(April 29, 2020) Hilary Pearson has been involved in the Canadian philanthropy sector for three decades. She spent almost 20 years as the CEO of Philanthropic Foundations Canada, a member organization of Canadian grant makers. She’s been on the board of Imagine Canada, the Stratford Shakespeare Festival of Canada, CARE Canada and Indspire. From 2012 to 2015, she served on the Governor-General’s Advisory Committee on Volunteerism and Philanthropy. She currently chairs the Advisory Body of the Coady Institute at St Francis Xavier University, co-chairs the Advisory Committee on the Charitable Sector, and serves on the Advisory Committee to the Masters in Philanthropy and Nonprofit Leadership program at Carleton University. You can find her current writing on philanthropy at her blog. Pearson spoke to editor in chief Gail Picco from her home in Montreal on April 27, 2020. The interview has been edited for clarity and for length.
Gail Picco: You’ve spent a couple of decades in a position where you could observe the work of many charities not just the philanthropic aspects, but the work of charities themselves. What changes have you observed about the environment and the work of charities?
Hilary Pearson: Excluding universities and hospitals and focusing on what I call—and what Imagine Canada calls—the core sector, I’ve seen both good and bad. I think the sector is uniquely vulnerable to a crisis such as COVID 19. We’re seeing the proof, particularly among parts of the sector where people are very dependent on philanthropy and fundraising. For small frontline organizations, it’s incredibly tough. On the good side, the ability to operate with and connect to technology is something I would never have expected 20 years ago. As a management consultant at the beginning of the Voluntary Sector Initiative in the late 1990s I worked closely with many of the national leaders of the voluntary sector as it was called then. At the time, people in the sector simply did not know enough about what the sector was as an economic sector in its own right. There was no easily accessible data. Information technology wasn’t around to help you connect and see trends. The data that was collected at that time, and the work that people did together contributed to a big leap forward. People 20 years ago were extremely worried about how to finance their work. That has remained, but the one unqualified success has been the way in which we’ve all been able to adopt new technologies and use them in a way to make us a more informed sector.
Gail Picco: How do you think charities have handled the pandemic? How are they managing it so far, broadly speaking?
Hilary Pearson: I’m thinking about the core sector here and I think that it’s been really tough. For small organizations and small businesses everywhere, it’s all about fixed costs, people costs, employees. Can they go on even if they access government support? I think the federal government has been pretty good about making sure charities and nonprofits are included in the subsidy programs. Imagine Canada has been arguing for a special grant program as a stabilization fund for charities. I don’t know what the state of discussions is, but I fear that without that kind of program, it’s going be hard for a lot of charities to start up again.
Gail Picco: I’ve heard this, and I’ve had discussions about it, but I’m still not sure. What kind of groups do you visualize when you think of that group of charities who need stabilization? I see equity seeking groups, I see groups that are run by black and brown people or women’s organizations and so on who depend on project funding, a lot of it made up of large grants from a small number of foundations. Who do you see?
Hilary Pearson: I think you’ve put your finger on it. For charities set up to focus on advocacy and public policy development, it’s tough to continue without dedicated funding. I think the arts sector is going to be really hard hit, including theaters, music groups, and other performing arts. The major food banks are probably going to be okay because they are getting donations and additional support from the government, but front line and precarious social services organizations will have trouble. They are on the edge.
Gail Picco: There does seem to be a gap there to fill, and private and family foundations do have an estimated $85 billion in assets but are giving away only 3.5% of that a year. What kind of role might they play in helping these vulnerable groups?
Hilary Pearson: I haven’t seen the data in the last couple of years, but I don’t think that the $80 billion is all in the hands of private and family foundations. I think it’s a mix with public foundations, and it’s harder for public foundations to spend more because many have Donor Advised Funds or are institutional foundations. connected to a hospital or university or other institution.. But I do see a difference from the 2008/2009 recession response when endowments went down and there was concern that foundations were going to pull back and, in many cases, they did. Many foundations I have worked with are treating the three and a half percent as a floor not a ceiling. We’ve had ten good years since the financial crisis and foundations have typically done well.
I think there’s a realization that it is not right to cut back. Even though the markets are scary for investment committees, foundations have to step up. I’m struck by the willingness of foundations to make public statements, to post them on their websites, which say, we are going to maintain our commitment to our grantees, we are going to loosen requirements and conditions, we are going to continue to have your backs. That’s amazing. I have to say it was a development, both in American philanthropy and here in Canada, I did not expect. Four funding organizations—PFC, Community Foundations Canada, The Circle for Philanthropy and the network of environmental funders—came up with five principles to keep the money going, ease up on reporting conditions and make it as easy as possible to access money. And I’ve heard about Give5 who are trying to get at least 100 foundations to sign a public pledge to disburse 5% of their assets this year. I think they could get 100 foundations to agree. Foundations are understanding the need for extraordinary action.
Gail Picco: The existing regulated payout for foundation in the US is 5% and there’s an increasingly vocal movement down there about getting them to increase that. I interviewed Edgar Villanueva a couple of weeks ago and he said what foundations were doing was hoarding. But you feel that getting up to 5% payout in Canada is not something foundations would have agreed to a couple of years ago?
