The cover article of the Globe and Mail Report on Business Magazine featured a provocative quotation by a cemetery industry executive. “In what other business in the world is the buyer given a warranty that extends to the end of time?” The answer – if you replace “buyer” with “donor” -- is foundations that manage endowments and other long-term funds and encourage gifts in estate plans.
The question points to an underlying practical issue: forever is a long time. What are the mechanisms that will enable continuity of the foundation and the prudent management of the funds over the long term? This question is particularly pertinent for Canadian foundations with donor advised funds, many, like Aqueduct Foundation, which are less than 10-year-old.
This is a challenge that Aqueduct has considered since inception.
Below are three key points for consideration:
- Governance. Governance is the source of foundation longevity. Is there a strong, knowledgeable board? Is it independent? Is there a culture of checks-and-balances? Are there processes for board succession and renewal? A foundation needs to be greater than any one person and the “founder syndrome” is often more curse than blessing.
- Critical Mass. A very practical issue for a foundation is critical mass of resources. Does a foundation have sufficient funds to ensure it is self-sufficient and cost-efficient? Modest funds under management are a source of long-term instability and inefficiency.
- Staffing. Does the foundation have knowledgeable professional staff? Does it engage in succession planning and address retention? Aqueduct is backed by Scotiatrust, a major national corporate trustee, which has been managing charitable foundations since 1927.
Charitable foundations with donor advised funds are not a financial or investment product. They are registered charities that are fiduciaries of the funds they hold and manage for the public benefit. This obligation needs to be front-and-centre.
Aqueduct Foundation is dedicated to long-term endowments and estate donations. Like the Roman aqueduct that inspired it, Aqueduct Foundation will be there.
Malcolm D. Burrows