The OAF Blog

Philanthropy in a Networked World

December 17, 2013

The Monitor Group, a consulting forum ( part of Deloitte’s ) spotlights promising new ideas and practices, including pioneering new models of philanthropy. They are associated with a Canadian task force focusing on philanthropy – Northern Lights. As more information and results from this task force become public, we’ll share in future the findings and highlights.

What's Next For Philanthropy?

A 2010 report articulates "next practices", how foundations and philanthropists can develop approaches better suited to achieve positive social impact in today’s interconnected and interdependent world.

In the past 10 years, much focus in philanthropy (including arts organizations) was on how to improve organizational effectiveness and efficiency -- to better deliver programming in an environment of constrained resources. Over the next 10 years, the Monitor Group believes a further focus will be on coordination and adaptation. This means that funders will need to look to others and partners and co-ordinate efforts to address the challenges we collectively face. Because of the rapid pace of change, organizations need to be adaptable – incorporating data in a continuous loop to see what is working well and regularly adjusting strategy to add value. The collective theme is – Act Bigger and Adapt Better.

Innovation and Cross-Sector Collaboration
Going forward, the most successful funders will want to embrace a network mindset and see their work as part of a large, diverse community of partners - a more powerful effort. Funders don’t need to work with others, but if they want to achieve significant impact in their communities, they will have to. We will need to enhance our capability to lever, shift and adapt strategy in real time.

In Canada, public innovation to meet social challenges requires not for profit leaders as well as business heads and philanthropists to work outside their comfort zones. Examples of innovative organizations working collaboratively to bring forward new initiatives include:

    • Social Capital Partners: led by philanthropist Bill Young, this organization is applying market solutions to help the disadvantage find employment;

    • JUMP: initiated by John Mighton, this initiative helps children build confidence and self-esteem, through a focus on developing mathematical skills -- resulting in higher academic success;

    • Evergreen Brickworks: Green cities for a healthier planet, develops a model that balances social goals with financial necessity – blending commercial activity with grants and private donations; and

    • MaRs Centre for Impact Investing: builds online investment platforms that mobilize private capital for public good.

Place des Arts, Sudbury
In an arts context, 8 francophone arts groups in Sudbury came together to foster collaboration between arts groups with the objective of creating a shared culture facility. The facility ‘Place des Arts’ is to be built centrally, as part of a broader initiative to re-vitalize downtown Sudbury. The project is independent, but is closely related to two other major infrastructure investments in the city – a new School of Architecture and new home/expanded space for the Art Gallery of Sudbury. Collective community input and shared knowledge of each projects’ goals is helping to achieve a larger success.

For more information on "next practices":
What's Next for Philanthropy, by the Monitor Institute 

Commentary with a Canadian context can be found in this article by Deloitte:  
Canada Needs a Social Revolution


Achieving Steady (And Growing) Investment Returns

November 04, 2013

A recent article in a US philanthropy publication reported that endowment funds held by charities and foundations were reporting average 5% returns (2011) and that investment performance has still not fully recovered from the steep market declines in 2007-2008. The article indicated, in this environment of low returns, some organizations were moving to ‘protect’ the endowment value by  lowering endowment payouts, appealing to donors to contribute, or seeking higher returns by investing in alternative asset classes.


OAF Investment Policy
The Investment Policy of the Ontario Arts Foundation states that the principal objective is to secure steady, positive long terms returns that help ensure consistent income payouts to arts organizations.  An equally important objective is to grow the value of the endowment portfolio so that the income it generates can keep pace with or be greater than the rate of inflation.

Each year, the board  of the Foundation reviews investment performance and determines how much can be paid out from the endowments we administer. This helps arts organizations to plan how they will use this important source of ‘unrestricted income’.   This annual review takes a balanced approach:

          • pay out income such that organizations receive steady, and increasing income; and
          • retain and reinvest part of the returns for future years.

Retaining some of the investment return is a safe guard to ensure that in a year where investment markets may experience a downturn, we are holding sufficient funds that enable the foundation to pay a similar level of income even if markets underperform.


Strong Investment Returns
We are pleased to report that changes the Board made in our asset mix and investment strategy in 2012 are resulting in positive investment results which exceed the levels reported in the US.  To the end of September 2013, the Foundation portfolio achieved a positive 9.1% year to date return, and for the one year period, performance was a strong 12%.


2012 Investment Strategy
In 2012, we made changes in our investment managers, which included allocating part of the portfolio to alternative investments. Without materially increasing the level of ‘risk’ in the portfolio, the more active investment strategies of the managers are adding value to positive results from more traditional asset classes of equities/fixed income.  Earlier this year, the Board also felt that investment returns from fixed income/bonds are lower than the risks associated with fixed income ( we continue to be in a period of low interest rates ) and fixed income weights were reduced, reinvesting into equities.

The Board of the Foundation meets regularly with our investment managers to receive information about their view of global investment markets, current strategy and performance. We are pleased with these results, which will support our ability for continued stable distributions of income.


Unrestricted Income
As the income we pay out is ‘unrestricted’, arts organizations can allocate the income where they feel it is most needed within their organization. It is recurring income and not subject to lengthy, sometimes complex granting program requirements.



Strategic Investing in the Arts

October 07, 2013

I recently read a comprehensive outline for a strategic framework for investing in the arts. Based in California, the paper by the William and Flora Hewlett Foundation is a superb description of the role of a foundation as funder, a descriptor of why we should invest in the arts, and an outline of what is offered/expected of the relationship between arts organization and funder. The foundation offers a compelling reason for investing in the arts.

“The performing arts offer a unique human experience that bridges cultural and generational lines. Philanthropy plays an important role in supporting the performing arts….and its approach to providing multi-year operating support”

At a time when many arts organizations invest considerable time in researching and completing funding applications, trying to make their mission ‘conform’ with a granters program for funding, it is refreshing to see a foundation that provides multi-year funding in a way that allows the organization the freedom to determine where best to apply the funds received.  "The Foundation has persisted in providing a significant portion of its support in unrestricted form, while other funders have increasingly favored project support."

This is similar to how endowment income is made available by the Ontario Arts Foundation. It frees the organization to invest more of their time with programs, supporters and the community.

The paper is not long and really well written. I encourage you to take a look.



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