Well, we are in the midst of a pandemic and this has resulted in some grantmaking foundations and philanthropists increasing giving and thinking carefully about how and who they give to.   Unfortunately, and we may only know for sure in a year or two, many foundations are not increasing grantmaking and they are using grantmaking ideas and techniques that go back decades.  Actually, who are we trying to fool – most of what grantmakers do today have gone back thousands of years – both good and bad.

This note is focused on Canadian foundations giving to registered charities and sometimes other qualified donees in Canada.   Grantmaking with non-qualified donees, I have dealt with elsewhere in numerous places and quite honestly if you cannot do grantmaking in Canada well then the likelihood is that more complicated international grantmaking is not going to be done so well either.

My advice to those who are wealthy – be careful with only complying with the law.  The law requires, through the disbursement quota, that Canadian foundations expend on average 3.5% per year of their assets not used in charitable and admin activities.   Giving away 3.5% is not generous.  It is the absolute minimum you should be doing from a legal perspective – oh and you got a 50-70% tax benefit probably when you put money in the foundation and the public may one day ask questions about whether the system would be better with the tax subsidy or rather having the government spend that tax subsidy on roads, health care, schools, foster kids, etc.

Some of the best grantmaking practices include mutli-year, unrestricted grants to Canadian charities with at least some emphasis on groups who have been or continue to be historically disadvantaged.  It includes diversity in your organization, or if not at a minimum participatory grantmaking practices, so that a group or committee that has different or lived experience can suggest Canadian charities to support with some of the funds that you are giving out.  It includes openness and transparency – Do you accept unsolicited proposals? What areas are you funding? (in order to avoid people wasting their time applying if there is no likelihood of success).   Also letting people know upfront if you have policies or approaches to things like restricted gifts, recognition, reporting, standard agreements, etc.

There are some impediments to using the multi-year unrestricted giving approach.  Sometimes when the foundation is established or seeded it is done in a way that is not well thought through and you may have to deal with narrow objects, restricted gifts that don’t make much sense anymore, etc.  Some of these problems can be fixed and some cannot be easily fixed.  If  I got a dollar for every time a director or executive from a charity has told me that their funds are restricted, and after they looked carefully they are either not restricted or the restrictions they identified were not correct – well let’s just say I could eat many of my favourite Ethiopian food meals.

Another set of problems is that to be a director of a funder typically requires no background, experience or knowledge.  I am told some of the interesting things by funders – I even created an article entitled Fallacies about private foundations which covers just a few of them.

Improving grantmaking is not that difficult if you think your grantmaking can and should be improved.  But if you are convinced that you are one of the best grantmakers in Canada and also know all the legal rules and flexibilities of charities and your own charity – it can be harder to fix because you may never see the problems, let alone the solutions.

In other words, if your charity only has a “gifts to charity” object you cannot give grants to non-charities – but you might be able to change that with some discussion with CRA if you are interested in grantmaking to non-charities.

If you think that your funds are all restricted and you are incorrect it could make quite a big difference in your grantmaking.   It is sad but it sometimes only takes 30-60 minutes to determine this.

Do you have an amendment clause in your gift agreement? For example, a clause in your gift agreement that says the donor and charity can amend the gift agreement.  Is it possible that the donor has changed in the last 20 years in terms of interests, theories of change, etc and might have a slightly different idea today as to how best the funds could be used if you approached the donor? Money that you thought was restricted in a particular way may be changed to be unrestricted.

Is there a cy pres clause in your agreements that allows for example after the death of the donor, or after 20 years, for the board to make changes if the purpose of the fund is no longer practical? (BTW practical and practicable are very different!)

Here is an interesting US document from US speaker, blogger, fundraiser and charity executive Vu Le entitled Equitable Grantmaking Continuum.    The US is different than Canada and yes each foundation is different but almost all foundations can learn something from this chart.   At a minimum, it will give you an idea of how many of your grantees or prospective grantees will view you.  Also, good grantmaking does not have to be all or nothing.   How about setting aside some funds to try participatory grantmaking etc.?  If your interests have been narrow and have not touched upon groups in the greatest need consider setting aside some of your funds for those groups.

Oh and one other thing I have learnt in my 35 years in the charity sector (yes I was a youth rep when I was about 15 on a board!) was that there is a power imbalance between funders and those who may receive funding.  No matter how nice and open-minded you are, it exists.  People’s lives and livelihoods are at a minimum are at stake and beneficiaries can be impacted tremendously by your decisions.   In those difficult situations, very few reps from charities can or will be completely upfront with you.  Expecting a group to potentially raise issues that could in theory anger you and result in a loss of funding – is not always a fair expectation.   I have seen Canadian charities toiling for years under very difficult situations with Foundations oblivious to the issues they have created or contributed to.  I wish that the sector was more open and frank but in my experience, it generally isn’t.

There are many ways to explore different grantmaking possibilities.  There are experts in different areas and communities that you can hire and learn from. There are great resources out there – mostly outside of Canada from groups focussed on good grantmaking.  Also, we created a website www.CharityData.ca which helps a little by allowing you to sort and filter all Canadian registered charities in about 30 different ways.  It is free to use.   You can do an Advanced Charity Search for example on 252 categories of charities in Canada filtering by only those in Vancouver with revenue between 30-150,000, etc.

Probably the most common way that foundations learn is by learning from other foundations.   That is often a very slow process and fraught with challenges because all foundations are different and many foundations who know little are learning from foundations who know only a little more and unfortunately they often are repeating misunderstandings about compliance etc.   Also some of the most assertive or high-profile foundations follow practices that are not great.  Some are verifiably bad, others are just subjectively bad.

So if you, as a philanthropist or a foundation, try to do even more to help the sector “build back better”.  If you do things this year exactly the same as in the past it is probably not going to be “better”.

We assist many foundations with reviews of their governance, operations, agreements, gift acceptance policies, disbursement policies and grantmaking.