With a turbulent external environment, growing pressure on charities, and internal shifts in leadership and focus, the philanthropic sector is navigating significant change. It’s all adding up to what may be the biggest shift to foundation philanthropy we’ve seen in Canada, Hilary Pearson writes.
The first four years of the 2020s have seen remarkable changes in the charitable sector in Canada. Some of it has been positive: accelerations in digital connection and networking, more flexible work arrangements, new talent entering the sector, more multimillion-dollar philanthropic gifts, new collective funds and platforms to support underserved communities, and related changes in federal regulation intended to expand the flow of philanthropic funds. But much more has been difficult. Social and economic inequities have sharpened. We know about the surge in demand for services (housing, food, employment, mental and physical health) in these years of pandemic, inflation, and climate shift. We also know that charitable donations have been flat or declining, and business revenues have decreased for some, leading to an operational crisis particularly for many charities on the front lines. The number of registered charities has dropped as they struggle to stay afloat with little or no reserves. Meanwhile, charities are also suffering challenges of staff burnout and struggles to recruit new leadership. The generational shift from baby boomers to Generation X and millennials means more competition for leaders. Charities in rural and remote areas suffer particular challenges with both financial and human capital shortages. And overall, we are in a period of increased polarization, shifting political directions, and global uncertainty.
The foundation sector itself is going through some significant change in this turbulent context. Some of this is a response to the shifting external environment and to the pressures experienced by charities. Some of it is specific to internal transitions in leadership and strategic focus. But it is adding up to what may be the biggest shift to the practice of foundation philanthropy that we have yet seen in Canada.
For decades, the operating model of private philanthropy has been quite static. Most private foundations (and many public) are built on a structure of an invested endowment from which a financial return is disbursed every year through grants to a group of charities. While there has been some evolution in this model with the addition of professional staff and ventures into social purpose investment, it has not fundamentally changed. Evolution has been slow. But since the first years of the 2020s, the rate of change seems to have accelerated and become more visible.
For decades, evolution in private philanthropy’s operating model has been quite static. But since the early 2020s, the rate of change seems to have accelerated and become more visible.
What accounts for this acceleration? Many factors are cited: generational change, urgency of needs, an appetite for innovation, the twin crises of the pandemic and climate change. Perhaps it’s all the above. It’s adding up to a mindset change in the practices of philanthropy, one that seems to be blasting forward under the leadership of several foundations that are making a point of sharing their experience with their peers. A sharpened focus on social and climate justice, a commitment to systemic change, and an openness to deploying capital creatively are what link these new foundation approaches.
In my 2022 book From Charity to Change, I profiled 20 or more foundations, many of which are among the best-known names in Canadian philanthropy. I described an evolution in the strategies of these foundations over several years from a charity mindset to a change mindset. But since 2022, there has been a remarkable further transformation. Of these 20 foundations, more than half have changed staff leaders and board members and have pursued new strategies and areas of focus. Seven of them have changed leaders as part of a generational transition or change in strategy. Two of them have spent down or will shortly close. At least three of them are transferring capital directly from their endowments. At least three are committing 100% of their endowments to social impact investments, and most of them are making social investments as part of their overall investment approach. Even more remarkably, many of these foundations changed their long-standing funding practices during the pandemic, and most have continued to practise more flexible, more participatory, and more trust-based approaches.
Members of Generation X and the millennials now in their late 30s and 40s are becoming the decision-makers in foundations.
The pandemic may well have accelerated these changes. But for many, generational change has been a catalyst. Members of Generation X and the millennials now in their late 30s and 40s are becoming the decision-makers in foundations. In 2021, Sharna Goldseker and Michael Moody, the authors of Generation Impact, described the characteristics of the millennial generation of donors and philanthropists. Leaders of this generation want to:
- focus on fewer solutions and organizations rather than follow the “peanut butter” method of spreading their money around
- change systems, not treat symptoms
- be bolder and more experimental
- have tool belts that contain more than just grants and gifts
- push for more impact investing and try out non-traditional funding methods
- go all in with the organizations they support, giving talent rather than just treasure, building more intimate relationships and working closely as partners who share in the subsequent challenges and successes
- align their values across their personal, professional, and philanthropic lives
As millennial leaders arrive on the boards and staff of foundations, these characteristics are beginning to translate into a mindset shift for philanthropy’s language and practice. Broadly, this shift means a transition from transactions to relations, from the language of donor/grantee to partners/collaborators, from grant to investment, from evaluation to learning, from program to capacity support, from restricted to unrestricted or multiyear giving. While the shift is not always consistent within a foundation, especially one that has existed for many years already, elements of it are visible in both older and newer foundations. The generation of leaders now in their early to mid-40s are beginning to make their mark. And many of them have backgrounds in community organizations, social action, and advocacy roles.
