This article is part of our February Special Report on Philanthropy in Canada. To see all the articles, click here.
On Feb. 26, Canadian Family Offices hosted an expert panel, sponsored by PBY Capital, that took a deep dive into Canadian philanthropy. Among the topics covered: what younger philanthropists are interested in, DAFs, passing the philanthropic baton to the next generation, and much more. The one-hour panel was attended by more than 500 registrants.
The panel featured:
- Ron Bernbaum, CEO, PearTree Canada
- Dr. Sharilyn Hale, principal, Watermark Philanthropic Counsel
- Julie Quenneville, CEO of the UHN Foundation
- Danielle Robinson, national director, philanthropic advisory services, BMO
Here is the full transcript of the panel discussion:
*This transcript is provided for convenience and is based on the audio recording of the video. While efforts have been made to ensure accuracy, minor errors are possible.
Joe: Hello, and welcome to the Canadian Family Offices’ panel on philanthropy. I’m Joe Chidley, managing editor of Canadian Family Offices, and it’s my pleasure to be moderating today’s discussion. We’ve assembled a star-studded team of experts for you today, and I know we’re all looking forward to an engaging and insightful conversation.
But first, I’d like to acknowledge our sponsor. This panel and the special report on philanthropy that we’ve been running all month on canadianfamilyoffices.com are presented by PBY Capital, who is also the title sponsor and the founding member of canadianfamilyoffices.com. So, thank you to all the folks at PBY Capital for their ongoing support.
Now, to the subject at hand, we have titled this event Who will give? Philanthropy and the next generation.
The basic premise is this: fewer and fewer Canadians, in general, seem to be donating to charities every year, older, wealthy donors are taking on an even bigger share of philanthropic support. But what happens after they’re gone? Will the next generation step up to the plate, so to speak? And if they do, how will their philanthropic priorities and expectations differ from those of their elders? And how can families, advisors, and charities help ensure meaningful transition to the next gen, not just of wealth, but also of philanthropic legacy?
Those might sound like big questions, but our panelists today, I know are more than equipped to answer them in full, and they’ve graciously accepted our invitation to do so. So, I will let them introduce themselves.
Who wants to go first? How about Sharilyn?
Sharilyn: Thank you. I’m happy to be participating in the conversation today.
I’m Sharilyn Hale with Watermark Philanthropic Counsel, and I’ve spent my career in the philanthropy and social impact spaces. And these days, I have the privilege of working with generous people and families to help them give with purpose and with clarity, and to support their aspirations around family continuity.
I also wear a research hat, an academic hat, produced some research on multi-generational family philanthropy in Canada. And I am engaged in Canada’s only graduate program in philanthropy and non-profit leadership at Carleton University.
Joe: Okay. Thank you, Dr. Hale. Ron, do you want to go next?
Ron: Sure. My name’s Ron Bernbaum. I am the Founder CEO of a company called PearTree Canada.
We productized the use of flow-through shares (FTS) about 20 years ago for philanthropic purposes, basically reducing the after-tax cost of giving for philanthropy and work alongside family offices and advisors in assisting people to give more.
We have an applied tax practice where we’ll be called by an advisor to say somebody has a major life event, or there’s a next generation play that’s going to require some tax planning. We will assist in that and if our approach works, great and we’ll apply it. If it doesn’t, we are not, we’re always keen to assist people on how to give more for less after-tax costs. And we do that. We’ve been doing that now for 20 years, and we’ve sourced for donation purposes over $5 billion of flow through shares. And that’s all we do all day long.
Joe: Okay. Alright. Good. Let’s turn to Julie.
Julie: Hi, my name is Julie Quenneville, and I’m the CEO at UHN Foundation in Toronto. So, it is just named yesterday, Canada’s number one hospital and the number two best hospital in the world.
I started off my career in journalism, and so I wanted to change the world through my stories and quickly discovered that it wasn’t moving fast enough for me. And I jumped into politics and government, and I worked as associate chief of staff to the health minister in Quebec. And then I moved from there into the hospital setting, as a senior manager for about a decade, serving in a number of different roles that are really focused on transforming healthcare.
I was asked to step into a role in philanthropy. And it wasn’t what I was expecting to be doing with my career, but I have been blown away with the opportunity when I saw healthcare from a policy perspective, from a civil service perspective. Now, the opportunity to see what can actually be achieved using philanthropy as the change agent has been fantastic. So, I served as CEO to the MUHC Foundation in Montreal for about eight years, until I joined UHN three years ago.
Joe: Okay, great. Well, pleasure to have you, and congratulations on that number two in the world slot. Somebody was joking before, why weren’t you number one, but …
Julie: Soon to come.
Joe: Soon to come. Yes, onward and upward. And last but not least, Danielle.
Danielle: Good day, and thanks so much for including me in this very important conversation today.
So, my name is Danielle Robinson, and I am a national director of philanthropic advisory services with BMO Private Wealth.
So, I spend my day as part of the specialized wealth planning colleagues across the country, meeting with our high-net-worth clients who have identified philanthropy as an important piece of their wealth planning journey.
