In the first article in this series on funders and public policy I suggested that the decisions made by policy makers matter a good deal if you are thinking about your approach and the outcomes you hope for as a funder. Think of reducing poverty, improving education, preventing illness or fighting climate change. Then think about how public policy shapes the context in which this work takes place. Clearly, it’s important. Policies on community benefits, child and family tax benefits, supports for social housing and tax benefits for the working poor, rights for disadvantaged populations, etc. All of this makes a difference in whether opportunity gaps can be closed.
There are many ways that funders can help to frame more effective public policies. And it’s not only about advocacy or raising a voice in the public arena. Before we get to advocating for policy, we have to help develop policy. PFC’s guide Funders Making Change: Engaging in Public Policy tells stories about the actions of funders to help develop policy in a wide range of areas. They convene dialogues, bring together issue experts, and operate their own programs. Many funders strengthen the voices of the community in the policy process or create spaces for dialogue and the expression of views. Some foundations do move into advocacy using their own voice to highlight issues in the public space.
If you are a funder who supports policy development, you can:
Here are some great current examples of Canadian funders who are pursuing these strategies:
The Muttart Foundation and the Pemsel Case Foundation
The Max Bell Foundation Public Policy Training Institute
The McConnell Foundation Social Labs
The Graham Boeckh Foundation and Access Open Minds
The Lawson Foundation and the Indigenous Solutions Lab on Diabetes Reduction
If you are a funder who supports policy advocacy, you can:
Here are some more great examples of funders as advocates:
The Early Child Development Funders Working Group
The Laidlaw Foundation Youth Action Fund
The Trottier Family Foundation and the Montreal Climate Centre
The diversity of the actions that foundations can take is remarkable. This is what the federal government calls “public policy dialogue and development” activity. And all of this public policy work is considered legitimate charitable activity by the federal regulator, if it is related to your purposes as a charity. That means “yes you can” fund public policy as a charitable funder.
What makes a private foundation “legitimate”? And what role does public scrutiny play in answering this question? My reflection was piqued by two recent thought pieces on private philanthropy and public legitimacy. The first, from Rockefeller Philanthropy Advisors (RPA), discusses the idea of a "social compact" for foundations. The second, by Krystian Seibert, an advisor to Philanthropy Australia, discusses how foundations can acquire a “social license to operate”. In both cases, it is suggested that private foundations need to think carefully and speak publicly about their legitimacy if they are going to withstand public scrutiny and surmount increasingly frequent public critiques.
The idea of applying “legitimacy” to private philanthropy is not new. People have been talking about the motives of philanthropists since the early days of “big” philanthropy in the United States (the era of Rockefeller, Carnegie and Ford). Wealth draws envy and philanthropy draws suspicion. The two are connected. Anonymous or completely altruistic giving may not attract much public attention. But the giving of large donors and large foundations is frequently publicly known, because there is value in recognizing it (for both recipient and donor) and/or because it must be made public by regulation. And these gifts may be perceived as having strings attached. Or, if the gifts have an impact on communities or public policies, they may be perceived as attempts by the wealthy to exert power. In these cases, people may ask by what “right” do donors make these decisions that affect the lives of others? What is their legitimacy?
Both RPA and Seibert cite books[1] published in the United States in the last two years that are creating a new wave of public attention and critique of the legitimacy of private philanthropy. These books come from a range of observers across journalism, academia, consulting and institutional philanthropy. This range and level of interest reflects the prominence of the role being played by wealthy individuals and also large foundations (whether new or long-established) in fundamentally important issues: education, health care, immigration, community development, environment and climate change. As many argue, the interest is also being prompted, as in the earlier days of the 20th century, by the great income inequality and power imbalances created by public choices about the relationship between state and business under capitalism.
The critiques are American because the imbalances are particularly striking in the United States. But the suspicion of philanthropy and its connection to private wealth is everywhere, as is demonstrated by the criticism of the large philanthropic donors to the rebuilding of Notre Dame Cathedral. In Canada, as well as in Australia as Seibert notes, large individual donors and private foundations are less well-known and therefore their legitimacy is not challenged as frequently. Nevertheless, Seibert describes an Australian foundation (the Ramsay Foundation) which created controversy and accusations of impinging on academic freedom through its gifts to universities. In Canada there is a well-documented local critique of the work of a private foundation, the Lucie et Andre Chagnon Foundation, which mounted an ambitious collaboration with the government of Quebec to fund early child development, ultimately dissolved because of challenges to its legitimacy from the public. The question of the legitimacy of philanthropy is as relevant in Canada as it is south of our border, even if it not yet as vociferous.
