BACKGROUND
While calls for increased funding and greater equity in granting in Canada’s charitable and non-profit sector have persisted for decades, over the last couple of years, there have been several notable developments.
In June 2019, the Special Senate Committee on the Charitable sector released its ‘Roadmap to a Stronger Charitable Sector’ report. Some of the key recommendations on ensuring strong and stable funding for the sector included encouraging the donation of private shares, and allowing charities greater freedom in undertaking revenue-generating activities.
Other recommendations included exploring ways of ensuring that donations do not languish in donor-advised funds (and endowments) so that they are instead used to fund charitable activities in a timely manner. The report also recommended the exploration of measures to ensure the provision of predictable and sustainable grants and contributions agreements.
On March 16, 2020, approximately nine months after the release of the Senate report whilst next steps were still being contemplated by sector stakeholders, Canada began to go into a nationwide lockdown in response to the COVID-19 outbreak. Not only did the pandemic lay bare the vulnerability of equity deserving groups across Canada, it also threw into sharp focus the fragility of organizations operating within the sector, particularly minority led, minority serving, and minority cause driven charities. The financial and operational resiliencies of these charities were significantly tested during the lockdown with Don McRae noting in an article that at least 93 charities indicated COVID as the reason for their demise in voluntary revocation filings over the two and a half years up to 2023.
But it wasn’t as though such organizations hadn’t been in fragile states prior to the onset of the pandemic in 2020. As the “Unfunded” report which was released in December 2020 showed, grants to Black-serving organizations represented a meagre 0.7 percent of total grants during the 2017 and 2018 fiscal years. Black-led organizations received only 0.07 percent of total grants made in the same period. This, even as total giving from Canada’s top 150 foundations for both years averaged 7BN.
In a similar vein, a 2023 academic study which investigated climate and energy philanthropy funding of diversity in Canada found that diversity-led organization that are more often addressing equity-deserving communities, received philanthropic support three times less often, and support from less funders than the conventional-led organizations. The authors suggested that the results “demonstrate that environmental philanthropy in Canada favors a large set of established organizations and perpetuates a landscape of exclusion for diversity-led organizations working on the low-carbon energy transition”.
By perpetuating disparities through funding they argued, “philanthropy is reinforcing inequities among marginalized communities”.
Acknowledging that this isn’t the case with all grant-making foundations, how can philanthropy do better in ensuring increased funding to, and greater diversity amongst grantees?
BREAKING THE EXCLUSION CYCLE
Clearly, both grant-making foundations and smaller charities/non-profits alike have roles to play and need to be supported on the journey to achieving a more equitable and inclusive funding landscape in Canada.
It is impossible to address the issue of increased funding without touching on the associated issues of perpetuity endowments and the disbursement quota. As a July 2022 survey conducted by GIV3 and Ipsos showed, “two-thirds of Canadian taxpayers feel their tax dollars, by way of the charity tax credits, should be applied within 10-15 years, with 36% of those surveyed preferring to see such funds used within 2.5 years than allowed to accumulate in perpetuity”.
A slowly growing number of foundations are opting to go the ‘spend down’ route, and there have been several recent announcements to that effect. However, there are concerns that even with spend downs, capital is simply moving from the endowments of foundations to those of more well-established charities/non-profits. There are also similar concerns around equity and diversity in relation to who benefits from the increased disbursement quota of 5%, per the CRA’s new rules which went into effect in January of 2023.
Foundation leaders and key partners in the ‘wealth management’ industry need to be made more aware of, and supported in developing mechanisms to identify and close gaps in granting practices that may inadvertently be feeding into a situation where philanthropy is seen to be reinforcing inequities among minority led; serving; and cause driven charities and non-profits.
Grant-making foundations often cite ‘capacity’ and ‘familiarity’ as key reasons why smaller charities and non-profits may not be benefiting from disbursements. Smaller charities and non-profits equally need to be supported to ensure that they are better positioned, both from ‘capacity’ and ‘visibility’ standpoints, to benefit from conventional and spend down disbursements.
To the latter point of ‘visibility’, smaller charities and non-profits need to consider how they are cultivating relationships with the younger generation of wealthy families and foundation leaders. This is important as these individuals often diplay significantly different attitudes towards the issues of equity and inclusion, and $1 trillion is set to move from Canadian baby boomers to their GenX and millennial heirs between now and 2026.
Beyond benefiting from increased access to conventional or spend down disbursements, charities and non-profits need bespoke capacity building support to explore alternative models of financial sustainability that reduce their dependence on grant-making institutions. This includes the increased take up of digital tools and technologies to drive operational efficiencies.
At Global, these are the sorts of challenges we enjoy finding solutions to. We look forward to collaborating with both grant-making foundations and charities/non-profits alike to ensure more equitable access to funding, and greater impact in the sector.
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Shani Eribo joined Global in 2024 as Senior Consultant. With fundraising experience spanning three continents, he focuses on supporting grant making foundations to maximize their impact, whilst also working with non-profits to co-create resource mobilization strategies that assure greater degrees of financial autonomy and sustainability. He is keen on supporting non-profits to achieve increased efficiencies by adopting digital tools and technologies. Shani has professional experience working in Europe, North America and Africa. He recently completed a Master’s degree in Philanthropy & Nonprofit Leadership at Carleton University where he was awarded the 2023 Dr Tessa Hebb fellowship in Social Innovation. He was also a recipient of the 2023 Emerging Black Fundraising professionals award.