Partnering with community
Jane Rabinowicz was named president of the McConnell Foundation in mid-2024. Like many of the new foundation leaders, she has lived experience in the social sector, beginning her career at Santropol Roulant, a community food hub in Montreal, and continuing to work on seed and food sovereignty. The McConnell Foundation is one of the oldest family foundations in Canada and is still governed by descendants of the founder, J.W. McConnell. Since 2020, under the leadership of Lili-Anna Peresa, who had come from a career in the community sector herself, the foundation had already made some important changes, clarifying a choice to focus its funding on “issues of generational importance that are impacting communities across the country and where they believe they can contribute to lasting change.” These areas include climate, reconciliation, and communities, particularly focusing on equity-deserving groups. This focus is shared with other foundations that are going through a similar rethinking of how they can most effectively contribute to the social ecosystem. Rabinowicz arrived at McConnell as chief program officer in July 2021, and with Peresa she began to move the foundation and its practices toward relationship-building and partnering with community. This is an approach that many new leaders are embracing in recognition of the power imbalance between funders and community organizations. By being open about its decision-making, and seeking feedback, the McConnell Foundation is also showing a commitment to learning and to accountability that is not commonly found among private foundations.
Real impact could mean stepping back and creating space for communities to define their own success, shifting from granting to genuinely distributing resources, expertise, and even decision-making power on how funds are flowing.
Arti Freeman, Definity Insurance Foundation
This commitment to being accountable to community is a hallmark of an unusual new foundation on the Canadian scene, the Definity Insurance Foundation. Arti Freeman was appointed as CEO in 2022, coming from a 20-year career in philanthropy at the Ontario Trillium Foundation. The Definity Foundation, created as a legacy to community from a demutualizing property insurance company, has set its course on helping communities across Canada tackle inequities, barriers to good health, and climate-related challenges. Freeman sharpened this vision by emphasizing the goal of social justice. “Justice isn’t simply about offering help – it’s about recognizing the deeper, systemic causes of the challenges that communities experience,” she says. “Philanthropy must work to remove the systemic barriers that prevent people from thriving.” In her view, foundations must rethink how to approach funding: “pooling resources in ways that strengthen community-led initiatives; prioritizing flexible, long-term support; and embedding accountability to the communities served.”
More foundations are hearing from community-led organizations about the importance of providing multiyear and general operating or unrestricted support. And they are willing to do so. As Freeman points out, “real impact could mean stepping back and creating space for communities to define their own success, shifting from granting to genuinely distributing resources, expertise, and even decision-making power on how funds are flowing.”
Using new tools
The next generation of foundation leaders is building on the experiments that a handful of foundations began in the 2010s, including collaborative and pooled funding. This is particularly true for environmental and climate-change funders who know that individual foundations can have little impact on their own in the complex effort to transition to a low-carbon economy. It’s not just the environment, though. Across their areas of interest, the new foundation leaders are looking to collaborate with intermediaries, community collectives, and, more recently, organizations that are not registered as charities. The 2023 change in the federal rules governing foundation grants to “non-qualified donees” (NQDs) has opened the door more widely to work with community groups, movements, and platforms that are not registered with the Canada Revenue Agency as charities. The McConnell Foundation is teaming up with other foundations to encourage more of this granting, speaking about its activities and creating a tool kit to help other funders support NQDs.
The Pathy Foundation is striving to be really intentional about connecting our partners with . . . consultants, tools, trainings, peer-learning opportunities, other grantees.
Michelle LeDonne, Pathy Family Foundation
Other foundations are expanding their thinking about what tools to use. Michelle LeDonne took over as executive director at the Pathy Family Foundation in 2023. She had begun at the foundation in 2019 as a program officer and had previously worked as a fundraiser with community organizations supporting the homeless. She explains that the Pathy Foundation “is striving to be really intentional about connecting our partners with resources that go above and beyond our grant funding [such as] consultants, tools, trainings, peer-learning opportunities, other grantees.”