And so, we really talk to them a lot about the differences between donor-advised funds, private family foundations, different strategic granting approaches to their philanthropy, and really just help them get started to do good across the country and within the world.
Joe: Okay, great. Well, thank you all for the introductions of yourselves. That took a lot of work off my plate. And let’s get to it because we have a lot of questions to get through.
We probably won’t get through all of them, and it includes an unprecedented number of questions from our attendees today, our guests today. I should note that we also had a record number of registrations for this event. We’ve had quite a few of these events in the past, and we haven’t seen as much interest as we have today, so no pressure. But let’s get to it.
And I think it’s a good idea maybe to begin with some definitions about who exactly we’re talking about here when we talk about the quote unquote “next generation,” because that can mean a lot of things, right.
Sharilyn, you had some thoughts about that.
Sharilyn: Yeah, I think context is really important for this conversation because next gen is used to denote different concepts. So, in the family wealth space, for example, next gen or rising gen typically references family members who do not yet hold the wealth or power within the family but will be moving into those roles. And so next gen in that context is actually not necessarily related to age.
And so, you might think of the example of Prince Charles, right? He was in his 70’s when he became a king. I also have a very dear friend and colleague who is in the next gen position within her family. But she’s taken a significant leadership role in her family’s foundation for over 25 years, right?
Next gen is also used as a descriptor for just young people, right? Younger age cohorts. So, Millennials, Gen Z, Alpha, and from a philanthropy perspective, they may be inheritors or anticipate being inheritors. They also may be wealth creators and doing their philanthropy without the broader context of a family system.
So, both generational age and age cohort, I think, are important lenses for our conversation today. But they are distinct and two different things.
And then lastly, I think it’s important to acknowledge that the term next gen actually comes out of generational theory, which suggests that we’re all kind of shaped by the moment that we happen to be born into. But generational theory itself is contested, on the basis that we’realso informed by lots of other stuff, right? Our, the family that we’re born into, our economic status, and just human lifespan development.
And so, as we talk about next gen philanthropy and trends and observations, I think the conversation is enhanced by being clear about our terms, and also having some nuance, right?
Next gens are not just all one thing and they don’t all behave in one way. But we do have some insights from research and some anecdotes, nothing wrong with that, that just helps us understand each other better. So that’s the spirit that I’m bringing to the conversation today.
Joe: Okay. Well, those are important provisos and things to keep in mind, and when I’m asking questions, I’ll do my best to distinguish between next gen within a family, perhaps, and younger philanthropists, young philanthropists, and then ask you to generalize and make sweeping statements and all that kind of stuff, which you can refuse to do if you wish.
So, let’s get to the questions.
The first one actually comes from a reader, and it’s a broad question, so jump in however you feel appropriate.
What are some of the key issues from your perspective when you interact with, let’s say, young philanthropists, in that sense of next gen? What are some of the key issues that are driving their interests and their preferences when it comes to philanthropy?
Julie: Maybe I’ll jump in and it’s hard to generalize because they’re also completely different.
If we’re looking at second and third or fourth generation families, the younger generation wants to differentiate themselves and be seen and be heard, and that’s often difficult. And so, we have created opportunities for them to be in leadership roles, and so that they have a voice that is separate from their family members, and so that they can show that they deserve to be at the table and are not there because of their genetics.
So, for us, that’s been a really important transition to develop a relationship directly with every generation of every family. And the only way that you can manage to do that is to develop separate relationships.
But in general, if I’m looking at the next generation, their preoccupations, all of us, our preoccupations are based on our life experience at that moment. If you’re in your twenties, you’re really focused in on your professional development. And so, providing them an opportunity to benefit their careers is extremely important. They’re worried about the environment, they’re worried about the world, but they’re also worried about money, and they’re worried about their own capacity. So, they don’t have, they’re not worried about their legacy as their parents or grandparents would be. They’re really worried about making it in life and being able to have an opportunity to thrive. Philanthropy can offer that.
Joe: Yeah. So is making it in life is, so, philanthropy is a piece of that idea of making it in life.
Julie: I think philanthropy can be a powerful force to help young professionals penetrate a market and be seen, be heard, develop a new network, and find new mentors.
I actually started off, before I ended up leading in philanthropy, I was actually volunteering for a number of organizations, and it was such a wonderful opportunity to meet people who were senior business leaders in the community, who took the time because we were volunteering together to listen to me and to coach me and to mentor me. And many of them became my mentors through life. So, I do think that philanthropy, the experience of getting involved and getting outside your comfort zone, is absolutely essential to thriving in a professional life.
Joe: Right. Okay. Thank you.
Danielle, from your perspective, what are you seeing among younger philanthropists that might be different, perhaps from their elders?
Danielle: So, working with families across the country in multiple generation families, certainly, I want to echo what Julie said about really giving those younger family members a voice. Their voice really does matter. Their passions matter.
