The founder of a charity that promotes greater giving in Canada has proposed a mandatory “Social Sector Grant” to build capacity and impact. Is it the type of shake-up a moribund sector needs or the scheming of someone who does not understand how the sector operates?
John Hallward likes to call himself a “shift disturber.” Others like to call him an “agitator,” in the most complimentary use of the word. Still others are pushing back against what they feel is an unwanted and unnecessary intrusion, but Hallward is not easily deterred. He is again agitating in the charitable and non-profit sector.
“I’ve always been entrepreneurial,” he says, “and entrepreneurs don’t like bureaucracy. We see the end goal and you do whatever you have to do to get the job done.” He’s now training that entrepreneurial focus on a sector that he says likes to “trip around happily as if we are doing wonderful stuff.”
“I don’t want to take away from all the good that is getting done,” he says, “but I’m getting cranky about all the good that is not getting done.”
I don’t want to take away from all the good that is getting done, but I’m getting cranky about all the good that is not getting done.
John Hallward, GIV3
Hallward, the founder of GIV3, a charity that promotes greater giving in Canada, sees a sector facing a growing charity gap that hurts the marginalized in this country the most. He doesn’t believe the sector can resolve the gap independently because it is fragmented, lacks strategic leadership, lacks incentive to innovate, and is risk-averse. So Hallward proposes to save the sector from itself with the creation of a mandatory Social Sector Grant, paid annually by each grantmaking foundation in the country with more than $500,000 in assets to provide a pool of funding to build capacity in the sector and muscle up its impact. The fund would come from the existing disbursement quota, so there would be no additional burden placed on the foundations; would be collected by the Canada Revenue Agency; and would be small enough to be a rounding error for each foundation (0.00025% of its assets), creating annual funding of $35 to $40 million.
Depending on your source, this is either the type of shake-up a moribund sector needs or the scheming of someone who does not understand how the sector operates. Hallward has led the push for an increase in disbursement quotas in the past and has backers who salute him for at the very least sparking debate when the sector is at a turning point. He has detractors who believe he has overstepped his expertise. But whether you back him or not, all agree that this proposal needs a lot of work, and some believe the amount of work needed means it will never be reality.
“Stakeholders want this,” Hallward maintains, and he has his own polling data that shows just that. “Here’s a way to throw a bone to the charitable sector without any cost.”
The concept of having a sector fund that would be governed, managed, administered, monitored by the sector for the sector – I think that is worth exploring.
Arlene MacDonald, charities advisor
Arlene MacDonald, an independent advisor to charities, says the Hallward plan is a way to build capacity in the sector. “We need agitators,” she says. “The concept of having a sector fund that would be governed, managed, administered, monitored by the sector for the sector – I think that is worth exploring, and I think the sector would benefit from this,” she says. “The concept of a fund is a solid one. I think the rest [of the proposal] should be open to broad discussion and input.”
MacDonald, however, says she backed the move to increase the disbursement quota because of the groundbreaking Unfunded report, which showed the stark disparity in the flow of capital in the sector. She questions whether a sector fund that does not focus on the capacity of marginalized and underfunded organizations aligns with the sector’s previous efforts.
But says Jean-Marc Mangin, the president and CEO of Philanthropic Foundations Canada: “This ambitious proposal – as I understand it – is not ready for prime time. It needs work and careful consensus-building across the sector. As currently articulated, it is the wrong fix at the wrong time.”
This ambitious proposal is not ready for prime time . . . As currently articulated, it is the wrong fix at the wrong time.
Jean-Marc Mangin, Philanthropic Foundations Canada
“It’s one of the most unusual public policy asks involving the sector that I have seen in more than three decades,” says Bob Wyatt, the CEO of the Muttart Foundation.
There have been many warnings of this growing charity gap, or the “funding gap,” but there is evidence that, although the number of donors is down, the amount donated has remained fairly level. But Hallward sees the warning signs. Statistics Canada reports that the number of Canadians claiming charitable donations on their tax returns declined from 25% in 2012 to 17% in 2022. The Canada Helps 2024 Giving Report finds that 60% of Canadians donated to charity in 2022 compared to 80% a decade ago (not all Canadians who donate claim on their tax returns). The Status of Canadian Fundraising report by Blackbaud International Markets found that more organizations (30%) reported an increase in voluntary income in 2024 (largely through large, one-time gifts) than reported a decrease (23%), but those reporting a decline blamed it on fewer donors because of a challenging economy for would-be donors. The one constant in all reports appears to be a sector being asked to do more with less. Canada is not alone. The same trends are apparent in the United States. The number of American households that donated to a U.S. charity declined from 65.4% in 2008 to 49.6% in 2018, the last year from which such numbers are available, according to the Lilly Family School of Philanthropy at Indiana University.
