The Canadian Charity Law Podcast

The episode provides a guide for establishing a private foundation in Toronto. It outlines key considerations such as defining the foundation's mission and legal structure, selecting a jurisdiction, and securing funding.

Further topics cover endowed funds, active versus passive funding models, and effective management strategies.

This episode is jointly sponsored by B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm exclusively serving charity and not-for-profit clients in Toronto, Ontario and across Canada with registration and governance, and B&H Charity Accounts Group, a bookkeeping firm serving Canadian charities in Ontario with all their financial and tax filing needs.

https://www.charitylawgroup.ca/
P: 416-488-5888

https://www.charityaccountingfirm.ca/
P: 289-301-8883

Creators and Guests

DJ
Producer
Dov Goldberg, J.D.
Dov Goldberg is a manager partner at B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm Providing Services Exclusively to Charities Across Canada

What is The Canadian Charity Law Podcast ?

Exploring the ins-and-outs of Canadian Charity Law in a way that can be understood by the layperson, including Charity Registration, Not-for-Profit Incorporation, Charity Governance, Charity Fundraising, Tax Receipting, and much more!

Sara:

Alright. So you're thinking about starting a private foundation in Canada.

David:

That's amazing.

Sara:

Yeah. It's pretty incredible.

David:

Yeah.

Sara:

And we're here to help unpack this journey with you.

David:

Absolutely.

Sara:

We're gonna be pulling some insights from the source

David:

Okay.

Sara:

Called what to consider when starting a private foundation in Canada.

David:

Mhmm.

Sara:

It's from the BIG Charity Law Group.

David:

Excellent resource.

Sara:

Yeah. So think of this deep dive as, like, your guide Yeah. Walking you through some of those critical first steps.

David:

A road map.

Sara:

Yeah. Exactly.

David:

Yeah. It's a path that many find incredibly rewarding. Mhmm. But it certainly has its own complexities. Yeah.

David:

And understanding those complexities from the get go can really set you up for success.

Sara:

Yeah. For sure. And this guide kicks off with a question, and I think it really sets the stage.

David:

Right.

Sara:

It basically asks, have you considered whether there's already a charity out there Yeah. Doing fantastic work in the areas you're most passionate

David:

love that question. Yeah. It's it's such an important one, and it's so often overlooked in the initial excitement of, you know, starting something new.

Sara:

Right.

David:

Sometimes, the most effective way to make a difference is by amplifying the efforts of those who are already making strides. Yeah. And you'd be surprised how much time and resources that can save you.

Sara:

Yeah. For sure.

David:

And you might even gain some valuable insights from their experience.

Sara:

Yeah. And the guide puts it as, like, DIY or donate.

David:

I love that.

Sara:

Yeah. It's catchy.

David:

Yeah.

Sara:

It's all about finding that approach that best aligns with your vision.

David:

Right.

Sara:

Whether that's building from scratch or empowering existing initiatives.

David:

Exactly.

Sara:

But let's say you've explored all those options

David:

Okay.

Sara:

And you're ready to take the leap.

David:

K.

Sara:

Where do we go from there?

David:

Well, that's where defining your foundation's mission comes in.

Sara:

Okay.

David:

This is where your passion takes center stage.

Sara:

Right.

David:

What change do you wanna see in the world? Mhmm. What legacy are you hoping to build?

Sara:

Yeah. We're talking education

David:

Yeah.

Sara:

Health care, the arts and culture. The possibilities are endless.

David:

Absolutely.

Sara:

This step is about capturing the heart and the soul of your foundation, like, the driving force behind every decision you make.

David:

And that clarity of mission is so vital Mhmm. Because it acts as your guiding star.

Sara:

Right.

David:

Everything your foundation does should ultimately flow from that core purpose.

Sara:

Okay. So we've got this incredible vision in place.

David:

Right.

Sara:

How do we start giving it a tangible structure?

