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Intelligent giving, not throwing cash at charities, is how we’ll cure society's ills

Ottawa proposes unlocking extra funds for charitable giving, but that might not be the best answer

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When the federal government indicated in its budget that it was considering raising the minimum amount that foundations and charities are required to give annually, a collective cheer went up in the philanthropic sector.

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Advocates have long argued that the disbursement quota, or DQ, which currently stands at 3.5 per cent, should be substantially hiked. As they see it, foundations’ investment earnings, which are tax-free, have grown exponentially in recent years, and the more money that flows into the charitable sector, the greater social impact it will have.

This seems like a logical assumption, and it’s certainly true that for under-the-radar charities, finding the cash to keep the lights on and develop programs that can help the communities they serve is a daily, Herculean struggle. But while charities that can demonstrate they deserve the funds and will put them to good use can almost always use more, throwing money at the problem alone is not a panacea. Unless you bolster that cash with evidenced-based decision-making, you might as well roll the dice with it in Vegas, because your chances of achieving your goal will be about the same.

During my 25 years of experience in the charitable sector, I’ve learned that it’s not the size of the grant that determines whether funders will have a social impact. It’s whether they understand the difference between effective and ineffective philanthropy.

Effective philanthropists give with intention, make funding decisions based on data and research, educate themselves about the social, cultural and historical context of the issues they’re funding, and understand that results don’t always come easily or quickly.

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Ineffective philanthropists spray and pray.

If you really want to see results, you’ll apply the same principles to making funding decisions that you would to managing your investment portfolio.

Philanthropists who take the time to educate themselves learn that some eminently worthy cancer causes such as breast cancer are over-funded, while more prevalent and often more deadly ones like pancreatic, stomach, lung and colorectal are perpetually cash-starved. That if you want to address the largest human, societal and economic costs related to education, you’ll get the biggest bang for your buck by investing in charities that help kids graduate high school — not by providing post-secondary scholarships, as was previously thought. That if you really want to see results, you’ll apply the same principles to making funding decisions that you would to managing your investment portfolio.

You also need boots on the ground to develop relationships with charity leadership and program staff, ask them about their needs (as opposed to insisting they do somersaults to meet yours), and yes, evaluate their results. None of this is a walk in the park. But in my experience it’s the only way to increase your chances of making a difference.

One example

At the Robert Kerr Foundation, which I oversee, that’s our approach. We’re a small, private foundation with four other directors focused on the basic and urgent needs of children and the homeless.

We have a current annual grant target of $700,000 to $1 million. We choose to grant above the DQ – sometimes within our target, other times outside our target – but we always make the decision based on the evidence in front of us. While we’ve had our heartbreaks, during the almost 10 years we’ve operated, we’ve developed a reasonably bulletproof methodology to ensure we spend Robert Kerr’s legacy wisely – one we’re happy to share.

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Our grant process is simple (we don’t make charities tick boxes or complete migraine-inducing applications, for instance), and our due diligence is concise. We look for charities with a specific funding need, transparency, solid management, cost efficiency and a track record of operating almost maniacally client-success-driven programs. We also ask them to think beyond their immediate needs, to those down the road. And finally, we’re willing to bide our time to see results.

We’ve witnessed high school re-integration rates climb for student dropouts who were grade levels behind, who, with the right kind of support, re-engaged, caught up on credits and either attained their GED or rejoined mainstream schooling and graduate. We’ve provided housing accreditation, training and employment for hundreds of marginalized individuals in the greater Toronto area. And when COVID-19 hit mid-March last year, because harm-reduction in chronic homeless populations is crucial, we sprang into action with partner Knix to provide PPE to 85 Toronto shelters weekly.

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One charity we support is Sanctuary, which provides dignified community care and support to the vulnerable, homeless and street-involved in downtown Toronto. Over the years we’ve funded their drop-in food and nursing program, and currently we are partnering with them on a proposal to build a residential healthcare centre for the city’s vulnerable.

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If it happens, it will be the most significant grant the foundation has made to date. But 15 years ago, I probably wouldn’t have funded Sanctuary because I was into grant-making by ticking boxes, and Sanctuary’s work simply doesn’t fit neatly into one.

Will the government raising the DQ mean that cash will suddenly start pouring into charities like Sanctuary? Not unless funders know about them. They’ll just keep spraying with a bigger hose. Which is crazy, because despite what you may have heard about how charities’ pockets have been crushed by COVID-19, this year our foundation has received the fewest funding requests it has ever received since I started in 2013.

We won’t know how charities fared during COVID until we review their financial statements a year from now. But many of the ones we support tell us they’re doing okay, some even operating with a surplus, because the government and their existing donor bases have stepped up.

Don’t just turn on the tap

Federal lawmakers, if you’re listening, don’t just turn on the tap. Incentivize foundations to spend in their communities and challenge them to collaborate on targeting specific issues in each sector and provide the granular solutions that government either can’t provide alone or simply isn’t nimble enough to act on.

Foundation directors, ask yourself whether your grant-making process is helping you make the kind of difference you want to make. If not, revise it. And look inward. No matter how sophisticated a philanthropist you think you are, chances are there’s a lot more you can learn. Then share what you’ve learned and partner with like-minded funders to achieve more.

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Individual and corporate donors, avail yourself of the plethora of resources to help you make evidence-based decisions, then contribute to the causes you care most about. Government and foundations can’t do it all.

Charities, actively measure and share your results, educate your donors on what they don’t understand and aren’t getting right, and don’t be afraid to show them your warts and moles, or brag about your cost-efficiencies and impressive results. Grant-seeking time is no time to be humble.

A little extra cash can go a long way, but unless it’s accompanied by a little learning, you’re just throwing it away.

Bri Trypuc is a Toronto-based independent philanthropy consultant and a co-creator of Charity Intelligence Canada. She is also the Executive Director of the Robert Kerr Foundation, a private foundation committed to addressing basic and urgent needs to improve the lives of children and the homeless.

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