You know, value systems do transcend along generational lines for sure. But meeting them where they’re at, the time that they have, and providing different ways for them to engage is really important. And so, my recommendations for any of the charitable folks who are on the calls right now or investment advisors, is really figuring out how to engage with those folks in terms of where they’re at and providing opportunities that might be a little bit different. And then also finding some of those points of intersection between generations that they can collaborate and work on.
So that would be some of my recommendations in some of the things that I’m seeing.
Joe: Okay. Great. Ron, what about from your perspective, jump in.
Ron: So, if I may add, and this is whether you’re building legacy in your own businesses, we see it, we see a lot of transfer of wealth from one generation to the other, so engagement of the next generation. But I think the bigger piece from our perspective quite often is disengagement from the founders of the family business.
They’re not, in our experience, we’ve often seen the same behaviours in not wanting to lose control of the business and not wanting to lose control of the family foundation or the Donor-advised Fund instructions. And quite often that frustration is obvious, and anecdotally in the last month, I’ve seen it three or four times. And it doesn’t matter whether the next gen is 55 years old or 32 years old, those are two actual examples over the last couple of weeks. So, engagement by the younger and disengagement, get out of the way and let them come back and do what they want to do and trust them to do it.
Joe: Yeah, that’s interesting. And it speaks to one of the questions that is also from a reader. Like what challenges are the younger generation facing in making themselves heard and having a place in the sort of philanthropic life of a family?
Sharilyn, do you have any perspective on that?
Sharilyn: You know, it goes multiple directions, right?
So, there are actually some wonderful examples in Canada of very generous families that have really created beautiful, I call them on-ramps and exits, for family members to engage and actually hold leadership, genuine leadership where they have voice. So, we have those examples too.
And sometimes I will hear from parents or grandparents concerned that the next generation is just not interested. That’s another consideration as well.
But certainly, for giving in a multi-generational family context, it’s kind of a dance between freedom and framework. So having enough latitude to actually engage, participate, perhaps have access to some granting funds so that they can begin to develop their own philanthropic identity within a broader system. But also, to have some kind of a framework to work within. Because one thing that I hear from philanthropists and not just next gen philanthropists, is often a sense of just being overwhelmed, right?
There’s so much need in our communities, and so many organizations, like where do you start? And I appreciate Julie’s reference to volunteerism and getting engaged and getting involved. It’s such an important pathway to better understand life outside whatever bubble we live in, right? We all live in bubbles. So, philanthropy can be very powerful in that way as well.
Joe: Danielle, I saw you nodding your head there when Sharilyn was talking about frameworks. What do you see as some of the challenges for younger donors?
Danielle: Lack of framework and system, right? Not clearly defined mission statements, not clear granting guidelines, not really understanding how to get involved and have that voice really at the table.
Ron mentioned something that I see very regularly, some of the founding donors or that second generation not moving into perhaps coachingor mentorship, right? Not having trust, inherent trust in the family, maybe not having great onboarding in terms of systems that are in place to start to slowly engage those younger generations as early as really early in life, right? Even around the dining room table having just conversations about what is happening within the larger family in the context of philanthropy and how you can start to think about this.
So, you know, I think the more that we can do professionally as advisors to be able to educate families around some of these things and help them create these systems, they don’t have to be overly complicated, you know? But I think having some baselines to work from, being transparent among all family members of what these things are, certainly will help get more people engaged that way.
Joe: Okay. Great. Julie, any thoughts on that? On challenges?
Julie: I think it’s a lack of experience.
You know, volunteering and giving in a small amount and seeing what happens and exploring and meeting charities yourself allows you to gain comfort and gain experience. You can’t suddenly your first gift be a $10 million gift and expect to do this right. To learn anything, you have to try and you have to fail, and you have to learn from those experiences. And so, I don’t see it as a challenge. I see it as a great opportunity, but they have to start young. So having an opportunity, as Danielle said, to contribute to small causes that excite them, that they’repassionate about, and learn from that experience.
Joe: Right. Okay. Good. Well, great.
Sharilyn: I’m just going to jump in, Joe, I think parents have a wonderful opportunity to model, right? Through their doing and their living, as opposed to telling. I spoke with a young person in a family for a project that I was involved in. And one very formative experience he had was his mother bringing home grant applications for the family’s foundation. And they were sitting there on the table and she said “Here, why don’t you have a look at these?” And that exposure to the commitment of time, number one, how much time it takes to go through reading all of those things. But it was an education for him in terms of understanding the needs in his community, in his country. How do you assess these things?
Another family has shared an example of sitting down with their kids to talk about the gifts that they’ve made, right? How much it was, why they chose that organization, how did they determine the amount? Some of the more nuts and bolts types of things, that’s real modeling and mentoring, that prepares heirs and inheritors and family members for a future in giving.
So, it’s not just like out of the blue, “okay, now it’s you coming to get involved.” It’s starting very young with that exposure, and them seeing what you’re doing and hearing you talk about it.
Joe: Yeah. So, so by very young, what do you mean what’s a good time to start? Never too young?
Sharilyn: Never too young.
Joe: Yeah. Okay. Good. Any other thoughts on that before we move on to the next question?
