Charitable Foundations Are Accumulating Great Wealth as Charities Struggle

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It’s time for the Federal Government to Require Foundations to Increase Their Granting – GIV3 Foundation

MONTRÉAL, Feb. 17, 2021 /CNW Telbec/ – A new public campaign: IncreaseTheGrants.ca launched this week. It asks the Federal Government to stop allowing charitable foundations from accumulating greater wealth, and to increase their percentage of assets granted to our struggling charities helping to serve millions of Canadians in need. Launched by Canadian philanthropic leader John Hallward, the ‘#IncreaseTheGrants’ campaign calls for foundations to return to their spending ratios of ten years ago.

“At a time when Canadian charities are struggling to meet the increasing demand for their services, we need to ensure that foundations are doing their fair share. COVID has exacerbated this need,” said Hallward. “Since taxpayer dollars have been used to develop these foundations (via charity tax credits), we have the right to expect our money be used to make a difference – and not sit idle, locked away in foundation investment accounts.” Hallward adds: “Delayed Good is less Good. The suffering compounds faster than the money does, in these foundation accounts.”

In addition to Mr. Hallward, there is an increasing call from others, including a strong voice from the Honourable Ratna Omidvar, Independent Senator for Ontario: “In this hour of need, all sectors of society must row together. Private foundations have been generous, but it is time to raise their annual Disbursement Quota (DQ) so that they participate more fully in the recovery from the COVID crisis.”

Per an Ipsos poll in 2020:

  • Canadians are unaware of this growing ‘Charity Gap’: rising demand on charitable services vs. the ability to fund them.
  • Canadians are unaware of how foundations operate, nor that they have accumulated well over $80 Billion in assets.
  • When informed, 87% of Canadians support the idea that foundations be required to grant more to help address this ‘Charity Gap’.

“The additional challenge is that Canadian charities dare not discuss this problem, so as to minimize any repercussions from the proverbial ‘hand that feeds them’. We need the Federal Government to step in and require foundations to do better, as they are not doing so voluntarily,” says Hallward.

Since 1970, foundations have been mandated to disburse a minimum (annual) amount of their funds – the Disbursement Quota (DQ) to specifically prevent capital accumulation. Over the past 50 years, foundations have successfully lobbied past governments to reduce the DQ on four separate occasions. Today, this DQ sits at just 3.5% of assets. Meanwhile, foundation assets have averaged 12% annual growth over the past six years. During this same period of rapid growth, foundations have decreased their actual percentage of assets granted to charities.

The ‘#IncreaseTheGrants’ campaign aims to raise awareness of this rapid growth in foundation assets, and declining granting – to ensure that more dollars are granted each year to help address urgent social needs. The website includes:

  • an online petition,
  • an ‘Email-Your-MP’ app,
  • connections to social media, and
  • a call for Canadians to join the movement to help raise awareness in Ottawa.

Hallward invites all Canadians to express their wishes to see a better and improved policy.

Hallward adds: “This is not just good policy; it’s good politics. Increasing the DQ would immediately trigger billions more in annual dollars for charities, without costing a dime from the public purse.” This effort speaks directly to the 2 million Canadian voters employed in our non-profit sector, and the millions more engaged as volunteers and donors. At 8% of GDP, this sector is bigger than the Automotive, Forestry and Fisheries Sectors. It deserves appropriate support.

Hallward recognizes that some foundations may protest, as they prefer to preserve capital and grow their wealth for future charitable support. He dismisses this as being unsupported. “There will continue to be future philanthropists well into the future. The current rapid growth in private foundations and Donor Advised Funds shows this to be true. We do not need foundations to hold their money for generations not yet born. We need them to apply taxpayer-supported assets sooner to help address social problems, quicker.”

For more information, visit www.IncreaseTheGrants.ca

SOURCE GIV3 Foundation

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