An impressive share of the money that supports Canadian causes is administered through private charitable foundations. A 2024 report from Philanthropic Foundations Canada, authored by Michele Fugiel Gartner and titled An Evolving Landscape: Reflecting Canada’s Philanthropic Foundations, finds that Canada’s 6,225 private charitable foundations manage over $87 billion in assets. In 2021, they gave away more than $5 billion.
Given the impact of their contributions, it’s clearly in everyone’s interest to nurture well-run family foundations, so we’ve asked the experts to name some of the top governance dos-and-don’ts for foundation board members who hope to continue doing good long into the future.
DON’T ignore the tedious administrative details.
What could be more inspiring than using your family’s resources to change the world for the better? And what’s duller than spending your weekends compiling documentation and filling out forms?
The vast majority of family foundations are relatively small—managing less than about $5 million in assets—and don’t have paid staff, notes Hilary Pearson, a Montreal-based strategic advisor to family foundations and former founding president of Philanthropic Foundations Canada.
The fact that responsibility for governance falls entirely on the board is a mixed blessing, she says.
“The advantages are that they know each other well, it’s a shared family project, and there’s a lot of commitment, energy and passion,” Pearson explains. “The weakness is that the family does not think of themselves as board members of a foundation that is registered as a corporation and as a charity. Both impose certain obligations on family board members, and a lot of family members do not know that.”
DO invest in educating your directors.
It’s easy for well-intentioned people to fall afoul of the regulations governing private charitable foundations. “The board has to be aware of the possibility of conflict of interest, and perhaps even more so than on a board that’s made up of unrelated people,” says Pearson.
“Family foundations don’t belong to the family,” she adds, so “even a small family foundation would benefit from a session in which it educates itself on the roles and responsibilities of board members.”
Pearson also recommends drawing up a simple document for board members that outlines the essential roles and responsibilities as defined by federal and provincial not-for-profit corporation legislation and the Canada Revenue Agency.
It’s key that members truly understand the nature of the board, says Jean-Marc Mangin, president and CEO of Philanthropic Foundations Canada, who divides his working time between Montreal and Toronto. Typically, a board will evolve over time. “Are you an operational board or do you have staff?” he asks. Understanding the roles of board and staff helps prevent conflict between the two parties.
DON’T fail to develop your up-and-coming leaders.
“A family can be very powerful,” Mangin says. “You can really leverage the family advantage, but when it doesn’t work well, it can be one of the most ineffective organizations.”
The handover to the next generation presents a particular risk to the stability of the organization. “When you go from generation to generation, make sure the value and vision get articulated on various occasions,” he says.
“When members of the family have been invited to have a seat at the table but are not given a voice, that is often when we see conflict or disappointment and where clear expectations and roles are helpful,” says Dr. Sharilyn Hale, the Toronto-based founder and principal of Watermark Philanthropic Counsel.
“For foundations that want continuity, rising generations can be involved whether or not the founder plans to exit, and the ability to collaborate intergenerationally is critical,” Hale says. “Focusing on leadership and skills development ensures the family has the capacity to navigate whatever the future brings.”
DO take time for visioning and goal-setting.
Mangin sets a high value on the articulation of a family vision, saying that “too often people just skip over that exercise.” Failing to get it right “may essentially result in the creation of a series of mini-family foundations, diluting the impact, with people being frustrated that the foundation’s not achieving what it could do. It’s good to bring different perspectives, but in the pursuit of the mission.”
Pearson points out that it’s important for families to come together around the reasons the foundation exists in the first place.
“The family foundations could do more thinking about what they could be doing as a foundation,” she says. “I think the cheque-making function is an under-utilization of a foundation—you don’t even have to have a foundation in order to have an endowment. If you do the work of setting up a foundation, there’s tremendous power in it, but you have to do the work of establishing a vision for the organization.”
DON’T expect the foundation to heal broken family relationships.
If the family members aren’t already operating cohesively, a foundation isn’t going to be the glue that unites them—quite the opposite, in fact.
“It’s common advice for families to set up a foundation and do philanthropy collectively, without considering their ability to work together or whether that’s the best approach for them to express their generosity,” says Hale.
“Some founders will set up a family foundation with the hope and expectation it will bring the family together. However, for families that are already having relational difficulties, this has the potential to do more harm than good.”
DO get non-family members involved.
“Even a small family foundation will benefit from having some non-family members on the board,” says Pearson, who notes that this can buffer family dynamics.
Mangin says it’s natural for an evolving board to bring in more outsiders over time. “In a mature foundation, you will see an increasing number of external voices,” he explains. “More of the successful foundations have been very good at bringing the right voices to the board table. The real experts are the ones who are your partners, doing the hard work. The people who receive your funds really understand what’s making a difference.”
In short, establishing and maintaining good governance of private charitable foundations requires a long-term commitment.
“Good governance is never done,” Mangin says. “It’s not a checklist—a checklist is useful, but it is not culture.” What does matter is “building the right culture and understanding that even though you have been quite successful in business, the worlds of not-for-profit and charity are quite different.
“Your mission is in service to the public good,” he continues. “It is a life-affirming purpose. At a time when the ties that bind us are being weakened, we can still make a positive difference in people’s lives for the most vulnerable people in the country, but to do that you need good governance: policy supported by good structure and good communications protocols.”
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