Because we’ve talked a little bit about the why, what’s driving younger generations, some of the challenges they face when it comes to philanthropy. Have you found that they are interested in other granting focuses, other philanthropic interests?
Like, you know, off the top of my head, traditionally healthcare, the arts, education are big for the current sort of cohort of big donors. Is that likely to shift as we move towards the younger generations?
Ron: If I may, just a very very very general comment. Most of the folks that I know in that next, in the 30-to-40-year range have a lot less interest in the United Ways, the aggregators of donations. They don’t want to just hand their money over and say, here, we trust you to allocate it the way it ought to be allocated.
We’ve seen quite a number of websites now that have come up that actually do the diligence on recipient charities. And you can donate through those sites based on that diligence or reach out to the charity.
So, I think the intermediaries might be waning a little bit in favour of direct participation or direct line of sight into where the money is going to and measuring the value of that through social IRR and other things that are more common these days than they certainly were 20 years ago.
Joe: Hmm. So, you’re saying they’re a little more focused on metrics and impact, perhaps.
Ron: And a direct interaction with the recipient charity, rather than, say, going through one of the city foundations or one of the major aggregators of donation dollars.
Joe: Right. Okay. Any other shifts anyone else is seeing on that front about where they’re giving?
Danielle: Certainly, I’m seeing a shift here, even within families that I am working with around their foundation tables away from some of the more institutional type giving.
When you think about DEI, mental health and wellness, you are thinking about environmental impacts, conservation efforts, these types of things. Really this overarching theme of marginalization and breaking down barriers. These are some of the trends that I’m seeing around the families that I’m working with.
But that’s not to, and grassroots, you know, I hear that word a lot. “I want to work grassroots, really localized in my community.”
I think these things are all very good, but I also think that there is a place for institutional and grassroots or some of those things to be happening together, right?
When you think about healthcare systems, when you think about educational systems, a lot of the things that I just spoke about, you can be granting to those efforts within these institutions, right? Or you can be actually pairing education, art, healthcare into a grassroots level within community as well. So, these are some of the things that I do speak to families about.
Okay, you know, if your grandparents are really interested in this and you’re now interested in this, there are places that we can, both generations can work together for impact, to achieve both of your goals and your areas of interest and values and passions.
Joe: Okay. Great. Julie, do you have something you wanted to say there?
Julie: Yeah, I agree with Danielle, and if we look back maybe two generations ago, most families simply wrote a number of checks, large numbers of checks. We had a donor in Montreal who used to take the deficit of the hospital every year at the end of the year and write a check for a couple of million dollars.
And so, charities became very dependent because they were giving to institutions and they would cover all of the institutions in their community. But today, and we’re seeing this in the younger generation and their parents as well, is people want to see impact.
They want to live it, they want to feel it, they want to make sure that it’s not going to get lost in a pot somewhere. They want to know exactly what it’s going to do and how it’s going to change the world.
And the relationship between the charity and the donor is extremely important because we want them to be excited and proud about what they’ve achieved. We have certain families where their philanthropic investment, even though they’ve built a multi-billion dollar company, their philanthropic investment is one of the things they’re most proud about. And it was most unexpected for them. But it’s up to us as the charities to be able to bring them in and show them their opportunities for engagement and impact.
And I’ll give you one final example. We launched a couple of years back, a center for social medicine within the hospital. And there was a generational gap at first where we found that a lot of people didn’t want to talk about homelessness. And a lot of people reacted to saying, well, hospitals shouldn’t get involved, except the problem is there, and we have an opportunity to be part of the solution rather than just close our eyes.
And the initial donors were mostly younger generations. A lot of big families came and said, well, my kids really want us to do something here, and so we’d like to talk about it.
We’ve now raised nearly $40 million in this last 18 months, and we’ve transformed how we care for homeless populations and is now being rolled out across the country. So, this is, again, a generational shift. The conversation was initially launched by a younger generation, but made possible, of course, through family dynamics.
Joe: Yeah, that’s very interesting. So that also speaks to local impact and more of a hands-on approach. Is that something you see too, Sharilyn, that they want to be more involved both on the volunteer level, but also seeing direct impact of what they’re doing?
Sharilyn: Yeah, so this is where it gets tricky. And I’ll say that there is data that supports that observation around interest in movements over institutions. And I do think that that’s something really important for the charitable sector in Canada to really wrestle with and do all the things that Danielle and Julie have offered in terms of suggestions.
The reason why I am kind of reflecting on the question is, you know, if we look back even in the history of Canada, we have a young history relatively on a world stage. We had the women’s movement, civil rights movements. These were funded by philanthropists and by volunteers to mobilize. Now, what came out of the development of those movements in some cases have been institutions, right? And so, I don’tnecessarily agree that older donors are not interested in movements. They did it, right?