David:

That's where the legal framework comes in. Right. We need you to determine the best legal structure for your foundation, whether that's a trusted corporation Yeah. Or another option.

Sara:

Right.

David:

This can feel a little daunting. Yeah. And the guide rightfully emphasizes the importance of seeking legal counsel early on.

Sara:

For sure.

David:

They can navigate the complexities and ensure that you're on solid ground.

Sara:

Yeah. It's all about setting yourself up for success. Right?

David:

Absolutely.

Sara:

And speaking of setting up shop

David:

Okay.

Sara:

The guide also points out the importance of choosing the right jurisdiction. I've gotta admit, I never really thought about how location could impact a foundation.

David:

Oh, it absolutely can.

Sara:

Oh, really?

David:

Different jurisdictions have different rules, tax implications, even different philanthropic landscapes. For example, registering in Ontario might give you access to certain provincial grants that wouldn't be available elsewhere.

Sara:

Interesting.

David:

Or perhaps Alberta's unique tax structure for private foundations might align better with your goals.

Sara:

Right.

David:

Careful consideration here can really make a significant difference in your foundation's overall impact.

Sara:

So it's not just about where your foundation is physically located

David:

Right.

Sara:

But it's about creating that optimal environment for it to thrive.

David:

Exactly. Now once you've established your legal structure and chosen your jurisdiction Mhmm. It's time to think about the foundation's internal structure.

Sara:

Okay.

David:

The team that will bring your vision to life. Yeah. This involves establishing a board of directors.

Sara:

Okay.

David:

Your leadership team, so to speak.

Sara:

It's like assembling your dream team of advisers, each bringing their unique skills to the table. Exactly. But how do you, as the founder, balance your vision with giving the board the freedom to make decisions?

David:

That's a great question, and it's something that a lot of founders grapple with. Yeah. Striking that balance between guidance and autonomy is key. Mhmm. A well structured board Yeah.

David:

Potentially including trusted family members

Sara:

Okay.

David:

Can ensure that your vision is carried forward Right. While also benefiting from diverse perspectives and expertise.

Sara:

So it's a truly collaborative effort.

David:

Absolutely. And speaking of collaboration

Sara:

Okay.

David:

We can't forget about another vital element, funding.

Sara:

Right.

David:

Will you be the sole contributor to your foundation Mhmm. Or will you be inviting others to join that journey?

Sara:

That's a big decision.

David:

It is.

Sara:

It impacts everything from the scale of your initiatives to the overall sustainability of the foundation.

David:

It does indeed understanding your funding sources. Yeah. Whether it's personal contributions, family wealth, or other avenues

Sara:

Mhmm.

David:

Allows you to set realistic goals and develop a sustainable funding strategy.

Sara:

And the guide really emphasizes the importance of setting those realistic goals

David:

Yes.

Sara:

Based on those funding sources. Right?

David:

Yes. Yeah. It's about being strategic and ensuring your foundation can truly thrive in the long run.

Sara:

Okay.

David:

And this brings us to a fascinating concept that's often discussed in the context of long term impact. Okay. Endowed funds.

Sara:

Endowed funds.

David:

Have you heard of this?

Sara:

I have. Yeah. Okay. So imagine setting up your foundation so that its investments generate enough income to fund your mission forever. That's incredible.

Sara:

That's the power of an endowed fund.

David:

It's like planting a seed that keeps growing and giving back for generations to come.

Sara:

That's a great analogy. Yeah. However, managing those funds does require careful planning and financial expertise

David:

Right.

Sara:

To ensure that they're used wisely and sustainably. It's a responsibility that shouldn't be taken lightly.

David:

So we've covered a lot of ground already. We have. Defining the mission, legal structure, jurisdiction. Mhmm. Structuring the foundation itself funding.

Sara:

It feels like we're building a really solid foundation

David:

Yes.

Sara:

For understanding what it takes to make this dream a reality.

David:

Absolutely.

