Hamilton’s renaissance has brought new investments, new residents, and new ideas to the city. This report, however, also shows that not all Hamiltonians are benefiting from Hamilton’s economic upswing, and that some groups may be harmed by the unintended consequences of this growth. The findings from this report bring a caution that Hamilton’s renaissance may be short-lived if important foundations of the city’s economic growth such as young people and affordable housing are ignored.
One of the most effective ways to address the inequities present in Hamilton’s growth is to implement innovative policies that have been successful in other communities. Some of the forward thinking and new relationships built by Hamilton’s renaissance present a unique opportunity to build win-win solutions that will foster a more equitable sharing of Hamilton’s prosperity. Together, leaders from all sectors, informed by the voices of those struggling without access to the benefits of Hamilton’s economic growth, can work to implement policies that will lead to more inclusive growth.
One common element from a review of recommendations from policy think tanks engaging in economic and social issues is not to look to the past for answers. Instead these organizations recommend better responding to current economic realities through modern solutions that are backed by evidence from successful implementation elsewhere.
Tom Zizys in Working Better: Creating a high performance labour market (a report for the Metcalfe Foundation) explained:
“We cannot turn back the clock, but we can decide in what ways we can shape the labour market to better serve our economic and social goals. We have replaced one labour market system with another without recognizing the structural transformation that has taken place and how it informs so much of what is wrong with our present arrangement. As a consequence, we have muddled through with peripheral, incremental, and patchwork responses. But we have choices. And our first choice is to decide that we want to do something about it.”[1]
Three major themes can be drawn from a review of policy recommendations from various Canadian think tanks and social policy commissions:
1) An emphasis on increased access to experiences and opportunities, especially for children and younger adults that help provide ladders into the middle-class.
For example
Youth jobs guarantee (Broadbent Institute), a proposal for:
Creating accessible opportunities for children and youth (PEPSO) by:
Adult Education and Training Strategy for Canada (Institute for Research on Public Policy), including:
For Hamilton, the findings in this report about youth access to jobs should spur action to ensure youth living in under-served neighbourhoods have better access to a first job in the early part of their labour force years.
Some local efforts that can be built on in the area of increased experiences and opportunities include:
2) A call for the modernization of Canada’s social safety net and employment support programs, including child care and affordable housing, to reflect a changing labour market
For example
Renewing Canada’s Social Architecture (The Mowatt Institute), a series of policy papers on specific ways the social safety can be rejuvenated, through for example:
Increasing the supply of affordable housing and ensuring a fair system of housing assistance (Wellesley Institute), including through:
Enabling flexible, quality childcare (PEPSO), including through:
Transforming social assistance to include high-quality employment supports for all recipients and makes rates more adequately reflect the cost of basic necessities (Commission for the Review of Social Assistance in Ontario), more specifically:
Taking inspiration from the Guaranteed Annual Income model to bring changes in the delivery of social assistance (Caledon Institute), more specifically:
Locally, there has been work done to help move towards an improved social safety net:
3) Improvement in employment conditions and access to labour market information
For example
Enable more secure employment (PEPSO), through measures such as:
Improve enforcement of employment standards (Workers’ Action Centre), including:
Set minimum wage to $14/hour to ensure all full-time jobs lift workers out of poverty (Canadian Centre for Policy Alternatives):
Good quality labour market data and analysis (Metcalfe Foundation), including:
In Hamilton, employment conditions could be improved for many workers through increased employer participation in the Living Wage campaign (Hamilton’s living wage is currently set at $14.95/hour, including benefits). In addition, the implementation of actions in Workforce Planning Hamilton’s Labour Market Plan would help support many policy goals outlined above.
Provincial policy steps towards action
There have been some recent shifts in provincial policy that are in line with important labour market reform recommendations described in this section, including:
These provincial policy improvements are a good start towards continued steps for a renewed economic support system that ensures a more evenly shared prosperity. The increased participation of the federal government in supporting provincial policy reform would benefit residents across Canada. In particular, there have been calls echoed across the country for the federal government to take leadership and support funding for a National Housing Strategy, and to participate with provinces in modifying CPP to ensure a higher level of income security for workers without employer-sponsored pension plans.
In Hamilton, the attention of community leadership is needed to the ways local governments, employers and civil society can each take actions in their own sectors, sometimes staring with voluntary measures, pilot programs or collaborative advocacy. Increased attention and co-operation can boost the city’s ongoing renaissance to become one that brings prosperity to the entire community with benefits that get pushed into all corners of our city and our economy.
