Foundations and Charities: Closer Than You Think

By guest contributor Hilary Pearson, CEO Philanthropic Foundations Canada

Do the following situations sound familiar, if you lead a smaller Canadian charity?

  • You have a quarterly board meeting coming up shortly and you are the only one available to write five detailed board memos on projects, complete with financial analyses.
  • One of your community partners wants to meet urgently on the one day a week you aren’t paid to be in the office.
  • Your accountant is looking for missing receipts to file your annual CRA report and you haven’t had time to do the filing.
  • You’d like to get to that training workshop that you know would really help you be more efficient but you haven’t got the time and your board doesn’t want to spend the money.
  • You know that your website needs some urgent updates but you don’t know how to do it yourself and your part-time webmaster is on holiday.
  • No matter how hard you try, your voice mailbox always has new messages….and you don’t have anyone to help clear it.

These situations sound like the everyday experiences of the part-time or single employee who is trying to lead a small charity. And you would be right in thinking that this reality is both common and unfair.

The twist is that these situations also describe the reality of staff in smaller Canadian foundations. Yes, the same foundations to which a charity leader might appeal for funds to address her own lack of capacity. There are about 5300 registered Canadian private foundations. Seems like a lot of funders available to help. But these are typically very thin in terms of staffing. Ninety percent of them or more have assets under $5 million and most have no paid staff. This is a reality that is important to share. Smaller foundations and smaller charities have much more in common than they may think.

True, foundations have one less worry. They have money. And of course, that’s a huge advantage. But here’s the truth. Just like other charities, foundations want to keep overhead expense low and spend most of their money on mission. The typical small private foundation:

  • Has one or no paid staff
  • Has staff that work only part-time
  • Can’t meet all the needs in their community
  • Has to work with outsourced bookkeepers, IT suppliers and administrative support

A charity executive who is awake at night worrying about how to meet payroll or how to get through the next quarter may have scant sympathy for her foundation leader counterpart. Fair enough. Nevertheless, foundation staff can identify keenly with their stressed community partners. And agree that limited internal capacity can be a drag on productivity, and on mission.

So, what’s to be done?

First, a case must be made for investing in one’s own organization. All charity leaders need help to understand their own organizational drivers of impact, and to make an argument to their boards and donors for making sensible and targeted investments in the capacity needed to deliver on their mission. Sometimes, the most helpful thing a funder can do is to support a leader in doing that work, whether through training or through introductions to other leaders sharing the same issues.

Secondly, there needs to be freer and more open communication between funders and grantees, or foundations and charities. Let’s stop talking about so-called administrative versus charitable budgets and talk about all costs, direct and indirect, of delivering the work. Funders can help by knowing who to ask the right questions about costs and being conscious of not adding on more indirect costs such as measuring and reporting, when it’s not directly helpful to what a charity is doing.

Thirdly, both foundations and charities can leverage their equally scarce resources better by collaborating or partnering with others. Increasingly, it is obvious that smaller organizations can’t get as far as they would like unless they work with others for the same goals. These days, with digital communications and tools, collaboration is a practical option and approach. Both funders and charities can benefit.

Fourthly, foundations can offer more open-ended operating support. Funders who believe and trust in an organization’s work and leadership can provide unconditional funds without restrictions or conditions. This frees both the charity and the foundation from the burden of filling out and reviewing detailed grant requests or filing long evaluation reports. There is no loss of accountability if the relationship of trust is established. And foundations can afford to take more risks after all.

Of course, given the thin human capacity that I have described for both foundations and charities, none of the above is easy. But there are many resources available now to small foundation leaders through organizations such as Philanthropic Foundations Canada which offer guides to practice and suggestions about questions to ask, policies to consider and connections to make. Sometimes the first step is to look for a network organization that can be of help.