This article is the fifth in a series
SUMMARY: Charity lawyer Richard Bridge shares the example of Ulnooweg, a dynamic and innovative First Nations non-profit that has provided financial services to Atlantic Canadian First Nations for decades. Its development of the charity Ulnooweg Financial Education Centre and success in attracting foundation funding to go national has helped Chiefs and Councils plan and meet community needs more effectively. It also shows the enormous benefits of First Nations securing qualified donee status.
PRECIS : Richard Bridge, avocat d’organismes de bienfaisance, cite en exemple Ulnooweg, un OSBL autochtone dynamique et novateur qui, depuis des décennies, fournit des services financiers aux Premières Nations du Canada Atlantique. Cet OSBL a fondé le Ulnooweg Financial Education Centre, un organisme de bienfaisance, et s’emploie à obtenir du financement auprès de fondations à l’échelle nationale; grâce à ses efforts, des chefs et des conseils ont pu faire une meilleure planification et mieux répondre aux besoins de leur communauté. On constate aussi les énormes avantages que retirent les Premières Nations à obtenir le statut de donataire reconnu.
The Circle on Philanthropy and Aboriginal Peoples in Canada begins its important 2012 paper, “Aboriginal Philanthropy: A Foundation for Understanding,” with this observation:
“‘Aboriginal’ and ‘philanthropy’ are not words that come together often in Canada – and we want to change that.”
I have had the good fortune to work with registered charities of all kinds across across Canada for the last 17 years. In recent years I have had the privilege of working with many Aboriginal and First Nation organizations and communities, mainly in Atlantic Canada. Based on that experience, I agree completely that there is a substantial gap that should and can be closed. Indeed, the potential for more connections between the philanthropic sector and Aboriginal communities is enormous. These include opportunities for grant making, investments, partnerships, joint ventures, education, and co-operation of all kinds. It is an opportunity to expand the infrastructure of philanthropy to include hundreds of communities that are now largely outside the scope of the sector.
I am writing to share an example of such a connection in Atlantic Canada that is innovative and will have a significant positive impact throughout the region and across Canada. It is one of the most interesting, constructive, and potentially beneficial initiatives I have ever encountered.
The story begins with a federally incorporated not-for-profit organization called Ulnooweg Development Group Inc. (“Ulnooweg”), based in Truro, Nova Scotia, that also qualifies as a non-profit organization under the Income Tax Act (Canada). “Ulnooweg” is a word from the Mi’kmaq language that translates to “our way.” Ulnooweg’s members are the Chiefs of the 34 Mi’kmaq and Maliseet communities of the four Atlantic provinces. Its board of directors consists of experienced Chiefs and other community leaders, and it has an exceptionally skilled, numerate, and professional staff team.
For nearly 30 years, Ulnooweg has been successfully providing business services to Aboriginal entrepreneurs in Atlantic Canada. This includes business loans along with initial and on-going advice and support with business planning, marketing, and operational issues. This work has helped create and sustain hundreds of businesses and jobs and is a key element of a growing entrepreneurial energy across the region. More information about Ulnooweg is available at www.ulnooweg.ca.
This work has also enabled Ulnooweg to develop a deep and broad understanding of the communities it serves beyond entrepreneurial lending. It has expertise and data on essential issues including: community economic development, sectoral challenges and opportunities, demographics, employment, markets, education, private and public debt, community infrastructure needs, and capital needs and sources.
Ulnooweg has also developed expertise in the exceptionally complex legislative and regulatory world in which First Nations governments must function. In recent years it has broadened its activities to include analysis, advice, and support to Chiefs and Councils and management personnel on economic, financial, and community enterprise issues.
Back to the theme of connections between the philanthropic sector and Aboriginal communities: Ulnooweg was created as a result, in large part, of leadership shown by the Donner Canadian Foundation.
In the early 1980s, a grant from that foundation funded the Atlantic First Nations to undertake a two-year, once-in-a-generation study to analyze the needs and explore the tools required to support economic development of Atlantic First Nations. This study brought together a unique and diverse team to develop a concrete strategy to address the challenges in Aboriginal economic development. One of the outcomes of this creative collaboration was the establishment of Ulnooweg as an Aboriginal Capital Corporation.
Through its work with Chiefs and Councils and management staff, Ulnooweg recognized two significant themes.
First, after a generation of slow progress, First Nations in Atlantic Canada are now like emerging markets – experiencing or poised for rapidly increasing participation in the regional economy. Partnership opportunities in the energy and resource sectors are increasing; progress in the fisheries sector since the 1999 Supreme Court of Canada Marshall Decision has assisted many First Nations with overcoming unemployment and debt and generate equity for growth; and increasing numbers of post-secondary graduates are eager to play a role in new developments.
Second, there is an obstacle that needs to be tackled. The capacity of First Nations governments – Chiefs and Councils – must be continuously expanded to keep up with the rapidly increasing complexity and consequences of the governance and financial decisions they need to make. First Nations governance covers a much wider spectrum than that of most local and regional governments in Canada, spanning rights and claims, health, justice, education, social, welfare, housing, municipal, and community-owned business matters. However, none of the regional, provincial, and federal support systems and models available to mainstream decision-makers in Canada are in place to assist them with these responsibilities.