Sara:

What else should we consider as we continue on this philanthropic journey?

David:

Journey? Well, now that we've covered the foundational elements

Sara:

Okay.

David:

It's time to explore how your foundation will operate and make a tangible difference.

Sara:

Alright.

David:

Let's delve into that in our next segment.

Sara:

Welcome back to our deep dive into starting a private foundation.

David:

It's great to be back.

Sara:

Yeah. I'm feeling really inspired by all the possibilities we've discussed so far.

David:

Me too. It's exciting.

Sara:

Yeah. We've laid the groundwork.

David:

Yeah.

Sara:

Now it's time to explore how we translate all of that planning Right. Into tangible action.

David:

Exactly. We've built the foundation. Mhmm. Now it's time to decide how we're gonna furnish it.

Sara:

I like that.

David:

The guide highlights a crucial decision point here, choosing between active and passive funding.

Sara:

So are we rolling up our sleeves and running our own programs?

David:

Yeah.

Sara:

Or are we taking a step back and empowering other organizations through grants?

David:

That's the question.

Sara:

It's a big one.

David:

It is, and there's no right or wrong answer here.

Sara:

Right.

David:

Imagine you're passionate about tackling climate change.

Sara:

Okay.

David:

With a passive funding model, your foundation could support a reforestation project in the Amazon rainforest.

Sara:

Wow.

David:

Fund research into renewable energy, contribute to advocacy efforts pushing for policy change all at the same time.

Sara:

So it's like we're spreading out our resources.

David:

Exactly. It's a way to amplify your impact

Sara:

Yeah.

David:

By fueling the work of others.

Sara:

But wouldn't some people argue that you lose a certain level of control over how your funds are being used?

David:

That's a valid concern.

Sara:

Yeah.

David:

With passive funding, you're entrusting other organizations

Sara:

Right.

David:

To carry out your vision effectively. Oh. Due diligence and strong partnerships become really crucial here.

Sara:

Gotcha.

David:

On the other hand, opting for an active funding model

Sara:

Okay.

David:

Gives you more direct control over program design and implementation.

Sara:

So if I envision building community gardens in underserved neighborhoods

David:

Yeah.

Sara:

I could hire stat, develop curriculum, oversee every aspect of the program.

David:

Exactly. It's a much more hands on approach.

Sara:

Yeah. And for some founders, that direct involvement is a key part of their philanthropic vision.

David:

Absolutely. They wanna be deeply engaged in shaping the change they wanna see in the world.

Sara:

But that level of involvement also requires a lot more resources expertise, administrative capacity. Right?

David:

Absolutely. Running your own programs can be incredibly rewarding.

Sara:

Mhmm.

David:

But it comes with a significant set of responsibilities. Okay. It's a bit like launching a mini organization within your foundation.

Sara:

Right.

David:

You might need a dedicated team to manage operations Uh-huh. Ensure compliance with regulations Mhmm. And track progress.

Sara:

It sounds like choosing between active and passive funding really depends on a combination of factors. It is. Like, your personal preferences Yeah. The resources you have available Mhmm. And the specific goals you're hoping to achieve.

David:

I couldn't agree more. There's no one size fits all answer. Yeah. And the guide encourages really thoughtful consideration of all these factors.

Sara:

This whole conversation's reminding me of something the guide emphasized earlier Okay. About seeking expedite legal advice.

David:

Yes.

Sara:

It makes sense to have someone in your corner who understands the nuances of charity law

David:

Mhmm.

Sara:

Can help you navigate those complexities.

David:

Absolutely. It's an investment worth making

Sara:

Yeah.

David:

Especially when you're dealing with such important matters.

Sara:

For sure.

David:

Think of it like having a season guide as you navigate uncharted territory.

Sara:

I like that.

David:

They can help you avoid pitfalls

Sara:

Mhmm.

David:

Ensure compliance, and ultimately protect your foundation's integrity and effectiveness.