Policy reports cited:
| Organization | Author | Title | Year of publication |
| Broadbent Institute | Not listed | Towards a Youth Job Guarantee | 2014 |
| Link: https://www.broadbentinstitute.ca/towards_a_youth_job_guarantee | |||
|
|
|||
| Caledon Institute of Social Policy | Ken Battle | Guaranteed Income or Guaranteed Incomes | 2015 |
| Link: https://www.caledoninst.org/Publications/Detail/?ID=1078&IsBack=0 | |||
|
|
|||
| Caledon Centre for Policy Alternatives | Trish Hennessy, Kaylie Tiessen and Armine Yalnizyan | Making Every Job a Good Job: A Benchmark for Setting Ontario’s Minimum Wage | 2013 |
| Link: https://www.policyalternatives.ca/sites/default/files/uploads/publications/ Ontario%20Office/2013/11/Making%20Every%20Job%20a%20Good%20JobFINAL.pdf |
|||
|
|
|||
| Commission for the Review of Social Assistance in Ontario | Frances Lankin and Munir A. Sheikh | Brighter Prospects: Transforming Social Assistance in Ontario | 2012 |
| Link: https://www.mcss.gov.on.ca/documents/en/mcss/social/ publications/social_assistance_review_final_report.pdf |
|||
|
|
|||
| Institute for Research on Public Policy | Torben Drewes and Tyler Meredith | If at First You Don’t Succeed: Toward an Adult Education Training Strategy for Canada | 2015 |
| Link: https://irpp.org/research-studies/study-no54/ | |||
|
|
|||
| Metcalfe Foundation | Tom Zizys | Working Better: Creating a High-Performing Labour Market in Ontario | 2011 |
| Link: https://metcalffoundation.com/publications-resources/view/ working-better-creating-a-high-performing-labour-market-in-ontario/ |
|||
|
|
|||
| Poverty and Employment Precarity in Southern Ontario (PEPSO) | Wayne Lewchuck et al. | The Precarity Penalty: Employment Precarity’s Impact on Individuals, Families and Communities and What to do about It | 2015 |
| Link: https://pepso.ca/2012/12/15/precarity-penalty/ | |||
|
|
|||
| Wellesley Institute | Not listed | Long Term Affordable Housing Strategy Submission | 2015 |
| Link: https://www.wellesleyinstitute.com/publications/long-term-affordable-housing-strategy-submission/ | |||
|
|
|||
| Workers’ Action Centre | Mary Gellatly | Still Working on the Edge: Building Decent Jobs from the Ground Up | 2015 |
[1] Zizys, T. (2011). Working Better: Creating a High-Performing Labour Market in Ontario. Metcalfe Foundation: https://metcalffoundation.com/wp-content/uploads/2011/05/working-better.pdf
[2] Wingard, J. (2014). Working Together: Examining Employment, Education, and Training Strategies for the Jamesville, Beasley, and Keith Neighbourhoods. City of Hamilton Neighbourhood Action Strategy, Mohawk College and Workforce Planning Hamilton.
Donations to the Foundation are invested for the long term in public markets and in alternative investments. Investment income is then allocated annually to support granting, community leadership and operations. The summary and charts presented here provide both a financial snapshot and a history of recent activity that underlies the grants and community leadership activities represented in this annual report, made possible by remarkable donors.
Donations to the Foundation are from individuals, corporations and other charities. Donors may contribute to named endowment or flowthrough funds, to the Board-directed Community Fund, or to HCF’s community leadership projects.
The $35.1 million in donations this year is the second highest total in HCF’s history. Annual donations are influenced by the timing of the realization of donations in wills and significant one-time donations like the $27.7 million in donations of property and private equity. As illustrated in Chart 1, annual donations have ranged between $3.2 and $35.1 million over the past eight years. The five-year rolling average of donations ranges from $5.0 million to $13.3 million over the past eight years.
The five-year rolling average number of donations is 1,787 with 2019-20 at 1,853. The number of donations fluctuates based on “in memoriam” donations and the number and nature of events sponsored by donors to raise money for their funds.
Chart 1
Grants are made annually from both endowed and flowthrough funds. Because flowthrough fund balances are distributed in a shorter time period, granting from these funds can materially influence HCF’s total annual amount granted.
As illustrated in Chart 2, grants and community leadership project spending over the past eight years has ranged from $4.7 million to this year’s historic high of $11.5 million. Granting from endowment funds was reduced in 2013 as a result of the decline in investment returns in 2012 which a) lowered the asset base used for the granting calculation (currently four percent of the fund balances), and b) resulted in less income available to grant. Flowthrough granting and expenditures on community leadership projects has ranged from 22 to 56 percent of total granting in any given year and is dependent on the timing and nature of flowthrough and project activity. At 893, the number of grants for this year is 37 percent higher than the eight-year average.
Chart 2
Investments traded in active markets are reported at fair market value. Investments not actively traded are recorded at their cost less any impairment of their value.
To support our strategy of aligning our assets with our mission and to provide a more diverse and robust portfolio, HCF has committed to investing in alternative asset classes including loans to charities and not-for-profits, private debt, real estate, infrastructure and private equity. These alternatives are consistent with the Foundation’s long-term investment horizon and liquidity requirements. Since these investments are not actively traded, they are valued at cost in the investments. These alternatives total $25.8 million.