Hilary Pearson: I wouldn’t have thought that, no. But I do think there’s been an ongoing conversation, a thoughtful conversation, among a number of Canadian foundations about how to use their capital more effectively around impact investing, I have seen it as being a very positive development and am surprised at the number of foundations who’ve started to take impact investing seriously. You can always argue that this should be happening much faster and wonder what’s taking so long. I remember thinking that when the Task Force on Social Finance, which the McConnell Foundation funded 10 years ago, suggested foundations should set a target of 10% of portfolio dedicated to impact investing or social finance by 2020. Knowing the field, I thought it was bold at the time, but a number of them got there this year. This is a good time to go faster and get more done.
I’m an observer now, not an advocate, as I was for many years, and I can see that there are things foundations in Canada can work on. This crisis is accelerating the adoption of practices that I hope are going to be ones they stick with. In one of my blogs I noted that trust-based philanthropy may not be for everyone, but that some of the ideas around that fit with participatory grant making, more inclusive grant making, and with sharing power. I think [the pandemic] is probably accelerating it among some foundations and making other foundations more conscious.
Gail Picco: I’ll just ask one more question in this line because I do want to cover other areas. And I want to ask you because I legitimately do not understand it. When the pandemic hit, foundations and other organizations began lobbying, through imagine Canada and other vehicles, for the charity sector to get $10 billion of stabilization money. Yet within the sector, there are charities sitting on a lot of money and who could loosen up that money, but they don’t. To me, it’s similar to the way big business uses the idea that you have to help small business in order to get a bailout from government. What’s the rationale for why a government would support a $10 billion stabilization of the charity sector when the people in the charity sector itself, with that kind of money, are not putting anything on the table. If foundations or the wealthiest charities even said, ‘okay, we understand how bad this situation is for the charity sector, and that a lot of important charities are going to go under if they don’t get help, so 100 of us have gotten together and we’re putting $2 billion down to stabilize the sector. And we’re hoping the government, the taxpayers of Canada, will at least match that.’ Why don’t the organizations with resources in the charity sector come to the table with that kind of an argument, do you think?
Hilary Pearson: That would be unprecedented for a group of funders who typically will have collaborated only on projects and programming that relates to what they’re trying to accomplish as organizations. I do think there is some collective effort going into what are effectively regional or local stabilization funds. Place-based foundations are supporting their local communities, as are community foundations. If you added up those efforts, you actually see more being done around this question of stabilization. But I don’t think there is any big national effort because I don’t think foundations operate that way. Most private foundations are not national funders. It’s actually quite difficult to get a whole group of foundations to sign on to something as a national project.
Gail Picco: There’s another issue, one that’s dear to my heart and you’ve talked about it in one of your blogs. The charity sector is huge, $270 billion of revenue a year with more than two million workers doing incredibly important work with lots of lives on the line. And yet, we’re not covered in the media at all. The flip side of that is the charity sector, as a whole, has gotten away with being off the radar for a long time. Do you think they are ready for transparency and answering tough questions that a knowledgeable media might ask?
Hilary Pearson: It’s hard to generalize. There are organizations that could deal very effectively with the media. There aren’t that many journalists or reporters in Canada who have actually asked them any questions. You do get more coverage of multimillion-dollar gifts made by individuals. And the individual obviously is happy to lend their name to that.
At PFC it was difficult pulling stories out of foundations. In their view the stories were about the work, about how an organization out there in the community is succeeding. They did not want to tell stories about themselves. So, it’s difficult to get a sense of the impact that the foundation sector has. That’s one of the reasons why I’m writing a regular blog because I do think there are things to say about philanthropy in Canada and not too many people are writing about it.
Gail Picco: My last question for you. In January, you wrote about what you saw as three challenges to the sector for 2020 where Canadian foundations could have impact: digital democracy, leadership capacity and sector infrastructure. Would you make any changes or additions to those challenges now, aside from the obvious one of crisis management?
Hilary Pearson: The crisis has just magnified the importance of leadership capacity and organizational infrastructure for the sector. I think advocacy for a more modern more up-to-date regulatory framework is a fourth priority that will help the charitable sector in many ways. I’m the co-chair of the Federal Advisory Committee on the Charitable Sector. It advises the Minister of Revenue and was set up by the federal government in 2019. The purpose of the committee is to pursue a conversation with the federal government about regulation of the sector.
One of the things we’ve seen as problematic during the crisis is the regulation that CRA imposes on charities who are trying to work with non-charities. The ‘direction and control’ rules are very cumbersome and constraining in a situation in which you need to get money out quickly, work with others to collaborate or stretch your resources. Maybe, coming out of this crisis, because we know things will be different, we can work on fixing the constraints and mending the vulnerabilities in the system that we see more clearly now than we did before the crisis. We will learn lessons from that.
Gail Picco: Well, there is an opportunity for sure. And although this is a really stressful time for people—I worry about people in my family and I know other people are worried too—but there is a lot of reflection going on. And if history is any guide, post-pandemic periods are a time of change.
Hilary Pearson: I hope people can see things differently or be open to different ways of operating. Foundations in many ways have adopted these new practices—general operating support, trust-based grantmaking—practically overnight. So, let’s see if we can take some of that spirit forward.
Gail Picco: Thank you very much, Hilary. I’ve enjoyed this conversation very much.
Hilary Pearson: Me too. Thanks.