Sara:

So we've covered choosing between DIY or donating Yeah. Defining the mission, determining the legal structure

David:

Uh-huh.

Sara:

Considering the jurisdiction Mhmm. Building a board Yep. Securing funding, and now deciding on an active or passive funding model.

David:

That's a lot.

Sara:

It's a lot to take in, but I'm starting to see how all these pieces fit together.

David:

You're doing great. It's a complex process. But breaking it down into these manageable steps makes it much more approachable.

Sara:

Right.

David:

Now are you ready for a bit of a curveball?

Sara:

Bring it on. I love a good challenge.

David:

Excellent. The guide briefly mentions a topic that's often overlooked.

Sara:

Oh, okay.

David:

But it's crucial for ensuring your foundation's legacy lives on

Sara:

Right.

David:

Succession planning.

Sara:

Succession planning, honestly, it's not the most exciting topic to think about.

David:

I understand.

Sara:

Especially when we're just getting started.

David:

It's not always easy to contemplate what happens when you're no longer at the helm. Right. But think of succession planning, like writing a will for your foundation.

Sara:

Good. That analogy makes it a lot clearer.

David:

It ensures that your vision continues even when you're not there to guide it.

Sara:

So what are the key elements of succession planning for a private foundation?

David:

It starts with identifying potential successors for key roles.

Sara:

Okay.

David:

Who will step in to lead the board? Mhmm. Who will manage the foundation's investments?

Sara:

Right.

David:

It's about having a plan in place for leadership transitions Yeah. So that there's no disruption to the foundation's operations.

Sara:

So it's not just about choosing a successor. Right. It's about creating a framework that ensures continuity and preserves the foundation's values.

David:

You've got it. It's about thinking long term Yeah. And ensuring that your philanthropic vision transcends your own lifetime.

Sara:

I'm realizing that starting a private foundation is truly a multi generational endeavor. It is. It's about making choices today that will have a ripple effect for years to come.

David:

That's a powerful way to put it. Yeah. It's about creating a legacy of impact that extends far beyond our own time.

Sara:

Alright. So we've discussed the operational aspects

David:

Yeah.

Sara:

The funding models, the legal considerations, and even the importance of succession planning.

David:

Yeah.

Sara:

It's clear that starting a foundation is a significant undertaking, but I'm starting to feel more and more equipped to tackle this challenge.

David:

You're well on your way. But before we wrap up Okay. There are a few more crucial elements to consider. Alright. Let's explore those in our next segment.

Sara:

Welcome back to the final part of our deep dive into starting a private foundation in Canada.

David:

It's great to be back.

Sara:

It's been quite a journey so far.

David:

It has, hasn't it?

Sara:

Yeah. We've explored everything from defining your mission

David:

Mhmm.

Sara:

To navigating those complex legal waters

David:

Yeah.

Sara:

And even dipped our toes into that long term vision Right. With succession planning.

David:

Mhmm.

Sara:

So we've covered a lot of ground.

David:

We have.

Sara:

And I'm hoping that by now

David:

Yeah.

Sara:

You're feeling inspired

David:

I hope so.

Sara:

And empowered to take those next steps.

David:

Absolutely.

Sara:

But before we send you off on your philanthropic adventure, there are a few practical considerations we haven't touched on yet.

David:

Right.

Sara:

These are the things that can really make or break a foundation's effectiveness Yeah. And sustainability in the long run.

David:

Exactly.

Sara:

Okay. So we've talked big picture vision. Mhmm. Now I'm curious about the nitty gritty

David:

Alright.

Sara:

The day to day aspects of running a foundation.

David:

Okay.

Sara:

What are some of those crucial operational details

David:

Yep.

Sara:

That often get overlooked?

David:

One of the most important and sometimes underestimated aspects is establishing strong financial management practices

Sara:

Okay.

David:

Right from the start.

Sara:

Right.