“Declining giving is a worrisome trend,” Hallward says in his pre-budget submission to the federal finance department. “With thousands of charities struggling to meet demand, and millions of Canadians desperate for support, we urgently need to identify solutions that can creatively address the funding challenges faced by the charitable sector. The status quo is failing those in need. Furthermore, with declining numbers of donors, we are losing opportunities to mentor Canada’s next generation of givers, volunteers and advocates. We need to stop the spiral of declining generosity.”
Lisa Lalande, chief executive officer of the Century Initiative, was interested in Hallward’s work because it was a complement to work she had done at the Mowat Centre, not as part of her current work. She feels the sector needs to find a way to build a body of resource that supports capacity-building. “The sector is all about outcomes: How many immigrants will be served? How many homes will be built?” Lalande says, and while she says that is a good thing, it also means there is nowhere to go to find money to build core functions, such as improved human resources or accounting capacity or evaluation, tracking, and reporting.
There is a real need for a body to raise awareness of our role and drive more support to the sector.
Lisa Lalande, Century Initiative
“There is a real need for a body to raise awareness of our role and drive more support to the sector,” Lalande says. “There is a big question as to whether this will move forward, but it’s rare to find opportunities like this when we can explore an innovative idea.”
But Hallward is facing some stern headwinds. Wyatt is one of many interviewed for this article who agreed the sector should be working together on a program to promote donations but doesn’t believe it should be funded through a mandatory levy on tax-exempt organizations or through a body that has only a tangential association with the sector. “We probably need, as a sector, to help people understand what they are getting across the country through their charitable donations. We’ve never had the leadership organizations come to the foundations to say, ‘We all want to work together around this idea that Canadians need to give more money,’” he says. “We should also tell Canadians what they would lose if they don’t donate.”
We probably need, as a sector, to help people understand what they are getting across the country through their charitable donations . . . We should also tell Canadians what they would lose if they don’t donate.
Bob Wyatt, Muttart Foundation
Hallward points to the more than $100 billion in assets held by foundations. “We just need to spend a fraction of those accounts in smarter ways. The problem is it is not going to be done voluntarily,” he says. “The foundations say that money is there for a rainy day and when the roof leaks, we will be there. Except they weren’t. COVID showed that. Assets continued to grow through [pandemic years]. Foundations didn’t step up. Several stopped giving grants because the market tanked and their assets went down. They went into hoard mentality. So, why do we need a law to make this mandatory? Because it won’t be done voluntarily.”
At the onset of the pandemic, emergency funding from foundations and the government tried to stem the bleeding in the charitable sector, which was facing an increased demand for services. But donations plummeted as income and market holdings plunged, for both individuals and foundations, and in-person charitable fundraising was halted. An Imagine Canada survey mid-pandemic found that four in 10 charities were reporting reduced revenues, and of those, the average decline in revenues was 44%.
Statistics Canada, in its Report on the Charities Program 2022 to 2023, reports that there are 74,544 charitable organizations in this country, 6,549 private foundations, and 4,862 public foundations. The private foundations have $87 billion in assets, while the public foundations hold $48 billion in assets. Hallward says that because he’s asking for a commitment of “a rounding error,” it would be politically incorrect for them to put up a big fuss, but those who view his proposal with skepticism point to problems with his arithmetic. Hallward’s plan to pry some of the $125 billion in assets held in the sector ignores that more than half that total is held by less than 1%, about 30 organizations. The bulk is held by Mastercard Foundation, along with educational and healthcare organizations, which, in the midst of a healthcare crisis in this country, would be highly unlikely to want to see their grants moved into a general fund. The proposal also ignores the number of foundations that specifically target where their money is spent, whether it be Indigenous-led initiatives, homelessness, climate change, or the empowerment of women. Foundations have a long list of priorities, and not all of them would be expected to back a fund that “advances philanthropy.”
“I have significant concerns about how the proposal misunderstands the basic idea that charity is voluntary,” says John Pellowe, CEO of the Canadian Centre for Christian Charities. “Strengthening the charitable sector is a noble goal, and any foundations that want to support that aim can voluntarily act, either individually in a coordinated funding program or together by creating a new foundation for this purpose. The key is that their support of the entire charitable sector is a voluntary decision made by the foundations based upon their charitable purposes.”
The real solution is to develop and activate pro-social attitudes and behaviours . . . that improve public civility and result in high levels of generosity and volunteerism.
