In 11 weeks between March 25 and June 3, 2019 three $100 million dollar charitable donations were announced in Ontario. On February 13th, McGill University in Montreal announced a $200 million donation. These are enormous sums, and this unprecedented donation cluster is just the beginning of bigger things to come.
It’s useful to understand a bit of context.
Growth of Wealth
The growth of wealth since 2000 has been without precedent in world history. Globally, according to Oxfam’s inequality research, the number of billionaires is estimated to have doubled from 1,125 in 2008 to 2,208 in 2018, and they have grown much richer. Canada, with 0.6% of the global population, has 3% of the global millionaires.
One non-statistical measure of donation growth is to look at individual charities. My first job in fundraising was to help close the University of Toronto’s Breakthrough Campaign in 1990. It was the largest in Canadian history, raising $127 million. Approximately the value of one of these mega donations. University of Toronto closed its most recent campaign after having raised $2.6 billion with fewer donors.
Universities, Hospitals & Foundations
As the vast majority of the charitable sector knows, large donations aren’t evenly distributed. As Malcolm Gladwell observes in an excellent podcast we need to be mindful of charity equity. The four gifts mentioned above are going to hospitals and universities. And at least two of these four donations were grants from private foundations. As philanthropic figures increase so will the use of foundations to receive donations and manage grants.
David Dunlop, a U.S. major gift fundraising pioneer, taught that there were three types of gifts: annual gift, major gifts and (euphemistically) “ultimate” gifts. Dunlop’s rule of thumb is that a major gift is 10x an annual gift and an “ultimate” gift is at least another 10x the major gift. In other words, we’re just seeing the tip of the proverbial iceberg in terms of giving. (So fundraisers should stop trying to brag about who has the biggest donation.) The $1 billion+ gift is coming and it is mostly likely to show up after death.
Estate Donation Implications
Expect estate donations to Canadian charities to increase dramatically in value over the next few years. Although we don’t have public data about estate donations in Canada, anecdotally this is already happening. It is also true lower down the wealth pyramid among the so-called asset-rich middle class. Canada provides very significant tax savings for estate donations – an offset of up to 100% at death. There is going to be a greater need to plan the transfer of illiquid assets, especially private company shares, which require careful handling to receipt and realize value.
So stay tuned. We’re in a moment.