And so, I think that’s a point of nuance in the conversation. Could it be that younger donors at that life stage are more activist and more wanting to see change. I think that’s a very compelling argument. I have known younger donors who are deeply committed to institutions. And I’ve also seen in research the reference to social justice and to the environment. But we’re also seeing things come in cycles, right? We’re also seeing that environment is not cracking the list of philanthropy in Canada, it’s like 1.5% of giving. So, I think there’s a lot to unpack.
And the last comment I’ll make in this context is around data. We have very weak data in Canada related to philanthropy, to charitable giving writ large, let alone next gen philanthropy. And it’s a material gap for our charitable sector. It’s a material gap for philanthropists and for generous families. And we always default to US data, US statistics, and thinking and research that comes out of the US. It can be helpful and can inform conversation, but we do need to commit to better research and data here in Canada.
Joe: Hmm. Yeah, that’s interesting. And it’s something actually that, especially as someone who covers the high-net-worth, ultra-high-net-worth sector on a daily basis, it’s something that we find all the time, not just when it comes to philanthropy, that may speak to numbers more than anything else.
I’m going to switch it up a little bit and dive back into something that all of you have talked about a little bit: Best practices. So, within the family, family dynamics. And first, let’s take the viewpoint of the older generation, right? Maybe the founding generation, maybe second, third, fourth, but they’re older, and they want to pass along their philanthropic legacy to the next generation.
Sharilyn, you’ve talked about this a little bit as have all of you, but let’s dig a little more. Are there things on what specific tactics or strategies to get younger people more involved at an earlier age, sitting on foundations, setting up different structures, all that kind of thing. Could we elaborate a little bit more on that?
Jump in, anyone.
Sharilyn: Thank you. You know, what do we mean by legacy? Is that we want our kids and our grandkids to be as excited about cause X or cause Y as I am.
Beautiful remarks from a very noted philanthropist in Canada. I had the opportunity to interview her a couple of years ago, and she said, our legacy, her and her husband, our legacy is not the foundation. Our legacy is the spirits of generosity and service and civic engagement that we see in our children and our grandchildren.
And it was such a meaningful experience for her to be able to see that and to be able to express that, right? So, I think that’s a beautiful framing as we think about philanthropy and legacy and what that can look like in families.
And if you start there, then you know, the world’s your oyster in terms of ways and practices and strategies to engage. I’ll just reiterate, show what you’re doing, model, lead by example. I think that’s the best way. And then freedom to engage in those frameworks so that they have some support. They have the degree of support that they need to be able to do what they might want to do.
Joe: Okay. Alright. Anyone else have any more thoughts on that, on best practices? Frameworks? Danielle, you mentioned frameworks before. What does a framework look like when it comes to philanthropy?
Danielle: You know, again, working with family foundations, just in multiple generations and actually in multiple family branches within the foundation, you know, we spend a lot of time, or I spend a lot of time on values and really understanding where the values are within the family, what some of those passion points are, reviewing the mission of the foundation every few years to see if it’s still on track and still resonating, still meeting the needs of the community or the geographies that the family is supporting.
Some of the, as I said, granting guidelines, like really having some of these just baseline things written down and almost governing pieces that don’t have to be overly complicated, but that people just have a base understanding of what that looks like and how they can contribute to those pieces.
I spend a lot of time also just identifying points of conflict within some families around how they deal with those pieces, and communication strategies and those kinds of things.
How you get your voice heard, or some of the things that you’re wanting to look at.
And then when we talk about framework as well, I don’t know if it was Julie or Dr. Hale, but having the understanding what the capabilities and level of sophistication is within the family around their own philanthropy and what they’re trying to achieve, and ensuring that either there’s staff in place to support some of that work, administration, governance, making sure all that due diligence is happening properly. I think that that’s understated sometimes.
Lots of family foundations think that they have to do this all on their own, and it’s all volunteerism. But having some support or consultants to help you through some of this work is also good best practice to help even identify some of these things.
Joe: Yeah. Thanks for that, Danielle. And do you find, Ron and Julie, in your interactions with donors, do you find that they generally havethese sophisticated frameworks and protocols, or is there a lot of seat of the pants kind of stuff going on?
Ron: If I may, I think we see everything through the lens of tax, essentially.
When we’re called upon to help out, it’s to potentially get people the ability to give more rather than on an after-tax basis than they otherwise might have given.
I think one trend we’re seeing is, I think I said this maybe last year, and that’s I’m seeing more planning for when the family no longer lives in Canada.
I think with the continued tax rates being what they are, I mean if we look at the great philanthropist Pierre Lassonde who, you know, was a co-founder of Franco Nevada, he’s now living in Switzerland. And what I’m seeing a lot of activity in the tax community is families where at least the older generation is thinking of leaving and will have a significant tax liability when leaving on deemed dispositions when you leave Canada, like deemed dispositions on death. And they’re now planning their philanthropic giving on a tax basis where we know of one family in Montreal, Julie, that rather than writing a check for a significant amount of money like $700 million to the government of Canada, was able to donate pretty well all of that to charity in a structure, not our structure, but a structure that we’re very familiar with, that basically ended up putting $700 million into a city foundation, into a donor-advised fund. And we’re seeing more and more of that planning.
