Non-profits are a secret source of economic growth in Canada

In 2025, the Canadian economy continues to face persistent headwinds, including modest growth, lagging productivity, and continued trade uncertainty. While these challenges raise important questions about the country’s economic future, the role of the non-profit sector is an often-overlooked piece of Canada’s economic strength.

As a share of Canada’s GDP, a 2023 Statistics Canada study found that non-profit institutions contributed 8.3% of Canada’s total output—an estimated $182 billion. This includes the work of community organizations such as the YMCA; government non-profits such as health-care institutions; and business non-profits such as local chambers of commerce.

Non-profits are also a major source of jobs, employing 2.8 million people, or 1 in 10 Canadian workers. It’s also notable that women make up most of the non-profit workforce and many newcomers get their first Canadian work experience in this sector.

Barriers to growth

Non-profits are struggling to grow to their full potential, according to Pamela Uppal-Sandhu, the director of policy at Ontario Nonprofit Network (ONN).

“When COVID hit, demand for non-profit services spiked, stretching budgets and leading to employee burnout. Funding from government and corporate donors has not kept pace with rising costs since the pandemic, let alone to account for the surge in demand.”

Uppal-Sandhu further noted that individual giving is on a decades-long decline, as is volunteering. One reason the non-profit sector gets overlooked, she suggests, is that many people don’t realize, in their day-to-day lives, when they’re interacting with one.

“Non-profits permeate every corner of a community. They include food banks, legal aid organizations, and animal shelters, which most people know. Non-profits also run many childcare centres, youth sports leagues, and long-term care homes. They are behind colourful local coffee shops and affordable arts and culture programming.”

A thriving non-profit sector strengthens the foundation of Canada’s economy. These organizations not only create jobs and provide skills training but also deliver essential services that support families and communities. From childcare and elder care to enabling caregivers to re-enter the workforce, non-profits play a pivotal role in fostering economic participation. Additionally, social service organizations offering addiction support and mental health programs empower individuals to regain stability, reintegrate into society, and contribute to the local economy.

The trade war twist

Canada needs a strong non-profit sector, but Uppal-Sandhu explained there is a hard road ahead with a trade war looming only a few years after the COVID pandemic.

She shared the example of a housing non-profit. It could find itself with multiple and overlapping challenges in a trade war: the rising costs of inputs like steel and aluminum amid increased demand for affordable housing as the economy cools. Yet, the governments, businesses, and people they might turn to will also be looking to trim costs.

Non-profits face a unique challenge: the demand for their services tends to peak during times of economic strain. These are the moments when job losses rise, household budgets are stretched thin, incidents of gender-based violence increase, and mental health needs become most acute.

Moreover, non-profits face greater barriers to financing than for-profit businesses, even in a strong economy. They need more sustainable and reliable financing. This could include, for example, bridge financing. Right now, there can be a six-month gap between when a government grant is announced and when the non-profit can actually access the money, which can be extremely disruptive to work and service delivery.

New ways of doing business

One non-profit that’s working harder than ever in these challenging realities is the Fred Victor Centre, a Toronto-based organization focused on the city’s homeless population. Over 12,000 people in Toronto are homeless on any given night.

Michael Marco, VP Finance & Technology at the Fred Victor Centre, says the organization tripled in size over the last seven years.

“We’ve been in business for 130 years, so we’re not a new kid on the block by any means, but we experienced this enormous growth over the past few years.”

The centre touches about 3,000 people daily through 75 different programs. In a typical year, it helps more than 150 people to secure employment and reverses more than 450 drug overdoses.

Marco is proud of these contributions to the community, and the opportunities that Fred Victor provides to its 600 employees. He notes that of 12 people on the finance team, only two, including him, were born in Canada and consider English their first language.

“Not-for-profits provide a great opportunity for newcomers to find meaningful employment in their field. And we get well-trained candidates, as accounting designations are fairly universal,” Marco said.

Economic uncertainty remains the organization’s greatest challenge. When demand for services increases while resources diminish, innovative solutions and strategic foresight are essential. Marco shared how the organization launched a social purpose enterprise, Fred’s Kitchen – a catering company that prepares and delivers meals across Toronto. This initiative not only generates additional funding but also aligns with the organization’s mission by providing on-the-job training and employment opportunities to individuals at risk of homelessness, newcomers, and those facing barriers to employment.

“It’s a win-win, and we’re looking to expand that even further,” Marco said.

Nurturing non-profit growth

Canada’s non-profit sector sees exciting opportunities ahead, ONN’s Uppal-Sandhu said. One is the wave of support for local economic development amid the global trade war.

“That’s something we’ve been working on for a long time—making sure money circles locally—and now there’s a big moment around, how do we do it more? How do we make sure these kinds of models are scaled up? We see an opportunity there.”

Another interesting development is the trend of churches donating their space back to the community. For example, churches are becoming affordable housing, childcare space, and community centres.

“Despite everything, there is some really amazing stuff happening in communities,” Uppal-Sandhu said.

Non-profits benefit people and communities in tandem. The key now is to scale the non-profit sector’s impact at the time when Canada most needs it. Non-profits can meet the moment with stable partners, consistent financial support, and a forward-looking agenda.