Engaging Members and Working with Government: A Case Study from Canada

Hilary Pearson President & CEO Philanthropic Foundations Canada Ottawa, Ontario October 25, 2005

Outline of Presentation

Policy Issues and Positions

How do we define our positions?

Member Needs and Views

How do we engage our members?

The legal framework Successes and lessons learned
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Approaching Government

PFCs Mission

Our mission, crafted in1999 when PFC was created: to promote the growth and development of effective and responsible foundations,and to foster a social and regulatory environment that encourages philanthropic contribution Second part is the driver for PFCs government relations strategy
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Our Policy Issues

PFC was created (in part) to advocate on behalf of private foundations. Why? A) Tax Policy Issues

Longstanding federal government suspicion of private foundations as vehicles for potential self-dealing. Tax policy changes in 1997 discriminated against donors to private foundations.

Discrimination particularly unfortunate for charities because they restricted donations of assets (securities) to private foundations when assets had higher market value in late 90s.
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Our Policy Issues (cont)

B) Funding Access for Charities

Previous to 1999, organized private philanthropy was represented through an organization that also represented charities (Canadian Centre for Philanthropy) Private foundations wanted to add their distinct voice to the debate over donor incentives and the lack of adequate funding for charities In 2000-04, federal government introduced regulatory changes to disbursement rules and other tax regulations System is now much more complex for all charities.

C) Regulatory Issues

Our Policy Issues (cont)

PFC does not intervene on public policies at sub-national levels.

We also have not intervened up to now in national policy debates in specific areas such as environment, aboriginal affairs, or external affairs.

Our mandate focuses on the public regulatory environment and on promotion of philanthropy

We have no research capacity as an association to weigh in on policy issues in key areas such as social services, health, education etc. Our role is to inform and to convene on these issues.
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Defining a Position

Policy positions are defined by our Board of Directors

Elected annually from the membership Now at 15 directors Representative of the range of foundations

Executive Director drafts initial positions

Reviewed by two Board Committees (Government Relations, which includes Board and non-Board members, and Executive)

Executive Director typically presents PFCs positions

Presentations to committees of members of Parliament Discussions with officials Dialogue with Ministers Conversations with media

Member Needs and Views

Informing them

We communicate regularly with members on regulatory issues

Monthly newsletter Bi-annual member advisories Member seminars on tax and regulatory issues Briefs to parliamentary committees

Soliciting their opinions

We survey members on specific issues We ask for feedback by email and we get it We answer them on individual issues
Through the newsletter Through our annual report Through memos on specific topics

Giving them feedback

Member Needs and Views (cont)

Do member views diverge?

So far, we have avoided divisive debates We have unanimity on the importance of more favourable tax incentives for donors to private foundations Consistent support for PFCs positions on regulatory issues of importance to the charitable sector, such as rule complexity. Members are sometimes frustrated with the slowness of policy change Context of policy work is unfamiliar to most. Internal debates within government are of less interest to private donors. But no member has withdrawn because of lack of progress on policy changes. Policy change is understood to be evolutionary

Members want faster action

On Engaging Members: Reflections

Members are not uniformly interested in the policy/advocacy role

For many, the associations role in advocating for tax changes has not been a main reason for joining. Members value the learning and networking benefits more than the vaguer policy change benefits.

Complexity of tax and regulatory issues discourages many members from participating actively

Staff lead the work of advocacy on behalf of members.

Nevertheless, the advocacy role has been critical to building visibility and credibility for the network

Members value the association more highly because it is seen as part of the charitable sectors leadership umbrella organizations. Some members also see the association as an important vehicle for contributing more effectively to federal policy discussions on sector regulation.
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Approaching Government

PFC is a registered charity in Canada

This status imposes certain constraints on our political advocacy role. Substantially all of our resources must be devoted to charitable purposes and activities.

The 10% rule: Political activities can absorb no more than 10% of a charitys resources annually (if charitys annual income is over $200,000). Smaller charities can use up to 20% of their resources. Clearly partisan political activities are ruled out. Advocacy for a particular policy change must be approached carefully and with balance. Charities can engage in letter writing campaigns, rallies or other organized mass campaigns. But they must not exceed the 10% rule.

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Approaching Government (cont)

What is allowed political activity?

Political activities of charities, according to law, include the following:

If a charity explicitly indicates in its materials (whether internal or external) that the intention of the activity is to incite, or organize to put pressure on, an elected representative or public official to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country then this is considered a political activity.

A charity risks revocation of its status if it oversteps the 10% limit.

Implies that charities have to keep careful track of staff time and expenses on advocacy work.
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Approaching Government (cont)

Canadas charity law in effect puts a chill on advocacy work for many

Umbrella groups and associations such as PFC and CFC must keep a watch on the extent of their activities, if they involve advocacy for policy change. Working directly with parliamentarians Working with officials More rarely, working with media and communications or government relations specialists. Working with partner organizations in the charitable sector.

Within this constraint, there are many avenues:

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Successes and Lessons

PFC has worked for six years to obtain a specific tax policy change. We have not yet obtained it. Can we claim success?

No, if measured by the announcement of the desired change. Yes, if other measures are used, such as:

Increased access to civil servants Successful clarification of underlying issues through data Increased visibility to elected officials Increasing numbers of public statements of support for the change.

So, yes we do claim success, measured incrementally.

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Successes and Lessons (cont)

What are our success factors?

Proximity/regular contact with government officials Staff or Board knowledge of government processes and culture Good data Allies (or a lack of opponents) Being in the right place at the right time
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Successes and Lessons (cont)

Some of the lessons we have learned:

Be consistent Be persevering Cover all possible bases (political and bureaucratic) Develop solid research and good data Seek and gain support from other organizations Be vigilant for the right moment to push for change.
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Annex: Information on PFC

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PFCS Organizational Goals (1999)

To become a centre of ideas, learning and mutual support for foundations; To increase public awareness of the value of private foundations and to provide assistance in the development of new foundations; To serve as a positive voice for the foundation sector and an effective vehicle for its members to express their views to government;

To provide leadership in the foundation sector through the identification and encouragement of best practices and principles;
To serve as a resource on philanthropy and foundations at large.
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Who are PFCs Members?

PFC has 82 members;

Majority are private family foundations Also some independent non-family and public foundations Distributed among large, medium, small foundations Large ($50M+) 28% Medium ($10M to $50M) 31% Small ($10M-) 41% Represent half the assets of active family foundations

Members from across Canada

Total assets of about $ 4.5 billion

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The Foundation Sector in Canada

In 2004, 2,324 active grant making Canadian foundations*

Of these, 83.7% are family foundations (1,946) Others include community, corporate and special purpose foundations Few have assets of more than $50 million Majority of family foundations have assets under $10 million

Source: Imagine Canada online data (16 May 2005) from Directory to Foundations and Corporations. As at December 2004, the number of CRA registered foundations is 8,500.

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