John Pellowe, Canadian Centre for Christian Charities
Pellowe agrees that there has been a decline in donations over the years, but he maintains that the real solution is “to develop and activate pro-social attitudes and behaviours – such as empathy, social responsibility, forgiveness, honesty, kindness, friendliness, generosity, and concern for others – that improve public civility and result in high levels of generosity and volunteerism that benefit charities and individual Canadians.”
Others point out the need to refine the governance body proposed by Hallward and the difficulty in pushing for an amendment to the Income Tax Act. Hallward has suggested a brand-new “fit-for-purpose” agency whose membership is vague. It would develop a strategic plan that would be overseen by an executive director.
Then, there is the question of exactly what it might fund. Hallward says it could end up with more food in the food banks and more blood in the blood donor clinics. His formal proposal stresses capacity-building and says this is “about progression on a manageable number of priority initiatives to support the thousands of charities in local communities working to make a difference.” Others believe that without more specifics it will be hard to build support.
Wyatt says charities want more funding; they are not clamouring for more capacity-building because they know how to run their organizations. “Food banks need more money to buy food,” he says.
There are a lot of barriers to funding and not a lot of opportunities for funding.
Janine Manning, Indigenous Peoples Resilience Fund
Is program funding a bigger need than capacity-building?
Janine Manning, the executive team lead of the Indigenous Peoples Resilience Fund (IPRF), which has provided almost $14 million to 530 Indigenous-led initiatives over the past four years, says organizations need more funding. Manning was not commenting on the Hallward plan, with which she is not familiar, but was speaking on the needs on the ground that she sees daily. “There are a lot of barriers to funding and not a lot of opportunities for funding,” she says. If organizations identify capacity as a need, IPRF would support it, because its trust-based philanthropy allows organizations to identify their own needs. But those who stress that smaller non-qualified donees need capacity are usually those with vestiges of the paternalistic attitude that “those who have the money know best. But that is definitely not the model for IPRF,” she says.
A September survey of 693 charitable organizations by Carleton University’s Charity Insights Canada Project found that 35% of respondents ranked funding for capacity-building as their greatest need; 32% found it the most difficult funding to access. But almost seven in 10 said their greatest need was unrestricted organizational funding, which would include program funding and capacity-building. The Carleton project defines capacity-building as the strengthening of internal capabilities, including items such as technology updates, strategic planning, leadership development, and infrastructure improvements.
I don’t think [a tax on foundations] is a door we want opened. Where does it end?
Bob Wyatt
Wyatt sees a larger concern in the Hallward plan. Whatever it is called, it is a tax on foundations, he says. “I don’t think that’s a door we want opened. Where does it end?” Wyatt says it would allow governments to decide that other programs need to be funded because it would allow governments of different persuasions to direct funding to certain initiatives or prevent funding of other initiatives. Organizations that are doing medical research, for example, are going to derive no benefit from this proposed fund, Wyatt says. The same would apply to foundations funding the arts or education, he says.
Hallward counters that even the largest hospital foundations are hurt by a decline in giving and that those opposing a smarter use of funds are taking direction from a “small niche of bully foundations” who don’t like being told what to do and are threatened by new thought leaders. He has also questioned those who can’t see the real threat to the sector in the coming years. “I know people are worried about land acknowledgements, they are worried about DEI. I’m not arguing against them. I’m just saying those are not the top two priorities for the existence of our sector over the next 10 years,” he says, warning against his proposal being swallowed up in “wokeism.”
“Yes, we need to be inclusive and sensitive to marginalized communities, but the purpose of this is not to right a moral wrong in those areas,” he says. He adds that he is not passing judgment on any individual cause but is advocating for a solution for the sector as a whole, encompassing all missions. He says the board of a new Sector Fund Agency would have guaranteed seats for Black and Indigenous organizations and would be structured to ensure representation based on race, gender, and regional interests. “I want a more macro view of the sector,” he says.
We need new ideas, some bold ideas. If it sparks some new ideas, that’s a great thing.
Lisa Lalande
Lalande says the sector needs to shake things up. “We need new ideas, some bold ideas. If it sparks some new ideas, that’s a great thing.”
Hallward likes to refer to a TED Talk video of a lone man singing and dancing at an outdoor concert, slowly followed by a second man. Shortly after, everyone is up and dancing. Hallward ruffles feathers. He wouldn’t have it any other way. But there is always the danger of ruffling too many feathers. The message from the video sticks with him, however. “The difference between the first person being an eccentric versus being a leader hinges on the second person. Beyond the shift disturber, it takes bravery to be the second person to endorse the first person.”