A similar approach is taken by the Houssian Foundation, a family foundation based in British Columbia. Mira Oreck is the executive director of the foundation, which she joined in January 2020 as its first staff leader, leaving a career in political activism and policy advocacy. Houssian focuses on three primary areas: climate and nature (British Columbia), gender justice (nationally), and community belonging in Vancouver and the Sea-to-Sky region. Oreck confirms that she has seen growth in philanthropic interest in pooled funds and networked funding over the past five years. Houssian has also leaned even more into convening its grantees to connect and learn with each other across portfolios. Oreck believes that this is something that the foundation must do more of to address the loss of social connection we are experiencing today. One of their goals is to strengthen civil society through the simple act of bringing people together. This purpose, as Oreck puts it, is “to create an environment of ‘radical hospitality’ where people are celebrated, thanked, and cared for without expectations – though inevitably connections and partnerships emerge.” The outcomes are difficult to predict or measure, but, she says, “the intangibles are everything.”
We reimagined everything, from how we distribute funds to how we invest. We moved away from excessive oversight and toward trusting the groups we support. This work has been transformational.
Nadia Duguay, Béati Foundation
Nadia Duguay joined the Béati Foundation in April 2022 as general director, after a long career leading Exeko, a charitable organization supporting social innovation and social inclusion. Under her leadership, the foundation began a transformation to align its rules, processes, strategies, and policies with its values of social justice and equity. “We reimagined everything, from how we distribute funds to how we invest. We moved away from excessive oversight and toward trusting the groups we support,” she says. “This work has been transformational.”
Another element common to the foundations led by millennial leaders is their deployment of capital in the form of mission-aligned investing. A frequent critique levelled at endowed foundations is their “warehousing” of assets in the form of investments. The new foundation leaders are aware of this critique, and most of their foundations speak boldly of aligning all assets for mission. In some cases, such as at McConnell, Definity, and Houssian, they publicly commit to aligning their full portfolios with mission, including transferring capital and making direct investments in community-led funds. This is rapidly becoming more mainstream, particularly among foundations committed to social justice.
A challenging future
The engagement with new communities, using different tools and approaches such as convening, collaborating, and advocacy, has meant in many cases a need to reorganize or overhaul skills and process from within. This can be uncomfortable. Not only do many private foundations have new leadership; they are also recruiting new and younger staff who are more diverse and more insistent on having their voices heard and on challenging power dynamics. It is a challenge for leaders to keep their staff engaged as well as their board members. Several of them talk about the importance of becoming learning organizations, partly to build relationships internally and partly to break down the old barriers between funders and communities. LeDonne confirms that internal change at Pathy has “provided a rich opportunity for self-reflection on what was next for the foundation and to reconsider existing ways of working. We’re more agile as a foundation today, more willing to learn, lead, and take risks.”
As these leaders look ahead, they see many challenges. Cathy Taylor, the new leader of the Lawson Foundation, who came out of the community sector in Ontario after several years at the helm of the Ontario Nonprofit Network, says that “it has been a tumultuous year in our communities, in our broader political and economic environments, which has impacted the morale and resilience of our teams, board members, volunteers, and partners. Wars, political uncertainties, inequities, climate change, and more will continue to have an impact on the non-profit and charitable sector.”
All the challenges my foundation is seeking to address – climate change, reconciliation, and social justice – require widespread collaboration and new ways of thinking.
Jane Rabinowicz, McConnell Foundation
While this is daunting, these new leaders are optimistic. Rabinowicz points to polarization as “one of the biggest challenges we face in civil society today. All the challenges my foundation is seeking to address – climate change, reconciliation, and social justice – require widespread collaboration and new ways of thinking,” she says. “This is a time to work differently, a time for ambitious collaboration, doing more together than any of us can do on our own.”
Duguay agrees that “the rise of conservatism, both here and globally, poses a real threat to fundamental human rights.” She says that “foundations must be more than passive supporters. We must take bold, unambiguous stances and invest in initiatives that challenge the status quo.”
Foundations must be more than passive supporters. We must take bold, unambiguous stances and invest in initiatives that challenge the status quo.
Nadia Duguay
All these leaders are taking ideas and strength from each other. Peer groups are more critical than ever. Taylor notes that “even though I have been ‘foundation adjacent’ for my whole career, I found it challenging to orient myself in this new landscape and am grateful for so many colleagues who have made the transition easier.”
LeDonne agrees: “As a new leader, it’s really encouraging to have a peer group [of other foundation leaders] for support and for sharing ideas and challenges – and one that’s working towards similar goals or visions. There is a commitment to learning from each other, complementing each other’s resources and gaps, and to holding each other accountable on our organizational transformation journeys.”
Will the new generation bring about the profound changes in philanthropic roles and approaches that these new leaders speak about? The role of Generation X and millennial board members may also be hugely important. We don’t know yet. But the indications are positive that philanthropy is moving quickly toward this generational change and that it will have major implications for social justice and for communities in Canada that have been underfunded or neglected by philanthropy in the past.
