in their success. Nonetheless, the diversity of the experiments provides Canada with a menu of possible initiatives which this country should consider. So the question is does Canada even have the necessary charitable infrastructure present to even consider experimenting with charitable delivery of welfare?
Table 1 presents the number of welfare recipients and welfare cases in each province in 1998.1 Two types of charities can deliver welfare and welfare-related programs: religious and welfare charities. Religious charities have a long history and tradition of providing welfare-related services. Welfare-based charities are already heavily involved in delivering welfare-related programs.
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Table 1: Number of Welfare Recipients & Cases (1998) |
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|
Province |
Number of Welfare Recipients |
Number of Welfare Cases |
|
BC |
297,400 |
179,700 |
|
AB |
77,000 |
36,000 |
|
SK |
72,500 |
36,100 |
|
MB |
72,700 |
38,700 |
|
ON |
1,091,300 |
549,800 |
|
QC |
725,700 |
439,300 |
|
NB |
67,100 |
34,300 |
|
NS |
85,500 |
44,300 |
|
PEI |
10,900 |
5,600 |
|
NF |
64,600 |
32,300 |
|
Sources: Revenue Canada Charities Database (1995) calculations and analysis by authors and J. Emes and A. Kreptul. (1999). The Adequacy of Welfare Benefits in Canada. (Vancouver: The Fraser Institute). |
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Table 2 presents the total number of both types of charity in each of the provinces. Furthermore, table 2 shows the ratio of the number of charities to the number of welfare recipients and welfare cases in each province.
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Table 2: Number of Welfare Recipients and Cases versus the Welfare and Religious Charities |
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|
Province |
Number of |
Number of |
Total |
Welfare Recipients |
Welfare Cases |
||||
|
Per |
Per |
Per |
Per |
Per |
Per |
||||
|
BC |
1,317 |
3,599 |
4,916 |
225.8 |
82.6 |
60.5 |
136.4 |
49.9 |
36.6 |
|
AB |
802 |
3,568 |
4,370 |
96.0 |
21.6 |
17.6 |
44.9 |
10.1 |
8.2 |
|
SK |
567 |
2,179 |
2,746 |
127.9 |
33.3 |
26.4 |
63.7 |
16.6 |
13.1 |
|
MB |
620 |
1,670 |
2,290 |
117.3 |
43.5 |
31.7 |
62.4 |
23.2 |
16.9 |
|
ON |
3,362 |
11,293 |
14,655 |
324.6 |
96.6 |
74.5 |
163.5 |
48.7 |
37.5 |
|
QC |
3,510 |
4,389 |
7,899 |
206.8 |
165.3 |
91.9 |
125.2 |
100.1 |
55.6 |
|
NB |
335 |
1,230 |
1,565 |
200.3 |
54.6 |
42.9 |
102.4 |
27.9 |
21.9 |
|
NS |
414 |
1,426 |
1,840 |
206.5 |
60.0 |
46.5 |
107.0 |
31.1 |
24.1 |
|
PEI |
54 |
229 |
283 |
201.9 |
47.6 |
38.5 |
103.7 |
24.5 |
19.8 |
|
NF |
96 |
646 |
742 |
672.9 |
100.0 |
87.1 |
336.5 |
50.0 |
43.5 |
|
Sources: Revenue Canada Charities Database, 1995. Analysis completed by Johanna Francis. Calculations and analysis by author and Joel Emes and Andrei Kreptul, 1999, The Adequacy of Welfare Benefits in Canada, Vancouver: The Fraser Institute. |
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There is considerable variation among the provinces in the number of charities (hereafter, “charities” refers exclusively to welfare and religious charities exclusively unless otherwise stated) available to provide welfare-related programs and the actual number of welfare recipients and welfare cases. For instance, Alberta maintains the lowest ratio of both welfare recipients and welfare cases with 17.6 and 8.2 per charity, respectively. Conversely, Quebec has the highest ratio of any of province with 91.9 welfare recipients per charity, and 55.6 welfare cases per charity, respectively. Some provinces, namely Alberta, Saskatchewan, and Manitoba have a greater ability to provide welfare through such charities as indicated by their relatively lower ratio of welfare recipients and welfare cases to charities. That is, if this experimentation were undertaken, these provinces would have less welfare recipients and welfare cases per charity requiring assistance. In other words, charities in these provinces would be less strained to provide such services since they would face less demand in the form of a reduced number of welfare recipients and welfare cases per charity.
Table 2 contains a simple head count of the number of charities. However, this is overly simplistic because it does not account for different-sized charities. That is, a simple head count treats equally a small charity with limited resources (and thus a limited ability to offer programs and services) and a multi-million dollar agency.
