ARCHIVED - Evaluation of Foundations

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I. Introduction

A. Introduction

This report presents the findings of an evaluation of the use of foundations as instruments of public policy. This evaluation study was conducted by KPMG LLP (KPMG) on behalf of the Government of Canada between September, 2006, and January, 2007. As such, this evaluation is not an evaluation of the effectiveness and relevance of individual foundations, but is a policy evaluation, intended to assess the degree to which foundations can be used to achieve public policy goals. As with all evaluation studies commissioned by the federal government it has two underlying purposes: to provide an assessment of policy or program effectiveness and impacts, and to help design or improve the design of policies, programs and initiatives.

At various times since the 1997 the Auditor General, the Standing Committee on Public Accounts, and the Standing Senate Committee on National Finance have each reviewed the use of foundations and made recommendations relating to the arrangements in place to ensure good governance of, and accountability by, these organizations to Parliament and Canadians. All three organizations recommended that the use of foundations as an instrument of public policy be evaluated, particularly with respect to the use of up-front conditional grants as the funding mechanism for these organizations. The specific recommendations and government responses were:

B. Evaluation objectives

The objective of the study was to evaluate the use of foundations as instruments of public policy, focusing on three aspects of their use, as listed below. The evaluation framework developed for the study in early 2006 identified a series of evaluation issues that focus on various factors that may contribute to the overall appropriateness, effectiveness, and cost, which are also listed below.

Appropriateness of the use of foundations, particularly with respect to the use of up-front, multi-year funding arrangements.

1. In what ways has the use of upfront, multi-year funding arrangements with foundations facilitated or impeded the:
   1. Achievement of applicable government policy goals;
   2. Achievement of foundations' mandates and objectives;
   3. Management and operation of foundations?
   Could the same or better outcomes be achieved using a different approach to the transfer of funds from the federal government to foundations?
2. Could the target objectives of foundations be achieved just as readily using existing funding approaches and organizational/governance structures available to the federal government while providing for a similar or higher degree of accountability to Ministers, Parliament and the Canadian public?
3. To what extent do the existing foundations satisfy the guiding principles established by Finance Canada to determine when a foundation is an appropriate vehicle for delivering public policy?
4. Is the multi-year transfer of funding to foundations necessary and/or useful to the effectiveness of these organizations?

   How effective they have been.

5. To what extent have foundations followed their mandates and achieved their objectives? What are the key enabling, and limiting, factors encountered by foundations, and how have they been responded to?
6. To what extent do foundations:
   1. Overlap or duplicate other programs and activities of the federal or provincial/territorial governments;
   2. Complement programs of the federal or provincial/territorial governments, and if so, what is the degree of integration or coordination with these other programs?
   What costs and/or benefits do these instances of overlap, duplication or complementarity have for policy makers and/or foundations?
7. To what extent is the performance of foundations enhanced, or impeded, by their:
   1. Governance structures;
   2. Anticipated better access to staff and Board/Council members with expert knowledge & skills;
   3. Accountability requirements, as defined in their funding agreements?
8. Have applicable government policy goals and priorities relating to the mandates of each foundation changed since their establishment? Have the affected foundations re-aligned or revised their own objectives and priorities in response to these policy changes?

   What they cost.

9. What does it cost foundations — relative to the size of their endowments and the scale of their disbursements — for:
   1. Initial start-up;
   2. Ongoing management and operation?
   What factors drive the level and significance of foundations' management and operating costs?
10. What costs do funding departments and central agencies incur in connection with the establishment and operation of foundations?
11. How do the costs of managing and operating foundations compare to likely costs if entities within the federal government were to administer the activities performed by foundations?
12. To what extent have foundations been able to attract partners and lever additional funding from other levels of government and the private sector? Would this leverage have been feasible using other potential funding structures/approaches? Why/why not?

    In addition, the evaluation framework also identified two additional issues for consideration, the findings from which were incorporated into the discussion on appropriateness, effectiveness and cost:

13. Have foundations conducted required evaluations in accord with the requirements of their funding agreements and the Treasury Board Evaluation Policy? How have the findings from these studies been used:
    1. To assess and improve the design, delivery and management of programs by the Boards and management of foundations;
    2. To inform policy analysis and formulation by funding departments?
14. What lessons have been learned with the use of foundations, in terms of what has worked well, and what hasn't? For example, from variations in governance structures, involvement of different types of partners, use of perpetual endowments versus finite-term, disbursement-based endowments?

We interpreted the objective relating to "appropriateness" as referring to the appropriateness of using foundations as instruments of federal public policy and did not consider appropriateness from the perspectives of other levels of government. "Effectiveness" was interpreted to mean progress in achieving objectives set in foundations' funding agreements and (where applicable) legislation, and "cost" to mean the relative significance and composition of foundations' administration and operating costs.

C. Organization of the report

The report firstly presents a description of the methodology used for this study followed by a description of the key features of the way in which the "foundation model" has been applied as well as a brief review of the extent to which analogous models have been used in other jurisdictions. The next three chapters summarize our findings regarding the appropriateness, effectiveness and cost of foundations, respectively, which is then followed by a chapter presenting our conclusions.

D. Disclaimer

Our work was limited to, and our observations and recommendations are based on, the procedures outlined in the following Methodology chapter. The scope of our engagement was, by design, limited, and therefore the findings and recommendations should be considered in the context of the procedures performed. In this capacity, we were not acting as auditors and accordingly our work did not result in the expression of an opinion and does not constitute an audit engagement. We relied on information and representations of management and others and on management for the completeness of background information provided.

 

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