I think, you know, as we see more of those things these days about GDP per capita in Canada is now less than Alabama, and you know, people recognizing tax rates continue to be horribly high, I think we are seeing that a lot of the folks that otherwise might have been around to assist in social causes, 10 years from now might not even be here 10 years from now. But the good news is that those funds will likely remainin Canada.
Joe: Hmm. That’s interesting.
Ron: That’s just a trend line that seems to be picking up a lot these days. But it could be that we’re just in that sector and we only see that subset of activity and thinking.
Joe: Yeah, yeah, yeah. But I think it speaks to the mobility, probably, of the younger generations as well, right? Who are now, as a function of their privilege, for lack of a better word, are also global citizens too, right? So, focus may be further afield as well. So that’s interesting.
Julie, what do you find, is there a high level of sophistication in terms of governance and frameworks when it comes to philanthropy in the people you interact with?
Julie: There are many, many families that are unbelievably sophisticated, and have a history, and a lot of business leaders who then decide to create their family foundations are very sophisticated and very strategic in their investments.
I think for sure, there are moments in one’s life where there is a decision to be made about philanthropy that is probably for tax purposes. Those are not the families I interact with the most.
But that doesn’t take away from the fact that it’s an opportunity to start investing in philanthropy. And what, the only thing that bothers me as a philanthropic leader is, to me, philanthropy is about changing the world. It’s about changing our communities. It’s about having a powerful impact to actually make good and create something that is tangible that will be a benefit to everybody. It is the power of philanthropy to truly change our communities.
When you look at the donor-advised funds, we’re sitting on more than $16 billion of donor-advised funds across the country, and many of those were created for specific tax purposes at one time, and those individuals, those families thought, I will reflect on my best way of getting involved.
I do hope that they do think through how they want to invest those, because if we’re thinking again of philanthropy as a way of investing in our communities and bringing about change, if we’re just sitting on funds, and it’s the same argument with all charities, we shouldn’t be sitting on the funds that are raised and donated. We need to put them to work. We need to make change today, and there will be donors in the future who will make sure that they continue to give. We hope the next generation and next generation after that will be involved. If we stop donating to our communities at this time, many institutions will fall apart. We could never be the number two best hospital in the world, the only one in the top 10 that is universally accessible, if it was not for philanthropy. Philanthropy created that, brought in all that talent from around the world. And can you imagine if overnight for tax purposes, all of that philanthropy would disappear? These institutions that we’ve built would completely disappear.
So, I dream of the day that we put those donor-advised funds to work. There are 10 funds that represent 76% of the funds that are available in this country. That to me is an opportunity for us to do something extraordinary.
And, you know, we talked about the environment before. I’ve seen the same, where there’s a lot of desire to invest in the environment, but there have not been enough solutions put forward where their small injection of funds would actually make a big difference. And that’s what we should all be thinking about. That’s what I think about every day, is how can I offer an opportunity to make a difference in a sector where we’re all concerned about it.
Ron: If I can add just one comment to Julie’s comment, that is, we are registered lobbyists, both federally and in a couple of provinces. There’s a lot of discussion at the federal government level, especially, about taking family foundations and donor-advised funds and increasing the disbursement quotas such that if you set a disbursement quota of 10%, they’ll self liquidate in 15 to 20 years. And as deficits continue to run, it’s almost inevitable, and this is not something I’m raising, this is something I’ve observed, I’ve actually seen some of the briefing memos about increasing those disbursement quotas so that the family foundation that was expected to run for three or four or in perpetuity may very well find that under new legislation you may find that there’s a lifespan of 15 to 20 years.
And to Julie’s point, I think you’d see that it’s a good thing. Unlocking the tens of billions of dollars might be a very good idea.
Julie: But you would expect that new cash injections would come into those family foundations unless they were created at a moment in time where there was a sale of 100% of your assets to put it in. But a lot of these family foundations that we interact with, there’s still a family business, a family capacity, everyone is earning an income and there’s a contribution towards it. So, that’s the question.
And if you look at the donor-advised funds, many of them were created at one time. If we think about how much was donated in the past on an annual basis, if you think about philanthropy on an annual basis, we should be continuing to grow these if that is the purpose, we should be continuing to inject directly into the community and into these funds.
Sharilyn: So, I’m not an ambassador for donor-advised funds as such, but I’ll just highlight that the payout for donor-advised funds is over 10%, which is significantly higher than private foundations. And the average DAF account in Canada is just over $200,000. So, there are some outliers, certainly in terms of very large funds, but writ large across the country, the flow through DAFs is quite significant.
I just want to come back, if I may, given our topic today, Joe, you’ve mentioned a few times around the sophisticated governance. And I just want to flag, I guess, that governance only needs to be as complex as the family and as the wealth, right?
