Opening the Curtains in Philanthropy

Hilary Pearson

Do we need to open the curtains in the house of philanthropy? Many would say yes. But easier said than done. What does that look like? Who decides? And how far to go?

WINGS, the global network of philanthropy associations, offers some answers, or at least some ways of getting to answers, with a new publication for foundation leaders, boards and staff.  It is ambitiously titled Moving From Reflection to Action: A Guide on Transparency and Accountability for Philanthropic Organizations. This title tells us why transparency should be considered by foundations and other philanthropic organizations: transparency is part of accountability. WINGS suggests that both are a “precondition for building trust, legitimacy, and community support for each organisation's work.”

Governments are also raising the bar on philanthropic organizations to prove their legitimacy. Government regulation of philanthropy is justified by the need to protect the public interest. Particularly in those places where donors receive tax benefits for their giving, there is public interest in ensuring that philanthropy benefits public and not private causes. It is interesting that this WINGS publication was funded by the European Union. It comes as the European Commission has just released its proposal for member states to provide tax incentives for the social economy, including corporate tax exemptions and income tax incentives for individual donors, as well as facilitating cross-border giving within the EU.

In Canada, regulators and policy makers are under pressure to gather more data on philanthropic activity. The federal government is preparing new questions for charitable funders to answer later this year in their annual report of disbursements and investments. The curtains are being pulled open, by community partners who want to know more about their philanthropic funders, and by governments who want to know more about how the public interest is being served.

So, this guide from WINGS comes at an opportune time. But what does it address? The guide defines transparency as “the state that results from making information available from inside an organisation to a wider public, either through proactive publication or by responding to requests for information.” It defines accountability as “a readiness to take responsibility for actions, achieved by being transparent about those actions against a pre-defined framework of values and indicators, and responding to the findings of any evaluation and/or the feedback received from stakeholders.”

Many Canadian philanthropies passively meet the test of transparency by making information on governance, financials, and charitable activity available through the annual disclosure to government. However, this information is usually at least a year out of date when it is published on a public database by the Canada Revenue Agency. This is remedied to some degree by maintaining up to date websites and reports which some foundations publish proactively. But the published information varies from detailed to scanty. There are few guidelines on what should be made public, with the exception of those provided in the voluntary Imagine Canada Standards Program

The WINGS guide provides a helpful mapping list of topics and documents that could be made public and discusses some of those that should remain private such as employment records and personal data. It also suggests some useful criteria for discussion internally around what information to provide and under what circumstances. The guide adds suggestions on how to make a transparency policy stick, including designating a responsible person for ensuring that transparency rules are followed, and regular reporting and evaluation of the transparency policy. This will seem onerous to smaller organizations. But the guide is rigorous in its description of what make a transparency commitment more than just words on paper.

Similarly, in its description of a path towards greater accountability, the guide recommends an accountability plan that engages everyone from the board to the most junior staff member. Such an accountability plan has many developmental steps and is arguably more challenging to formulate than the transparency action plan as it involves identifying to whom and for what the philanthropic organization is accountable. The brave organization will also consider how to deliver that account and what to do when it is not meeting expectations. Recognizing this challenge, the guide does its best to describe each step and provides checklists to help along the way. It doesn’t provide any models or examples of organizations who have attempted to walk the path and who can share success and failure.  This would be very helpful. WINGS is inviting organizations to tell their stories and we may see more of these as this guide is taken up and implemented.

This is a valuable tool for philanthropic foundation boards and leaders of organizations of any size. And it comes at the right time. I do see Canadian funders creating and making public their data and reports on goals and outcomes as well as activities. 

A couple of recent examples: 

  • The Daymark Foundation, a recently established family foundation with a clear statement of its goals, strategies and hoped-for outcomes on its website to create transparency, and a published funding review to report on its first two years of funding.
  • The McConnell Foundation, a long established family foundation, which published its first ever annual review in 2022 and is continuing its commitment to transparency with an annual review of its strategies and funding as well as an impact investing annual report which it began in 2019.

And there are other examples! We are seeing more opening curtains in Canadian philanthropy. What would be interesting would be to have one of these foundations measure their reporting against the WINGS guide suggestions and let us know how they are doing and what may come next.

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