Canadian charities want to diversify their revenue. Here’s what’s actually getting in the way.

New national survey data reveals the gap between intention and reality, and what it means for your organization.

Over 900 Canadian charities just listed what keeps them up at night. It’s not what you might expect. The biggest obstacle to financial resilience isn’t a lack of ideas, it’s a sector stretched so thin it can’t act on the ideas it already has.

In February 2026, the Charity Insights Canada Project (CICP-PCPOB) at Carleton University released findings from a national survey on revenue diversification. More than 900 charities responded (a 75% response rate), which is a remarkably strong signal for sector research. The numbers paint a picture that will be familiar to anyone working in the nonprofit space. The open-ended comments paint an even more vivid one.

Here’s what the data actually says and what we think it means.

The intention gap is real and it’s wide

Nearly three-quarters of respondents said they plan to diversify their revenue in the next one to three years. Seventy-seven percent rated diversification as essential or very important to their long-term sustainability. That is a sector that understands, clearly and almost unanimously, what it needs to do.

And yet. When asked which sources of revenue they rely on, the top three answers were individual donations (71%), government grants (70%), and foundation grants (66%). The sector knows it needs to change and is largely still doing what it’s always done.

That’s not a criticism. It’s a description of a structural problem, and the survey’s open-ended comments make it painfully concrete.

1. The capacity trap and why it’s circular

By far the most commonly cited barrier (at 74%) was limited staff time or fundraising capacity. But the comments reveal something more troubling than a data point. Organizations aren’t stuck because they don’t know what to do. They’re stuck because they can’t afford the people to do it.

“We desperately need to do it, but CANNOT afford to hire someone to do it, so it doesn’t happen. And our current sources of revenue get increasingly unreliable.”

This is the chicken-and-egg problem that defines so many small and mid-size nonprofits: you can’t build a private donor base without a dedicated fundraiser, and you can’t afford a fundraiser without a revenue base. Boards and volunteers are often proposed as the solution but they too are aging out, burning out, or simply not equipped for major gift cultivation or sustained grant writing. The capacity deficit compounds quietly over time.

2. Project funding is the wrong tool for the job

No issue came up more frequently in the open-ended responses than the frustration with project-based funding. Funders will pay for a new program. They will not pay for the organization that delivers it. The result: charities chase grants for things they don’t necessarily need, while salaries, administration, and core operational costs go uncovered.

“The main barrier is that the majority of grants are project-specific. We can only take on so many projects, but operations and wages are where the funding is needed.”

Managing many restricted funders creates its own burden: more reporting, more deliverables, more relationships… all with the same small team. Several respondents said they would trade breadth for depth: fewer, stronger funder relationships with unrestricted or lightly restricted support. That’s a significant shift in how many organizations currently think about diversification.

3. Government cuts are the trigger, not just the backdrop

Across subsectors (arts and culture, community health, rural services, environmental organizations) the story is the same. Government funding hasn’t kept pace with inflation for years, and for many organizations, active cuts are now the reality. This is particularly acute in arts and culture (BC, Nova Scotia, Quebec) and in rural and remote communities

“Diversification is largely a result of reduced public funding. We have begun finding alternate revenue streams out of necessity, rather than as an outworking of a strategic, proactive goal.”

That distinction matters enormously. Crisis-driven diversification looks very different from strategic diversification. Organizations scrambling to replace lost government funding are far less likely to build sustainable new streams, they’re more likely to accumulate a patchwork of underfunded, misaligned revenue sources that cost more to manage than they return.

4. Diversification itself can be exhausting

Some of the most striking comments came from organizations that are already highly diversified and are worn out by it. Multiple revenue streams mean multiple reporting requirements, multiple sets of funder expectations, and multiple relationships to steward. Diversification, it turns out, has its own carrying costs.

“We have quite a diverse funding model, but this is exhausting and not sustainable.”

This is worth naming clearly: diversification is a risk management strategy, not an end in itself. For many small organizations, the cognitive and administrative load of managing many revenue streams may outweigh the financial benefit. Fewer, deeper relationships often produce more stability and more organizational sanity than many transactional ones.

5. Some barriers aren’t solvable with better strategy

A meaningful portion of respondents face structural barriers that sit outside the reach of any fundraising plan. Faith-based organizations are ineligible for many government and foundation grants. Rural and remote organizations operate in communities where the philanthropic pool is simply smaller. Organizations working on stigmatized causes like sexual violence, gender equity, experimental arts, face funders whose priorities skew toward more visible, mainstream needs.

“We are in an ‘unpopular’ area of work, sexual violence — harder to raise funds, and there are fewer funders specializing in this issue.”

For these organizations, the conversation can’t begin with tactics. It has to begin with an honest assessment of what is structurally possible and a willingness to be creative about the margins.

Questions worth bringing to your board

Whether you’re leading a nonprofit or sitting on its board, the data raises questions worth sitting with:

• Are we pursuing diversification because it fits our strategy or because we’re afraid of what happens if we don’t?
• Do we have the internal capacity to pursue and sustain a new revenue stream, or will it drain more than it generates?
• What would it look like to go deeper with one or two key funders rather than wider with many?
• Are our funders funding us or funding our programs? And what would a conversation about organizational support look like?
• Is our board actively participating in fundraising, or leaving it entirely to staff?

A note from us at Phil

The challenges in this data are ones we recognize from the organizations we work with every day across Canada and Quebec. The sector is being asked to do more with less, in an environment where the traditional funding landscape is shifting faster than most organizations can adapt. That’s not a failure of vision or effort, it’s a structural reality that deserves to be named. If you’re wondering how your organization fits into this picture, or what a realistic path forward might look like, we’d love to talk. Learn more about how services and how we can help. 

Source: CICP-PCPOB. (2026). CICP-PCPOB Weekly Report #4.02.04 — Revenue Diversification. Philanthropy and Nonprofit Leadership, Carleton University. Survey distributed February 25, 2026. n=909–913, confidence level 95%, margin of error 3%.