Philanthropy: The System Is Broken

On Sunday, November 24th, 2019, Kim Fuller CEO of Phil published an opened letter in Montreal’s LaPresse newspaper. Here is the English version of the letter. 

20 years have passed since I founded Phil, a company that is exclusively dedicated to working with not-for-profit organizations (NFPs). Already! Twenty years of dedicating myself to numerous causes and trying to make a difference within what has now become a huge industry. In the early days, I remember having to be highly resilient. People kept saying things like “you’ll never make a living working in the philanthropic sector”. These days, however, the importance of the charitable sector is widely recognized both on a local and international scale. Yet, we still have to face an unfortunate reality: the system is broken.

 

Information is scarce

Firstly, it goes without saying that a major information deficit exists between funders and recipients of funds. The task of efficiently identifying what organizations need to succeed is highly complex. A huge amount of information is required to accurately pinpoint how to assist organizations in achieving their goals, carving out their place in the world of philanthropy, and ultimately make a difference. We are sorely lacking the information required and this doesn’t foster the level transparency we are demanding from NFPs in return, notably regarding the resources they need to operate smoothly and a clear framework for their management. In order to bridge the gap, we need access to accurate statistics which will serve to identify the real needs of NFPs and provide a more effective set of guidelines for philanthropy to have an impact.

 

Philanthropy: a small-scale industry?

It might surprise you that the not-for-profit sector is larger and more important to Canada than the oil and gas sector, with a GDP of over 151 billion dollars. And yet, the proper regulation of philanthropic practices are still far from being a priority, leading to the persistence of myths that the philanthropic sector is a small-scale industry run by volunteers. The time has come for government to formally recognize the value of the not-for-profit sector and to provide a better structure for the public to have a greater social impact. With the recent creation of the Special Senate Committee On The Charitable Sector, I’m hopeful we will begin to see action from all stakeholders.

 

Philanthropy as a corporate culture?

I have spent the last twenty years of my career stressing how important it is for organizations to establish a strong philanthropic culture. However, very large companies still perform poorly in this area. They procrastinate when it comes to establishing clear guidelines for a philanthropic culture which would benefit all stakeholders in their organization. Here, I am not talking about establishing a corporate paternalism but rather the development of a clear, quantifiable, visionary plan that would represent their own specific philanthropic culture. We are currently far from seeing this. Too often, social investment is not at the heart of business strategy.

 

What goes unmeasured goes unfunded

I am deeply concerned to see how many not-for-profit organizations have their funding applications refused because their mission and services are difficult to measure. Funding bodies looking to quantify and systematically measure the impact of the work being carried out often don’t take into account all of the intangibles that are often at the core of not-for-profit organizations. For example, overcoming loneliness in the elderly population is difficult to quantifiably prove to funders, and yet the service that these kinds of charities provide an essential service our society. Do they deserve to be disregarded by funders because they are a square peg that won’t fit into a round hole? Unfortunately, today’s criteria used to determine eligibility for funding does not correspond to the missions of the majority of NFPs and that has to change. We need to re-evaluate how impact is measured.

 

Governance: time to step it up!

Having spent two decades advising numerous not-for-profit organizations, it goes without saying that communicating with boards of directors hasn’t always been easy. I meet and work with wonderful board members every day who are highly capable individuals and who are dedicated to achieving their organizations’ missions. However, I have seen my share of boards not sufficiently informed about the real issues affecting their organization. There is a lack of communication and clear strategies in the boardroom that sadly results in the blind trust of senior management and governance structures that often haven’t been reviewed in years. How can board members be supported or trained to become more accountable for their decisions? Boards and senior management teams need to be on the same wavelength and work in harmony in order to accomplish the mission of their organization.

It is so important to prepare boards of directors to make good decisions because they are responsible for the vision of their organization and they have a duty to reduce financial risk. Board members should also be required to self-evaluate on an annual or bi-annual basis in order to ensure that they are leading and serving the organization in the best way possible. They must be well-placed to go and recruit the best talent to manage the NFP and thus ensure the sustainability of the organization and its operations. In contrast, battles of egos between board members and senior management are often a hotter topic than the real issues affecting the success of the organization’s initiatives. We need to instigate a major shift and collectively bring about changes that will “repair the system”.

In collaboration with Sector3Insights and CanadaHelps, we have launched a national study that will allow NFPs to gain a much deeper understanding of the issues at play in the philanthropic sector. The other main outcome of the study will be to support not-for-profits with the improvement of their organizational and funding processes. Every day, we work with a number of organizations whose daily goal is to do more and do better. Even though the “system” needs to be reviewed, let’s be proud of those who are taking action.

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