February 8, 2016 From the President

Opening A Window on Canadian Philanthropy

 

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How clearly can we see into the work of Canadian philanthropy? Do we have open reporting and sharing of knowledge among Canadian foundations? The answers, so far, are not much and no. Data on the activity of Canadian foundations are difficult to come by, except at the most aggregated levels. And platforms for sharing information and communicating about goals, outcomes and learnings in the non-profit sector still lag far behind those of the for profit sector. But there are signs that things may change in Canada. I see two opportunities for creating more open windows on philanthropy, both driven by technology tools: timelier reporting of grants and other funding activity; and more platforms for sharing information about the goals and outcomes of foundation work.

In saying this, I am perhaps more optimistic than many observers, particularly those in the United States who are suspicious of the secrecy and motives of donors, especially large ones. The December 2015 announcement by Mark Zuckerberg and Priscilla Chan that they would dedicate most of their Facebook wealth to philanthropic activity has been shadowed by the reaction of many commentators concerned over lack of transparency.  They have focused on the fact that Zuckerberg and Chan set up a limited liability company to structure their philanthropy, which is not subject to the reporting requirements of a charitable foundation under the IRS.

There are two strands to this critique: one that the structure itself is opaque and that it is important for large donors who want to make social change that they work through regulated charities that must produce at least a minimum of information about their grants and results; and two, that wealthy donors are inherently suspect, whether they choose to work through charitable or non-charitable entities, unless they allow their giving vehicle to be governed by independents with a commitment to transparency.

In my view the important question is not about the choice of giving vehicle (after all plenty of donors don’t choose either a foundation or a limited liability company but simply give as individuals). The key issue is how transparent these donors are willing to be, especially if they are committing large sums to systemic change. This matters for donors and foundations in Canada just as much as it does in the United States, given rising popular distrust of wealth and the emphasis placed on accountability by policy makers and the media.

We in Canada share one of the obstacles to transparency in philanthropy that has been pointed out by journalists trying to cover the philanthropic field such as David Callahan from Inside Philanthropy, that is, a lag in the reporting of grants data in a timely way. For example PFC is constrained by a close to two-year lag in reporting our aggregate data on the grants and assets of the largest grantmaking foundations, due to delays in obtaining the final data from Canada Revenue Agency (CRA). This could be fixed both through accelerated uploading of information by the CRA (which may come with the digitization of the T3010) and through the actions of funders themselves, who can upload a list of their most recent grants to a website whenever they choose to.

As PFC has underlined in our 2015 report, Emerging Data Practices for the Philanthropic Sector we have digital technology at our fingertips to help us open our own windows, even if this window gives access just to the grants we make.  With more structure in terms of an agreed typology of grants, we can make quick progress in creating more transparency about funding patterns. An interesting new case study from GovLab on the accountability of Canadian charities through open data tells us quite plainly that opening our data  window “could stand to provide benefits to organizations releasing the data….actors whose financial activities place them in higher standing in the public eye stand to benefit from increased citizen trust”. We can only benefit ourselves in the funder community if we are willing to make our grant data bases more visible more quickly. And, as the report points out, if open data becomes the default in the nonprofit sector, “organizations can start to consider how they can turn this process into new ways to solve problems together.” This is our second opportunity to open a window on Canadian philanthropy, and I will be addressing this in my next blog post.

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