Ulnooweg developed a new tool to address these themes. It is called the Community Financial Review Process. It converts the often-indecipherable data from First Nations’ audited financial statements into clear, easily understood, and practical graphic forms that greatly enhance the capacity of First Nation Chiefs and Councils to make sound and responsible financial decisions and plans in the rapidly evolving context of their increased participation in the regional economy.
More specifically, the Community Financial Review Process involves:
- standardizing and regrouping a First Nation’s accounting data going back a minimum of five years, with a focus on the specific needs and characteristics of the community;
- identifying and illustrating significant trends, ratios, and red flags for planning, budgeting, and decision purposes;
- supporting the Chief and Council in understanding how to use this tool and the data for planning and decision-making purposes (e.g., best use of debt service capacity given needs, constraints and priorities, over-indebtedness risks);
- tailoring the data systems to reflect the characteristics of the community (addressing specific community revenue sources or capital projects);
- producing clear graphic reports highlighting findings; and
- meeting with the Chief and Council to present and support with a progressive approach starting with basics to a sophisticated planning capacity.
This work helps Chiefs and Councils address key questions, such as: Are we living within our means? Is dependency on government funding decreasing? Are our own-source revenues expanding? Are we on a path to growth? How do we compare with other communities in similar circumstances? Where should we focus attention? What questions should we be asking our financial managers? Are we borrowing for the right reasons? It is a multi-year process that involves the analysis of data and presentations to Chiefs and Councils in at least three consecutive years. Subsequent and ongoing Community Financial Review Reports are also very valuable. Chief Terrance Paul is the Chairman of Ulnooweg and Chief of the Membertou First Nation, which has used the process successfully for several years. “Debt is an essential tool to build safe, healthy and modern communities,” he said. ”It can bootstrap you to prosperity, develop your resources, grow your economy, create jobs, and make life better for your people. But debt is like a power tool: when it gets out of control, things turn into a nightmare and progress can grind to a stop for a generation. Our community financial review process is about making sure debt works for us.”
Ulnooweg concluded that the Community Financial Review Process and related activities were charitable, and would be best structured as a charitable organization to enable greater collaboration with the broader philanthropic community. In 2013 it incorporated the Ulnooweg Financial Education Centre (“UFEC”) under the Canada Not-for-profit Corporations Act with the following purposes:
“To advance education in First Nations communities in Canada and Indigenous communities outside Canada by:
- 1. Teaching financial, accounting, economic, governance, business and strategic planning principles, practices and skills through courses, training, workshops, presentations and counseling sessions; and
- 2, Conducting research into the social, financial, economic, demographic, and development conditions, needs and opportunities of these communities.”
This purpose wording covers the research and teaching that are at the core of the Community Financial Review Process and is broad enough to include other education and research activities.
The Community Financial Review Process has been completed or is currently underway in a total of 14 Atlantic First Nations communities. The intention is to provide it to all 34 Atlantic First Nations communities that ask to receive it. The charity wants to make it available across Canada.
The J.W. McConnell Family Foundation has provided initial funding and technical support to expand its delivery and UFEC is working to expand its capacity and to determine the most effective way to reach other communities. The ability to replicate the process and scale-up delivery nationally was particularly attractive to the Foundation. UFEC hopes to deliver the process in Ontario and British Columbia in 2016, resources permitting.
In addition to the Community Financial Review Process, Ulnooweg and UFEC are working to close the gap between the philanthropic community and Aboriginal communities by providing education and support to: a) assist First Nations governments with securing qualified donee status; and b) help communities and individuals establish and maintain new charities of their own.
Qualified donee status
Securing qualified donee status is the easiest way for First Nations to connect with the philanthropic sector. Qualified donees are able to issue tax receipts for donations and to receive grants from other qualified donees, including registered charities.
First Nations governments are eligible for this status as “public bodies performing a function of government in Canada.”
To secure this status, First Nations must “register” or get on the list maintained by the Canada Revenue Agency.
This requires submitting an application letter with supporting documentation to the Canada Revenue Agency requesting registration and demonstrating that the First Nations government is in fact performing government functions in its community. A full description of the application process and requirements is found here.
The application process is not unduly onerous, but it requires time and attention to complete properly.
Each year in Canada, charities and other qualified donees issue approximately $14 billion in tax receipts for donations, and foundations make grants of approximately $5.4 billion. These are important pools of potential support for a wide range of initiatives by First Nations.
Qualified donee status comes with few strings attached. Listed First Nations are not subject to the full array of legal and regulatory requirements, restrictions, and reporting obligations that apply to registered charities. All they must do is ensure they: a) issue accurate and complete official donation receipts; and b) maintain books and records adequate to allow verification of amounts donors claim for tax credits or deductions. Qualified donees are obligated to make these books and records available to the Canada Revenue Agency on request.