So too much governance, in my work both working with families and also teaching governance, I use the analogy of a guitar, right? When the strings of a guitar are too loose and floppy, you can’t play beautiful music, right? When the strings of the guitar are too tight, you play it and it breaks, right? So, there’s a sweet spot in governance, both corporate governance for a foundation and family governance, which is relevant for families who may use a foundation or use a donor-advised fund for that matter. We need the right amount of governance to allow them to play beautiful music together. So, it doesn’t necessarily need to be overly sophisticated or cumbersome. It needs to suit the family and what their needs are.
Joe: Yeah, that’s a good point. And when I said sophisticated, I should have said good, which is what I really meant.
Sharilyn: Great.
Joe: Yeah. Great. Yeah, there you go.
Sharilyn: Great governance.
Joe: Great governance. Yeah. So keep it, yeah. I think we could do a whole panel on DAFs probably, I think, and maybe we should.
But getting back a little bit to the younger generation and potential conflicts, I suppose, and disappointments on a less heated level, that may come in dealing with philanthropy across generations. What’s the role of advisors to families, family offices in navigating these things?
And this is a question that’s prompted by a reader question, which is, why aren’t there more philanthropic advisors in Canada, given the number of affluent families here? And that’s from our friend Keith Sjögren. Any thoughts on that, the role of philanthropic advisory?
Danielle: Well, I can speak to that from my perspective at BMO Private Wealth. You know, philanthropic advisory, it does sit within our private wealth services, and we are working with high-net-worth families, but it’s philanthropic advisory, it’s estate, it’s tax, it’s cross border, so it’sreally a part of that holistic wealth planning piece. And we talked a little bit about that earlier in that these families are going through that wealth journey and wealth transfer, and I can’t state enough how important is the wealth planning piece in this.
And Dr. Hale, I can’t agree more in terms of the complexity piece. It only really does have to be as complex or as sophisticated as the family itself and their approach to some of this. That’s the same within the wealth planning role too. So, coming back down to the actual philanthropic advisory piece, my role a lot of the time is to get involved with families. They know that they want to do good, but they just don’t even really know where to start, right? They know that they want to make a difference in their own community or across the country and the world.
And so, I think we do have this opportunity to talk to them about philanthropy 101. What is charity? How do we connect some of their values and passions to the things that they’re seeing within their community? Where are they wanting to make a difference?
So that’s a lot of the work that I’m doing with families across the country. And then getting a bit more strategic perhaps in terms of looking at their shorter and longer term, how they want to build some of those legacy pieces. Is it going to be multi-generational? You know, sometimes I’m starting with families and couples with $25,000 in a donor-advised fund structure. So, a lot of the administration governance is being looked after, and they just focus on that grant making piece, right? We help them to sort of do that.
So, I can’t answer the question as to why there’s not more of us given the wealth transfer that’s happening. But certainly, I would say it is an important role. I think it sits within that wealth planning piece in that context for families who are interested in this kind of work.
Joe: Okay. Thanks, Danielle.
Sharilyn: Part of it as well is a lot of people don’t know it’s available, right? That help is available to enhance the giving experience. And I would also say that philanthropy advisory work is also having a moment in terms of the formalization and professionalization, both in Canada but in other parts of the world as well. Where those of us who are doing the work are asking questions: what is the work, how do we define this, what are the domains of practice? Because that’s important for any field of work. It’s also important for philanthropists and generous people: how do they know what type of philanthropy advisor they need?
And there’s been some really wonderful work done in the US, particularly a group called Daylight Advisors. They’ve developed a wonderful competency framework or a model that really parses out what is the work of advising in philanthropy. It’s on their website. It’s on my website as well. But it’s a really important tool to be able to identify and assess an advisor that you want to work with.
We’re all different. Some of us, like myself, I’ve come through from the charitable community. Others come from a tax or law or wealth perspective. Not all philanthropy advisors do governance work.
Some just focus on the wealth planning side; some focus on really developing deep programmatic grant making.
And so, depending on where you’re at as a philanthropist or as a generous family, figuring out what help is available, and then what is that help, what does it look like, it is just emerging. So, I think over time, that will continue.
And it connects to a topic that hasn’t come up, and I know we’re nearing the finish line, but the issue of connection and lack of social connections in our communities, in our societies. We do have data that shows that people with fewer friends give less. Foundations, community foundations across the country have really identified isolation and loneliness as an issue.
And so, as we think about younger givers, next gen givers, this sense of community connection is really important. The younger donors today give less than donors who are older now, but when they were that age. So, there is something going on around the lack of philanthropic investment. We’re seeing lower numbers of givers, and those who are giving are giving more. That’s a problem for the charitable sector to wrestle with, for us all to wrestle with, but of particular concern to the charitable sector.
Joe: I guess that’s both a challenge and an opportunity, right? Because involvement with the charitable sector is a form of social interaction and building a social network. So, let’s talk a little bit about what charities, in the few minutes we have remaining, about from the charity perspective, what can they do to engage the next donors.
Julie, you’ve mentioned some best practices. What are you seeing out there, in terms of getting them involved outside of the family? What can charities do getting them involved in charity?
