Overview

A charity is a type of organization that focuses on non-profit and philanthropic goals. Charities may undertake activities that focus on relief of poverty (e.g., food banks, low-cost housing units), advancement of education (e.g., universities, research institutes), advancement of religion (e.g., places of worship, missionary organizations) and other benefits to the community (e.g., animal shelters).
 

Financial data, including revenue from fundraising, revenue from the sale of goods and revenue from investments, as well as non-financial data such as the number of employees or the type of charity are all potentially important indicators of the sustainability of a charity. Like all organizations, charities are vulnerable to financial insecurity. This risk may be associated with the internal structure/characteristics of the charity, as well as the financial health of the environment in which the charity operates.

The global recession that began in 2008 had a negative impact on the sustainability of charities in Canada and worldwide. Many charities experienced a decrease in donations, while simultaneously experiencing an increase in demand for services. Investment income decreased. Some charities were not able to continue operations.

In this case study you will explore various characteristics of charitable organizations in Canada, primarily financial characteristics, to predict their sustainability.

Data Source

The study data are from the Canada Revenue Agency. Specifically, the data come from the T3010 Registered Charity Information Return. All registered charities, from small community organizations to large organizations with an international focus, must complete this return as part of the requirements of maintaining charitable (tax-exempt) status. The form contains a report of the charity’s activities, sources of revenue, and expenditures.

Each charity that provided a return between 2006 and 2008 is included. Separate datasets are provided for each year; these datasets can be linked together via the charity identification number, which is unique to each charity. The outcome of interest is the success of a charitable organization at continuing operations in 2009. There are many financial measures in the dataset, such as the ratio of capital assets to total assets, as well as non-financial measures, such as the number of persons employed by the charity.

The datasets are characterized by a large amount of missing data, which will need to be addressed in developing an analysis plan. As well, the datasets contain a large number of observations. While you can work with all of the observations, a sampling methodology may also be acceptable when approaching the research questions. Machine learning models should be considered for these data, given both the large number of observations and variables.