In order to ensure that we’re actually comparing like-sized charities, we used total agency income as a method by which to create an artificial or virtual “average” charity. Specifically, we divided the total amount of revenue received by all welfare and religious charities in a specific province by $100,000 to calculate the number of like-charities in each province based on income. That is, we calculated the number of charities that would exist if each charity had $100,000 in income.2
Admittedly, there are a number of other measures, such as assets, staff, and volunteers that could have been used. Income was selected due to both its appropriateness, since income or revenue provides an agency with its resources and also due to data limitations inherent within the Revenue Canada Charities Database.
In every province the number of charities increases after making the aforementioned calculation. The increases vary substantially. For instance, the total number of charities (welfare and religious) in Ontario increases from 14,655 when a simple head count is used to 51,435 when revenues are used to calculate the number of “average” charities, represents an increase of 251 percent. On the other hand, the number of welfare and religious charities in PEI only increases 6 percent. The increased number of “average” charities clearly affects the ratios presented originally in Table 2. For instance, the ratio of welfare cases to the number of charities in Ontario declines from 37.5 to 10.7 after we adjust for the size of charities.
Interestingly, though, the provincial ranking based on the ratio of welfare recipients and welfare cases to the number of charities remains relatively unchanged after making the discussed adjustment. In fact, only Ontario and PEI experience a marked change in their ranking.
Both tables indicate that some Canadian provinces, namely the western provinces and Ontario, have the charitable infrastructure in place to at least consider experimenting with the charitable delivery of welfare as evidenced by the relatively low ratio of welfare recipients and welfare cases to charities.
Welfare reform in the US has enjoyed moderate success. One key ingredient of this success has been the ability of states and local jurisdictions to experiment with different delivery mechanisms and even different types of programs to meet the specific needs of welfare recipients in their jurisdictions. Given Canada’s apparent ability to experiment in at least 4 provinces, we should, at a minimum, consider charity-based delivery of welfare as a possibility.
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Table 3: Welfare Recipients and Cases versus Adjusted Welfare and Religious Charities |
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|
Province |
Adjusted Number of |
Adjusted Number of |
Total |
Welfare Recipients |
Welfare Cases |
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|
Per |
Per |
Per |
Per |
Per |
Per |
||||
|
BC |
7,054 |
7,687 |
14,741 |
42.2 |
38.7 |
20.2 |
25.5 |
23.4 |
12.2 |
|
AB |
3,956 |
6,010 |
9,966 |
19.5 |
12.8 |
7.7 |
9.1 |
6.0 |
3.6 |
|
SK |
1,646 |
1,880 |
3,526 |
44.0 |
38.6 |
20.6 |
21.9 |
19.2 |
10.2 |
|
MB |
3,492 |
2,520 |
6,012 |
20.8 |
28.8 |
12.1 |
11.1 |
15.4 |
6.4 |
|
ON |
26,531 |
24,904 |
51,435 |
41.1 |
43.8 |
21.2 |
20.7 |
22.1 |
10.7 |
|
QC |
11,754 |
7,620 |
19,374 |
61.7 |
95.2 |
37.5 |
37.4 |
57.7 |
22.7 |
|
NB |
1,232 |
1,400 |
2,632 |
54.5 |
47.9 |
25.5 |
27.8 |
24.5 |
13.0 |
|
NS |
1,195 |
1,958 |
3,153 |
71.5 |
43.7 |
27.1 |
37.1 |
22.6 |
14.1 |
|
PEI |
65 |
235 |
300 |
167.7 |
46.4 |
36.3 |
86.2 |
23.8 |
18.7 |
|
NF |
718 |
1,326 |
2,044 |
90.0 |
48.7 |
31.6 |
45.0 |
24.4 |
15.8 |
|
Sources: Revenue Canada Charities Database, 1995. Analysis completed by Johanna Francis. Calculations and analysis by author and Joel Emes and Andrei Kreptul, 1999, The Adequacy of Welfare Benefits in Canada, Vancouver: The Fraser Institute. |
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Notes
1A welfare recipient is a single individual receiving welfare benefits while a welfare case is a household unit receiving welfare benefits. Welfare cases or households receiving welfare benefits may, and often do, have more than one individual receiving welfare benefits.
2The value of revenues, namely, $100,000, was chosen since it is roughly the median value of revenue for charities in Canada.
Jason Clemens (jasonc@fraserinstitute.ca) is the Director of Non-Profit Studies at The Fraser Institute. He is currently working on a study on charitable giving, to be released in December 2000.
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