David:

This means setting up clear accounting systems, ensuring you're meeting all the regulatory reporting requirements

Sara:

Mhmm.

David:

And making sure your investments are managed responsibly and ethically.

Sara:

So it's not just about having the funds. Right. It's about managing those funds Yes. With the utmost care and transparency.

David:

Precisely. Transparency is absolutely paramount in the world of philanthropy.

Sara:

Yeah.

David:

It builds trust with your donors Mhmm. With the beneficiaries you serve

Sara:

Right.

David:

And with the public at large.

Sara:

Okay.

David:

When you're transparent about how you're using resources

Sara:

Uh-huh.

David:

You're demonstrating accountability and integrity.

Sara:

And speaking of donors

David:

Okay.

Sara:

I'm realizing that donor engagement isn't a one time ask.

David:

Right.

Sara:

It's an ongoing relationship that needs to be nurtured and cultivated.

David:

You're absolutely right. Building strong relationships with your donors.

Sara:

Yeah.

David:

Keeping them informed about the impact their contributions are making. Mhmm. And expressing genuine gratitude.

Sara:

Right.

David:

These are all essential ingredients for a foundation's long term sustainability.

Sara:

It's almost like building a community

David:

Yeah.

Sara:

Around your shared philanthropic goals. Mhmm. Fostering a sense of collective ownership and impact.

David:

That's a great way to think about it. Yeah. And that sense of community extends to the beneficiaries as well. Right. It's so crucial to involve them in the process Yeah.

David:

To listen to their needs and feedback Uh-huh. And ensure that your programs are truly making a difference in their lives.

Sara:

It's about empowering communities

David:

Yes.

Sara:

Not dictating solutions.

David:

Couldn't have said it better myself.

Sara:

And finally, as we wrap up our deep dive

David:

Yep. I

Sara:

wanna emphasize something that's often overlooked but incredibly important.

David:

Right.

Sara:

The need for continuous learning and adaptation.

David:

That makes a lot of sense. The world is constantly changing.

Sara:

Right.

David:

And the needs of the communities we serve are evolving all the time.

Sara:

Exactly. A successful foundation is one that stays informed about emerging trends

David:

Uh-huh.

Sara:

Evaluates its impact regularly

David:

Yeah.

Sara:

And isn't afraid to adjust its strategies

David:

Right.

Sara:

In order to stay relevant and effective.

David:

Precisely remember, starting a private foundation is a journey, not a destination.

Sara:

Right.

David:

It's a journey filled with both challenges and rewards.

Sara:

Mhmm.

David:

But, ultimately, it's an incredible opportunity to make a lasting difference in the world. Wow. To leave a legacy that extends far beyond your lifetime.

Sara:

That's truly inspiring. Yeah. I hope our deep dive today has sparked your imagination

David:

I hope so.

Sara:

And equipped you with the knowledge to embark on your own philanthropic adventure.

David:

Me too.

Sara:

And if you find yourself needing guidance along the way Yeah. Remember that there are resources available to support you. Absolutely. Organizations like the B. I.

Sara:

G. Charity Law Group

David:

Yeah.

Sara:

Offer a wealth of information and expertise.

David:

They do.

Sara:

We'll definitely include a link to their website in the show notes

David:

Pretty idea.

Sara:

So you can explore further.

David:

As we conclude our deep dive, I wanna leave you with this final thought.

Sara:

Okay.

David:

Starting a private foundation is an act of profound generosity and vision. Mhmm. It's about transforming passion into purpose

Sara:

Right.

David:

And leaving an indelible mark on the world.

Sara:

Beautifully said.

David:

Thank you.

Sara:

And who knows? Maybe one day, we'll be featuring your foundation story

David:

That would be fantastic.

Sara:

On a future deep dive.

David:

Yeah.

Sara:

Until then, keep dreaming big. Keep learning, and keep making a difference in the world.

David:

Absolutely.