Lexicon Financial Group Weekly Update — May 14, 2025

May 14

“Philanthropy is all about making a positive difference in the world by devoting your resources and your time to causes you believe in. In my case, I like to support causes where a lot of good comes from a little bit of good, or, in other words, where the positive social returns vastly exceed the amount of time and money invested.”

— Jeffrey Stuart Skoll OC, a Canadian engineer, billionaire internet entrepreneur and film producer

From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel

Looking Around

You may not think about it often, but each one of us has encountered and been touched by multiple charities or nonprofits over the course of our lives. It’s not just the ones that spring to mind immediately like hospitals, religious organisations, or community shelters. Your local business improvement association? A nonprofit. A community sports club? Also a nonprofit.

All charities are non-profits but not all non-profits are charities. There are about 85,000 registered charities which are recognized by the Canada Revenue Agency (CRA). It’s easy to look them up online and do some research, since all of their information is available publicly.

We are fortunate to count nonprofits and charities as part of our client base. Of course, we execute our fiduciary obligation to manage their investment assets in accordance with their risk and return objectives—the same thing we do for families and individuals. But, we also assist them where we can with insights and introductions to professionals who work in the areas of marketing, donor relations, governance, and more.

Managing client investment portfolios is obviously what we do for our clients. However, helping our clients in ways beyond money management brings additional benefits for them.

For the nonprofit sector, we’ve been sharing best practices with the broader community through a series of videos and audio podcast episodes. That program is called “Grow For Change”, and that learning is available at anytime, for free, on our website and associated YouTube channel. The audio-only version is available on Spotify.

We believe in the power of the charitable and nonprofit sector to bridge public service gaps by enabling access to housing, health care and education as well as a variety of other goods and services.

As a sector, it contributes an average of 8.1 per cent of total Canadian GDP. This is more than the Canadian retail trade industry and close to the value of the mining, oil and gas extraction industry. Two million Canadians are employed in the charitable and nonprofit sector. (1)

Despite this, charitable giving has been on the decline in Canada for more than a few years now. According to recent data published by the Fraser Institute, charitable giving in Canada declined between 2018 and 2022. The share of tax filers who reported donating to charity fell from 19.4 per cent in 2018 to 17.1 per cent in 2022. The share of Canadian household income being donated fell from 0.54 per cent in 2018 to 0.50 per cent in 2022. To put this in perspective, in 2022, Canadians donated $11.4 billion to charity. However, if Canadians had donated at the same rate as they did two decades prior, charitable giving in 2022 would have reached $13.8 billion. That’s $2.4 billion more that could have gone to support charity and non-profit causes.

On top of this, charities have also struggled with a shortage of volunteers. According to StatsCan, 65.3 per cent of non-profit organisations reported struggling with a shortage of volunteers in late 2022. (2)

With revenues down and costs on the rise, it’s no wonder the charitable sector is feeling the pinch. CanadaHelps describes this as the “giving gap.” Today, we add another potential increase in costs in the form of tariffs, and it isn’t long before some great organisations will have to scale back their services or – worse – stop providing services at all.

For example, a food bank in Edmonton recently reported that they were expecting food costs to jump to $6 million, a 50 per cent increase over the $4 million they budgeted for. (3)

Closing the giving gap won’t be easy, but there are steps we can each take to make a difference. For example, instead of giving cash from your chequing account, consider donating securities (stocks, bonds, mutual funds, exchange traded funds) from your non-registered investment portfolio. Many are also not aware that you can donate life insurance policies to support causes you care deeply about. Craig actually recently presented on this topic at the Canadian Association of Gift Planners national conference.

If you have causes you’d like to support, let’s book a call and explore the most tax-effective way for you to do this. After all, it could mean more money to your favourite charity and less to Canada Revenue Agency. We would call that a win-win.

Read and Watch

Want deeper insight into topics in your Weekly Update? Then, read and/or right click:

Canada could take a page from China's playbook in tariff war, says Nobel economist

EU ready to take slow road in US trade talks in pursuit of bigger deal

What must Japan do to survive Trump’s global trade war?

Can China's New Economic Playbook Help it Weather U.S. Tariffs?

Raymond James Markets & Investing: Three takeaways from earnings season - CIO Larry Adam, May 9, 2025

Raymond James Economy & Policy: The Federal Reserve reserves the right to change its mind - Chief Economist Eugenio J. Alemán, May 9, 2025

Looking Back

The S&P/TSX composite index (TSX) added to its weekly gain last Friday, which was led by energy and metal mining sectors as well as hopes that trade tensions could help offset the uncertainty that has been weighing on domestic activity. The Canadian unemployment rate rose to 6.9 per cent in April. This is the highest level since November and is the result of U.S. tariffs starting to hurt Canada's export-dependent economy. Investors now see a 67 per cent chance that the Bank of Canada (BoC) could resume its interest rate cutting campaign next month, which is up from 46 per cent before the jobs report. (4)

Major U.S. indexes finished down last week. However, talks between U.S. and Chinese officials in Switzerland (that could potentially pave the way for broader negotiations and tariff de-escalation) and the U.S. and U.K.’s announcement of the first new trade deal since the unveiling of U.S. reciprocal tariffs have increased investors’ hopes of more deals to come. As expected, the Federal Reserve (Fed) concluded its monetary policy meeting last week by announcing it would be holding the Fed funds target rate steady in the range of 4.25 to 4.50 per cent. According to Fed Chair Jerome Powell, Fed officials remain in a “wait and see” mode as they continue to assess incoming data to determine the economic impacts of the Trump administration’s significant policy changes, particularly wide-ranging tariffs, which are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.

In the European Union, the pan-European STOXX Europe 600 Index ended up slightly higher last Friday, but other major European stock indexes ended the week mixed.

Stock markets in Japan gained last week. The Japanese yen weakened past JPY 145 against the U.S. dollar, hovering around a one-month low as the greenback, which strengthened notably on the announcement of a U.S.-U.K. trade deal and confirmation by China that its trade negotiations with the U.S. are due to begin. The yield on the 10-year Japanese government bond (JGB) rose to 1.35 per cent from 1.26 per cent, as the safe-haven demand for JGBs weakened due to renewed global trade optimism. However, there were limited signs of progress in the ongoing bilateral trade negotiations between the U.S. and Japan.

Japan is seeking the full removal of reciprocal tariffs (President Donald Trump imposed a 24 per cent tariff on Japanese goods before the 90-day pause was announced) and the additional 25 per cent levies on autos, steel, and aluminum. For the U.S., agriculture is likely to be the focal point, as it seeks to increase the export of American agricultural products to Japan.

Mainland Chinese stock markets advanced in a shortened trading week ahead of U.S./China trade talks. An unexpected policy boost from the People’s Bank of China (PBOC) also added to positive sentiment. PBOC cut its reserve requirement ratio by half a percentage point and announced other loosening measures, including rate cuts on a range of relending tools and loans for policy banks. Last Friday, China reported that exports to other countries rose a higher-than-expected 8.1 per cent in April but were down from March’s 12 per cent gain. U.S.-bound shipments fell 21 per cent from a year ago, after Washington imposed the tariff hike in early April. However, exports to India, other Southeast Asian countries, and the European Union soared, as Chinese companies offset the U.S. sales drop with sales to other markets.

Economists believe that U.S. tariffs, in their current state, will likely deliver a shock to Chinese exports and economic confidence. However, they also believe that China should have the financial capacity to reduce tariff impact through fiscal stimulus, which its central government could roll out in stages as it assesses the economic toll of the tariffs. (5)

The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.