So what do we do? Is there a way of justifying the practice of private philanthropy beyond simply stating that it is dedicated to public good? Do we rely for our legitimacy in the public eye on compliance with the regulations imposed by the government (in our case the Canada Revenue Agency)? Historical experience and current criticism suggest that there is an ethical and philosophical obligation to go beyond regulatory compliance. Seibert flags the need to be mindful of “non-state regulation”, or social and public influence on, and expectations of, behaviour. A private foundation must think of its legitimacy as both regulatory and normative. RPA and Seibert take this into the realm of practice with complementary suggestions.
RPA describes its concept of a philanthropic social compact, or “agreement” that a foundation makes with stakeholders about the value it will create in society. In effect this creates the foundation’s legitimacy or social license to operate. How does a foundation do this? Not necessarily through a formal statement. The key is to be willing to demonstrate accountability, which then builds public trust (i.e. normative legitimacy). This can be done through accountability to government regulators, and through transparency of goals and strategies and assessment of impact (internally and externally communicated).
Seibert adds to the construction of normative legitimacy by dissecting legitimacy into: input, output, throughput and context. These are helpful ways of thinking about the practical implications of creating legitimacy. Input legitimacy focuses on the inclusion of stakeholders. Output legitimacy focuses on the delivery of effective outcomes. Throughput legitimacy focuses on internal processes and how they optimize transparency and accountability. Contextual legitimacy focuses on the political and public setting in which a foundation is operating.
Clearly not every foundation is going to create normative legitimacy for itself in the same way. The range of philosophies and operational strategies among private foundations means that there is no single formula. The balance among the different forms of legitimacy creation will be decided by the history, context, governance and operating style of each foundation. And as Seibert notes, it is necessary in scrutinising philanthropy to avoid generalizations and to apply nuance. The contribution of RPA and Seibert is to force us to think more deeply about why foundations should care about their legitimacy, or license to operate, and to be willing to be scrutinized and to scrutinize themselves. In this way we can meet the criticisms and perhaps allay the suspicions that are rising again against private philanthropy.
[1] Winners Take All: The Elite Charade of Changing the World, by Anand Giridharadas, and Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better, by Rob Reich.
It’s federal election season in Canada. Surely a time to consider public policy and its importance to the work of philanthropy. But public policy decisions and programs can have a profound impact on philanthropic goals. The decisions made by policy makers matter very much if you are designing any philanthropic strategy. Think of reducing poverty, improving education, preventing illness or fighting climate change. Can you imagine not thinking about how public policies matter? So, can foundations involve themselves in the policy process? In my view, not only can they but, where possible, they should, if their purpose is to create public benefit.
For many foundations, engaging in public policy work seems totally outside of their purpose. Most Canadian foundations describe themselves as arms-length funders of other charities. Yet foundations play many roles. They convene dialogues, bring together issue experts, commission original work and operate their own programs. While many foundations don’t choose to speak out themselves, they strengthen the voices of others, or create spaces for dialogue and the expression of views. Going beyond this, some foundations use their own voice to highlight issues in the public space. All of this activity can contribute to better public policy.
Even if foundations are reluctant to advocate directly for a policy position or action, they need to pay attention if their mission involves changing the systems that make our society less equal or less inclusive. In a sense, as charities they are compelled to do so. Dr Roger Gibbins, a former Senior Fellow of the Max Bell Foundation, has put it well: “The very concept of a charity carries with it an obligation for policy advocacy that sets charities apart from the private and more broadly defined nonprofit sectors. In short, charitable status confers a privileged position that comes at a price: that charities necessarily assume a moral obligation to pursue the public good.”
Through their funding and work, Canadian foundations have indeed contributed directly to many important public policy changes of the last two decades: the Canada Child Tax Benefit, the Registered Disability Savings Plan, the Portable Housing Benefit, the Ontario Greenbelt, Community Benefits Agreement, the Great Bear Rainforest (Forest Protection) Act and others. They are funding public policy training for charities, supporting policy think tanks, running social policy labs, funding municipal governments, writing open letters and commissioning polls.
All of this is absolutely legitimate charitable activity, if it is related to the charitable purposes of the foundation. Since the 2019 federal rule changes that took the word “political” out of the description of charitable activities under the Income Tax Act, foundations have a clear green light to engage in what the government now calls “public policy dialogue and development” activities. A new guide Funders Making Change: Engaging in Public Policy from Philanthropic Foundations Canada makes the case for why and how funders can engage in public policy work, even if they may not have thought of it as philanthropy. The guide describes the federal rule changes. Even better, it tells stories about the actions of funders in a wide range of policy areas, making their engagement and impact much more vivid.
We face some big and potentially wrenching social and economic challenges in Canada. This is a crucial moment for philanthropy to get involved in policy dialogue and development. This work is a lever for systemic change that can have enormous positive impacts. It is possible and arguably it’s necessary for more foundations to engage. The field of action that is permitted under the law is broad, as long as it serves a charitable purpose. And the public benefit created by foundation engagement in policy work is invaluable.