1:1 with Malcolm Burrows
Over the course of 2019, Nicole Nakoneshny, KCI’s Lead, Knowledge + Insights, is going one-on-one with the members of our Philanthropic Trends Advisory Board to talk about the future of fundraising and philanthropy and explore What’s Next for Canada’s charitable sector.
KCI’S “WHAT’S NEXT?” INTERVIEW SERIES – MALCOLM BURROWS
Malcolm is a nationally-known philanthropic advisor with 29 years of experience, including 13 years with three Toronto charities. He founded and leads Aqueduct Foundation, a neutral public foundation with donor advised funds operated by Scotia Wealth Management. He is head of Scotia Wealth Management’s 100-year-old private foundation services practice.
Malcolm is an active educator, writer and volunteer in the charitable sector. Through the Canadian Association of Gift Planners, he has contributed to the development of new charitable tax incentives, including the elimination of capital gains on gifts of public securities and the “estate donation” rules. His proposal for gifts of private securities and taxable real estate published by C.D. Howe Institute was included in 2015 Federal Budget. He was a member of the Technical Issues Working Group of the Charities Directorate of Canada Revenue Agency for seven years.
Malcolm is President of The Muttart Foundation, an Edmonton-based private foundation, and board member of Médecins Sans Frontières/Doctors Without Borders (MSF), Barcelona, Spain.
Nicole: You’ve worked for many years in the “philanthropic sector” and have played a variety of roles over that time to encourage philanthropy by Canadians. I’m curious to hear your thoughts about what has changed over that time? And what do you feel has stayed the same?
Malcolm: It’s been a period of massive change. The world of philanthropy was much smaller back when I started doing this work. It was quite embryonic at the time. People weren’t really giving major gifts back then – there was very little culture and support for it. Back then, giving tended to be broader based rather than transformational. Now, fundraising is a skilled profession.
In a strange way, some of the things I value the most in this sector are what have thankfully stayed the same; the ethos and the culture. There’s a strong sense of collegiality and sharing in this sector, and the people are great.
Nicole: To your point about Canadian giving shifting away from being broad based – does this concern you?
Malcolm: This isn’t something that’s unique to philanthropy, but more of a reflection of societal changes (increasing income disparity, for example). These things drive and create the context for philanthropy in Canada today, and it’s the reality that we work in. One thing that does concern me from a charitable perspective is the ability for charities to find, access, and engage new donors. It’s harder and harder to acquire new donors. It was great in the 80s because that was the revolution of direct marketing – people answered their telephones and opened their mail! Today, we need new and different ways to connect with donors. The other thing that I think about is the disproportionate concentration of donors among the “big brand” charities, because those are the ones people know. I do wonder what that will mean for smaller, less well known charities and how they will be able to compete.
I was an early advocate for, and still am a big believer in adjusting the tax implications for donations from proceeds from private company share sales, and proceeds from taxable real estate sales. Right now, our incentives tend to focus on public securities and assets, and generally don’t help smaller communities.
Nicole: You’ve been heavily involved in thinking about and advising on tax and policy issues relating to the charitable sector in Canada. From a policy perspective, what improvements could be made to increase the effectiveness of philanthropy and the non-profit sector in Canada?
Malcolm: This is perhaps a scandalous notion, but I honestly don’t think many things could be improved. We have one of the best, most supportive tax policies of any jurisdiction in the world. We are far ahead of the system in America. For example, only about 1 in 1,000 donors in America get any kind of tax benefit (the richest) for estate donations. In Canada, every Canadian receives a tax benefit by giving to charity by will.
I think a greater understanding of some of the tax benefits would be helpful. I suspect the majority of Canadians don’t know how much they save on taxes by claiming charitable gifts. I’d love to see greater clarity and communication about what benefits we have for philanthropists.
I was an early advocate for, and still am a big believer in adjusting the tax implications for donations from proceeds from private company share sales, and proceeds from taxable real estate sales. Right now, our incentives tend to focus on public securities and assets, and generally don’t help smaller communities. If you go to Regina or Kelowna for example, there aren’t any head offices there. But there are private business owners, and real estate owners. It’s a public policy concern that not enough major gifts are benefitting smaller communities, and it should be addressed.
Nicole: As the Head of Philanthropic Advisory Services at Scotia Wealth Management, you work with clients who give very substantial gifts to charities. How would you characterize the conversations you have with these donors? Have you noticed any changes over the years you have played this role?
Malcolm: One of the things I take great pleasure in is the ambition and engagement that donors demonstrate during the planning process. They may come in with a fuzzy sense of philanthropy and what they want to do. But as they drill down, learn, and get involved, it’s just glorious. As for what’s changed, the scale of the gifts and the depth of donor’s involvement have both increased. The increasing value of these gifts is also creating more of a need for intermediaries to help donors navigate the sector and make their investment decisions.