Julie: Historically, the best way to get involved is to join a board of directors, but that limits us to anywhere between 15 and 30 people. And what we are doing increasingly is creating opportunities for people to be involved, creating leadership opportunities in a variety of different ways. And so, if you think about, in our situation, we’ve created a variety of different campaigns: a cardiac campaign, an arthritis campaign, a transplant campaign.
So, we create opportunities for people who are passionate about very specific ideas and concepts and projects to be involved but also play a leadership role and bring in a network of people.
And so, these are social opportunities, they’re leadership opportunities. It’s a way to be engaged and test your skills at a different level. Not all campaigns and not all opportunities have the same responsibility level. And we’ve created organizations and groups as well for the younger generation. We’ve created a few events that are specifically dedicated at making more friends.
So, last year we launched our very first walk. It’s extremely accessible, whether you’re in a wheelchair or if you are running marathons, you can participate and be part of something that is bigger than you. It was an immense success. We had more than 4,000 people in the first year, and that tells me that people want to be involved. I think in healthcare it’s a little bit different where people patients of a hospital actually want to be asked for a gift because they’re part of it, and it’s a recognition that they are part of the solution. So, it’s a very differentenvironment. It’s extremely engaging. So, we do have a part to play in creating opportunities for them to actually feel like they are having an impact on their institutions.
Joe: Anyone else? Any thoughts on that, on what charities can be doing or should be doing better to engage younger donors?
Ron: I think, I’m not sure that I have a suggestion, but to the point that Dr. Hale made, part of the problem is that the younger generation has less money than we did when at the same age. Times are just tougher.
So, we have that famous K curve. The people at the top are giving more because they have more to give. And the people at the bottom and people in the middle class are struggling under the current situation where they otherwise might have given a few hundred dollars a year to the local hospital and can’t do it anymore because of what’s going on more broadly in society. And that’s unfortunate.
So, I’m not sure that it’s a shift so much in the mindset of younger people. I just think there’s a lack of capacity in the system.
Joe: Okay.
Sharilyn: Religion is also a significant one. Traditionally in Canada, a very large proportion of philanthropy was directed to religious communities, faith communities, churches, temples, mosques. And with the decline in participation in faith communities, I think that has had a real impact as well.
Joe: So, this will be the last question, and it’s a very broad one, so I want you all to jump in. If you could recommend one investment that charities should make today, this is from a reader, should make today to prepare for the next 10 years of donor behaviour, what would it be? So, you only have to put your crystal ball, set it to 10 years from now, what would the recommendation be?
Julie: Maybe I could jump in first. I think it’s to bring in, widen the net, to speak to more people. Historically, we have spoken with very few incredibly generous families, and in order to plan for the future, you have to involve absolutely everybody in your charity and the next generation as well.
Joe: Okay. Who’s up next? You all have to answer the question.
Sharilyn: Multiple touch points, multiple ways to connect, engage, participate, not just one. And speaking to the whole family when you can. I think we have made strides, certainly in the fundraising context, speaking with women donors, for example, or speaking to both members of a couple. But having that broader lens and the examples that Julie gave of engaging younger family members in meaningful ways.
Joe: Okay.
Ron: I think I was just going to add that, I’m not exactly sure how to frame it, but when the people that are logged on to this webinar are family offices and people of wealth and the ability to donate, and it’s their children and grandchildren who take on leadership positions and board memberships, whatever. But in speaking with somebody who is more affluent, trying to speak to someone who’s trying to figure out how to buy their first house or how to pay the mortgage, there’s a disconnect between those who are next leaders in charities and those who we seek to engage with in terms of the broader community. And somehow, I think the big charities have to bring in folks that speak to their peers as opposed to speaking down from others. I see it and I hear it, I see it at galas where the folks that are talking are not really, they’re just addressing, it’s an echo chamber amongst those who can afford to give. And if you’re looking to broaden the base, you need to solicit leaders within that base.
Joe: Okay. And Danielle, the last word.
Danielle: From my viewpoint, I’m going to go back to donor-advised funds actually, because they are growing. They are growing quickly. Often, they’re a place that folks can start before they maybe move into a foundation. So from a charitable perspective, I think setting up your charitable organization and having some resources for people who are making partnerships and connections to those larger DAF charities, and being ready to work with folks who are giving from a donor-advised fund, establishing those relationships with local community foundations, the larger DAF charities across the country, to better understand maybe what some of the donors are giving, some of those giving patterns and trends, and create alliances of partnership to potentially open up some new revenue sources from families, I think would be time well spent within the sector.
Joe: Okay. Sounds like good advice.
And we are right on time. We managed to get through many, if not most of the questions that I had prepared.
So, I just want to say thank you very much Julie, Danielle, Ron, Dr. Hale, for your participation today. As usual, you answered the questions wonderfully and gave us all a lot more to think about, I think than we can address in one hour. So, thank you very much for that. And thank you to our attendees.
This panel event will be available, a recording of it will be available in a few days on canadianfamilyoffices.com. So, if you missed anything or you have friends, family, or colleagues who want to see it, feel free to recommend it.
And thanks again to our panelists and have a wonderful day. Bye-bye.
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