Put philanthropic funds to work now

Think Philanthropically

Most people agree that it is foolish to respond to a major crisis with half-measures.  It is generally advisable to act decisively and deploy a disproportionate amount of resources so that the crisis can be eliminated quickly and effectively.  When we know what needs to be done – and we have the necessary resources – we ought to act right away.

“The total asset value of Canadian philanthropic foundations was approximately $123 billion in 2020, yet these foundations only issued charitable grants of around $8 billion that year.”

Philanthropic foundations were established to permit funds to accumulate tax free so that they could be deployed at the right time. Now is the right time – later will be too late. The total asset value of Canadian philanthropic foundations was approximately $123 billion in 2020, yet these foundations only issued charitable grants of around $8 billion that year.  Did they need to retain 93% of their assets for some future rainy day?  It would seem that 2020 was plenty rainy – and there are a number of critical issues that need to be faced from now to 2030.

How we respond to the compelling social challenges in this decade will frame the kind of society that will emerge in the 2030’s and beyond. We need to invest significantly to address the affordable housing crisis, poverty reduction, educational opportunities for marginalized groups, care for vulnerable seniors and a better approach to deal with waves of immigration that result from war and political uncertainty in our world.  Canada must also build bridges to begin to address the destructive consequences of colonization of our First Nations, Metis and Inuit communities so that pathways of reconciliation can emerge.  Will this require a robust ongoing financial investment? Yes, however, the cost of doing nothing will be far more significant than the cost of making significant, targeted investments right now.

There is a bit of an urban myth that is often repeated by well-meaning people. The myth is that the system is either broken or overwhelmed and there isn’t enough money available to solve the major challenges we face. The truth is that there is a great deal of money that can be thoughtfully and responsibly deployed.  It is simply sitting in the investment accounts of major philanthropic foundations.

The good news is that, for the most part, we know exactly what needs to be done.  The less good news is that our various levels of government are not acting in a coordinated fashion to allocate sufficient funding to implement the social policies they have announced.  Elected officials need to treat complex social concerns in a non-partisan manner, one that transcends the typical federal/provincial/municipal jurisdictional squabbles.  This lack of governmental coordination is compounded by the reality that many philanthropic foundations continue to hold onto donated funds.  The intention of the money in philanthropic foundations is to act with our governments to fund the agencies on the ground that will bring solutions to bear on today’s major social concerns.  Unfortunately, some foundations are far better at growing their wealth than distributing it.  This needs to change.

“The cost of doing nothing will be far more significant than the cost of making significant, targeted investments right now.”

Foundations must focus on developing more robust disbursement strategies in order to address today’s problems. Some are stepping up! The worst case scenario is that a foundation might distribute all its funds.  A few actually plan to do precisely that.  Isn’t that a better idea than holding onto money that could be used responsibly to address the today’s needs?  A philanthropic foundation need not exist forever. Actuarial estimates suggest that we will see a generational wealth transfer in North America of more than $65 trillion by 2040.  More money will become available in the future.  Why not use the resources we have right now, in this decade, to help bring about the changes that we all want?

Sam Watts serves as the CEO of Welcome Hall Mission  www.welcomehallmission.com  He serves on several non-profit boards and is an appointed member of the National Housing Council of Canada.  He is the author of Good Work…Done Better www.goodworkdonebetter.com