Nicole: You founded Aqueduct Foundation, a public foundation the enables donors to create donor advised funds. Why do donors create these funds? And what is your reaction to the anxiety that the sector feels about this growing practice?
Malcolm: In my world, we deal with large gifts of capital for multiple beneficiaries. We don’t do regular cash gifts from income. Sometimes the gifts are so substantial that it’s too much to give at once, and there’s often not complete clarity on the donor’s part around where they want it to go. A high percentage of people I deal with have values and things they believe in, but they don’t necessarily have a list of charities that they’re close with. So this is a way to make a major donation that reflects their wishes, and then figure it out over time.
Criticism of donor advised funds from the sector is rooted in the notion that investment advisors are locking down money that they can keep forever. At Aqueduct Foundation, our philosophy has always been “facilitating philanthropy”…and we take that philosophy very seriously. From the beginning we’ve had spend-down funds, immediate grants out, and we don’t view it as an endowment only tool.
Having said that, people are right to be thinking about what donor advised funds mean for the sector, especially because it’s the fastest growing vehicle in the sector. But I would also say that all foundations that facilitate donor advised funds have a responsibility to make sure that their charitable purpose remains front and centre, so these organizations can keep their social license.
I think that organizations should be going deeper into their mission in order to compete. That’s the whole point, and that’s what donors want – to make a difference and support an organization’s mission.
Nicole: What advice do you have for charities on how to deal with donor advised funds?
Malcolm: I believe deeply in mission and connection. Some charities may look at this growing practice of donor advised funds and think they need to drift toward this trend – away from their mission – in order to compete. In fact, I think that organizations should be going deeper into their mission in order to compete. That’s the whole point, and that’s what donors want – to make a difference and support an organization’s mission. Also, get to know your donors, especially those with a donor advised fund! These donors have set aside money to support charity, so these are excellent prospects for ongoing support.
Nicole: What’s an issue facing the sector that relates to fundraising that isn’t getting enough attention in your opinion?
Malcolm: I’m concerned about professional staff turnover. High turnover rates create long term instability. When I look at organizations that have the luxury of a long serving team, they generally outperform those who don’t. It’s very hard to do great work when you don’t have staffing stability. And I certainly don’t blame the fundraisers themselves. I think oftentimes they’re hired with crazy expectations from boards that they simply can’t live up to.
Nicole: What are the things that you believe should be on every charity’s agenda right now as it relates to their fundraising?
Malcolm: I always start with clarity of mission and the urgency around this. We tend to be so tactical that we often forget about this. I’m also a big believer in strategic planning and prioritizing. It’s important to have that clarity about what your plan is. Basically; 1) know what you’re doing/why you’re doing it, and 2) know how you’re doing it.
Where do you look for inspiration?
I’m compulsively, obsessively inspired. I don’t really go out and look for it. I find that it constantly shows up on my desk and in my life.
Who (e.g. company, sector) outside of the NFP sector do you think has done a great job of dealing with the disruption they have faced?
Working inside a large Canadian bank, I’ve been quite blown away watching the business and the culture from within. I’ll tell you a secret about big banks – they’re like a swan on the water. It looks graceful and calm from the outside, but there’s always massive, monumental, disruptive change happening inside because of the constant appetite for improvement and innovation.
What was your first experience with “charity” – either giving or receiving?
Charity and volunteering were part and parcel of my upbringing. My mother worked in Social Services, and my dad was President of a non-profit sailing club. He worked so hard to keep that sailing club up and running. This was on the Ottawa River. During the winters with a lot of ice, the sailing club’s docks would literally detach and float down to Montreal, and my dad would actually chase them down the river. I grew up thinking “of course you volunteer to chase docks down to Montreal”. It was normal!
You have a Masters in Drama – how has this experience helped you in your career?
First, it’s helped my people skills and intuition and helped me to both value and work well in a team. It’s really important to have a different mix of skills in a team, and coming from a humanities background has made me people sensitive.
In a bizarre way, it also helped me learn things like tax policy. I didn’t have a background that was related to public policy in any way, but my humanities background helped me come at it from a different angle. I was able to approach challenges in ways that others in the tax community may not have. Also, the process of learning a complex topic in itself was made easier by my experience as a journalist, which was my first job. As a journalist, you’re interviewing someone about something you may not know anything about. So you have to ask questions like “what does that mean?” and “how does that work?” Then you’re able to communicate it in plain language to a broad audience.
Why did you stay in the sector and profession?
There’s just no better. I’m a pragmatic idealist. I like being able to achieve things that benefit the world, but I also like dealing with very practical problems, and being able to implement. I’ve been very fortunate to find a career that allows me to do this.
What advice would you give to your younger self as you were beginning your career in philanthropic planning?
Keep saying “yes”. Keep putting your hand up. The reason I ended up in this wonderful space is because I kept volunteering for things and making connections with new people.