As originally published in the Toronto Star.

The pandemic's exposure of the many challenges facing our society is driving donors to focus on measurable impact.

The global pandemic, social injustices and the consequences of climate change are reshaping philanthropy in Canada. Today's donors don't just want to help those directly in need, they want to make a meaningful contribution in addressing the major issues affecting society, such as systemic discrimination, the legacies of colonialism, and achieving a net-zero future.

This means donors of all income levels are taking a more active role in their giving and that includes challenging charities to demonstrate the measurable impact of their investments. In fact, KPMG's recent report, "Disruptive Philanthropists," found that roughly three-quarters of donors now cite measurable impact as a deciding factor when selecting causes to support.

Today's donors are prepared to learn and do more to ensure their investments have a real and measurable impact. This includes listening to new voices that challenge outdated thinking and taking into account environmental, social and governance (ESG) principles.

This shift in mindset is driving a push for new and better data to analyze impact. KPMG's research found that two-thirds of philanthropists have adopted data as part of their evaluation of impact, and 42 per cent want structured feedback from their beneficiaries. Data to measure impact is also increasingly valued by donors to support evidence-based decision-making and analysis.

Unfortunately, many charities struggle to provide quality and consistent data across jurisdictions and frequently lack the resources to meet this growing demand, putting their organizations at risk.

Recognizing the problem, leading national organizations and charities recently made recommendations to the federal government about the need for changes to current official data collection practices to support increased transparency and equity within the charitable sector.

The reality of funding inequities was underscored in the 2021 study "Canadian Charities Giving to Indigenous Charities and Qualified Donees," which evaluated gifts from Canadian registered charities to "Indigenous groups" in 2018. The research found that "even though Indigenous People are about 4.9 per cent of the population, Indigenous groups received just over one-half a per cent of gifted funds."

A landmark study on philanthropy by the Foundation for Black Communities also provided valuable insights into the existing disparities in Canada. The study of 40 charitable foundations revealed that grants to Black-serving organizations represented a meagre 0.7 per cent of the total grants issued by those foundations in 2017 and 2018.

Without support from donors, smaller and underfunded charities and non-profit organizations will struggle to produce the data increasingly sought by donors, and this in turn could further hurt their funding.

The recommendations to government also propose to expand the definition of what officially qualifies as a "donee" under the Income Tax Act, potentially allowing for a wider range of funding recipients.

To make a real impact on the big social issues, more collaborative approaches are needed, with the charities themselves and other key partners. In our research, we found this trend is growing. Sixty-three per cent of philanthropists believe that to deliver true impact, they need to combine their efforts and are increasingly partnering with other foundations, philanthropists, businesses and government bodies.

Internationally, the Giving Pledge, a promise by the world's wealthiest individuals to give the majority of their wealth to charitable causes, includes signatories here in Canada. Giving circles, where groups of engaged donors pool their funds, are a good example of effective collaboration.

The realities of the past two years have exposed the inequities that exist in our country, and a commitment from many to do their part to remedy the issues behind it. The growing spirit of giving back can come in many forms. In addition to donating money, we can also dedicate our skills, time and social networks to organizations that contribute to meaningful change.

Philanthropy can be a highly rewarding experience for family members and an excellent way to strengthen family bonds and reaffirm shared values. Giving with purpose can also educate the next generation about financial literacy and complex societal issues.

The first step is to define what is most important to you and who will be involved in your philanthropic journey. From there, embark on a process of education to gain a deeper understanding of the issues and learn from the charities and the people they serve. When you decide to give back, carefully consider whether all potential funding recipients are treated equitably. Ask about existing data that demonstrates impact, but be flexible and aware that this information may be limited or different for each charity.

Given today's challenges, a modern mindset to philanthropy is our best chance to challenge status quo solutions and build a better future for everyone.

https://www.thestar.com/business/opinion/2022/01/15/modern-philanthropy-is-challenging-the-status-quo.html

© Copyright Toronto Star Newspapers Ltd. 1996 - 2021The Toronto Star and thestar.com, each property of Toronto Star Newspapers Limited, One Yonge Street, 4th floor, Toronto, ON, M5E 1E6