Generally speaking, a First Nation that is a qualified donee has greater latitude than do registered charities when it comes to the use of resources it receives through donations and grants. Like a municipal or provincial government, a First Nation can use its resources for activities it deems in the community’s best interest, even if they falls outside the scope of charity. This is subject to any conditions imposed on specific donations or grants by donors or grant makers.
AS of October 1, 2015, fewer than one quarter of the 634 First Nations in Canada are listed with the Canada Revenue Agency as qualified donee. In my view, all First Nations should apply to be listed. The application process is relatively easy and, once listed, the door is opened to the broader philanthropic world.
Despite the needs and opportunities, there are not many Aboriginal registered charities in Atlantic Canada. The UFEC is offering training on how to create, register, maintain, and grow charities. Several new charities are emerging, and many more will likely appear as this educational work reaches more communities. The range of potential new charities is broad. It includes cultural and heritage centres, environmental protection organizations, groups delivering services to people with disabilities, a potential new community foundation, and other initiatives. Cooperation and synergy should be key themes in this growth.
The UFEC’s second formal purpose is to conduct research into the social, financial, economic, demographic, and development conditions, needs and opportunities of Aboriginal communities. Research of this type is essential for communities working to break dependence and to build and maintain prosperous and sustainable communities.
Again, the opportunities for valuable research in this field are countless, and the potential for that research to have real and dramatic impact is immense. This is work that Ulnooweg has been engaging in and that will be expanded by the UFEC as resources permit.
Part of this research is the identification and analysis of existing successes. There is a lot of entrepreneurial activity happening in Atlantic Aboriginal communities. It is both community and individual entrepreneurship. Examples include wind turbine joint venture projects involving a First Nations government and the private sector, the construction and management of a mixed-use commercial and business centre, and the launch of a new fisheries enterprise. Documenting, understanding, and drawing lessons from these experiences are valuable work.
The experience with fisheries in Atlantic Canada is particularly noteworthy. In 1999, the Supreme Court of Canada affirmed that 1760 and 1761 Treaties included the right for 34 Mi’kmaq and Maliseet First Nations to hunt, fish, and gather in pursuit of “a moderate livelihood.” Since 1999, Aboriginal participation in fisheries of all kinds has increased dramatically from an estimated $4.4 million per year to approximately $100 million per year in 2014. It now provides income for approximately 1,800 people in the region.
Although the cod fishery has declined dramatically, the Atlantic region has other prosperous and sustainable fisheries. Aboriginal communities and individual fishers are increasingly taking the lead in this sector. Other communities are acquiring fish licenses and vessels, operating processing facilities, running hatcheries and also engaging in aquaculture. Ulnooweg has played a key role supporting this growth by delivering training, technical assistance, and business planning in partnership with the federal Department of Fisheries and Oceans and Atlantic Policy Congress of First Nation Chiefs secretariat.
The UFEC has the potential to add more value to the fisheries and other economic and community sectors through research and education.
Another topic identified by Ulnooweg as a fruitful field of research for UFEC is the critical and complex question of access to private capital by First Nations to help meet physical infrastructure needs such as roads, schools, housing, senior care facilities, and water and sewer systems. In addition, capital is needed to enable First Nations to pursue commercial opportunities, such as energy, fisheries, and forestry sector projects.
This topic requires another article to begin to address it properly. Very briefly, connections between First Nations’ governments and organizations and private capital sources and markets are still in their infancy. This is a fundamental impediment to meeting community needs and pursuing development opportunities. First Nations need greater access to investment capital to do business, just as other governments, public bodies, and private enterprises do. Ulnooweg and UFEC are both working to identify and analyze options and to ultimately build connections with investment capital.
For many investors, whether they seek purely commercial opportunities or projects that offer a demonstrable social impact, or perhaps both, these new connections with First Nations should be of keen interest. There is a real opportunity here for more leadership from those who invest philanthropic resources. Allocating some of that pool of capital to First Nations investments would be an excellent start.
For leaders in the philanthropic sector who want to have impact, there are immediate opportunities for co-operation with Aboriginal communities and organizations to advance virtually every field of charitable endeavor. Through a) grant-making to First Nations that are qualified donees and Aboriginal charities, b) investments in Aboriginal projects or enterprises, or c) the sharing of knowledge, they can help build philanthropic and other community infrastructure and close the gap identified by the Circle on Philanthropy and Aboriginal Peoples in Canada. This, in turn, will reduce the intolerable gaps documented elsewhere regarding poverty, health, income, employment, and other indicators of well-being.
In my view, it is essential for the philanthropic sector to turn more energy, experience, and resources to building new constructive relationships with Aboriginal communities across the country. I believe that innovative approaches to governance excellence, community economic development, and entrepreneurship that help Aboriginal communities achieve greater self-reliance and prosperity should be priorities.
 Thank you to Todd Hoskin, Chris Googoo, Darrell Hasiuk, David Simms, Dominique Collin and others at Ulnooweg for their input and the helpful materials from which this paper draws.