HCF invests according to policy guidelines established by the Board of Directors. Two committees of the Board oversee investments to ensure compliance with the policy:
As an endowment builder, HCF’s policy focuses on long-term investing and is supported by reserve accounts that are currently at their policy maximum.
The investment policy sets out a total portfolio target asset mix, as well as a range around these targets. The public market investment managers have mandates within this targeted asset mix and use their discretion to invest the portfolios within this range. Chart 3 reflects the current and target asset mix. Note: $25 million of private equity relates to a fund established by a donor and is not part of the asset mix or the consolidated portfolio results.
Chart 3
Two long-term portfolios are invested in the public markets with Jarislowsky Fraser, and Connor, Clark & Lunn. Chart 4 compares those portfolios against benchmarks as follows:
Benchmarks reflect the performance of each market index based on HCF’s specific target asset mix. Comparing actual results to the benchmark measures the value added by investment managers compared to the average market performance. HCF’s investment policy target is a long-term investment return in the 6.5 to 7.5 percent range.
Chart 4
The effect of the global pandemic has materially affected investment returns, resulting in a -8.4 percent public market return for the year. The seven-year annualized return at 6.8 percent is within the targeted investment policy range and is 1.2 percent higher than the 5.6 percent benchmark. As noted in the financial highlights, the current 10-year annualized return of 7.0 percent is in the target range and is higher than the benchmark by 1.2 percent.
Impact investments enable donations to endowed funds to drive positive change beyond granting, because they represent investments of capital that deliver financial returns coupled with positive social and/or environmental outcomes. In addition, these investments provide a pool uncorrelated to the public markets which, in turn, buffers the portfolio from the volatility currently experienced.
More than 15 percent of our long-term assets are in impact investments. Chart 5 illustrates HCF’s impact investing progress over the past five years, with $25 million currently placed or outstanding and another $15 million committed. This brings the total commitment to $40 million, up from $34 million last year. Impact investments cover areas including affordable housing, arts, environment and sustainable development.
Chart 5
Local loans since inception total $9.7 million with $7.1 million outstanding at year end. Chart 6 shows the impact areas our loans have supported. Since the loan program’s 2012 inception, $2.6 million in loan principal has been repaid and recycled as new loans. In addition, the interest from these loans supports HCF granting.
Chart 6
IRP is a Government of Canada program being delivered nationally by partners including Community Foundations of Canada. As the first phase in the government’s long-term investment in social finance, the IRP’s goal is to make social-purpose organizations “investment ready” so they can make a difference in new and innovative ways through their participation in the social finance market. HCF has partnered with community foundations in London and Niagara, and the McMaster Innovation Park to manage the program regionally on behalf of Community Foundations of Canada. The first request for proposals for funding in January created enormous interest nationally and garnered 65 submissions to our regional partnership. Approved funding is expected to be released in June 2020. As an additional benefit, the IRP brought a growing number of potential opportunities for local loans to HCF’s attention.
These investments include private equity, private debt and real estate investments. Many of these investments are long term in nature, are maintained at cost and do not have a regular income stream. As these investments are maintained at cost, their results include interest income and realized gains, but not unrealized gains. Results for these investments are closely monitored and are reported when realized. Chart 7 identifies the investment areas, with $18.0 million placed and a total commitment of $33 million across 21 investments.
Chart 7
Operating expenses for the fiscal year ended March 31, 2020 total $2.5 million and were 2.5 percent higher than last year. Staffing costs related to the Foundation’s 22 employees represent 70 percent of HCF operating costs.
In addition to breaking out cost by type, operating costs are allocated to each of the Foundation’s operating areas: grants administration, community and philanthropic leadership, community relations and knowledge dissemination, development activities, and administration and governance. Examples of community and philanthropic leadership include convening around the city’s critical issues and fostering the growth of philanthropy by sharing staff time and knowledge to support other charities. Charts 8 and 9 illustrate these costs by operating area and by expense type.
Charts 8 and 9
The Foundation’s annual development expenses are not necessarily attributable to the donations received in that year. The nature of donations to the Foundation can result in costs preceding the receipt of the donation by several years (for example, donations through wills). As a result, consistent with the community foundation sector, operating costs are evaluated by a ratio of total operating expenses to average total assets. Ratios fall within a range depending on the size and stage of the community foundation’s development.
Management considers the ratio of 1.26 percent (1.25 percent in 2019), as illustrated in Chart 10, to be within an acceptable range for a foundation of HCF’s size, stage and level of community leadership, compared against benchmarks established in the community foundation sector. We continue to monitor both the actual results and the benchmarks on an ongoing basis.
Chart 10
Hamilton Community Foundation’s total assets of $201 million at March 31, 2020 include balances of HCF funds and funds held on behalf of others at $1.7 million.
Hamilton Community Foundation’s fund balances, illustrated in Chart 11, represent accumulated donations plus the net investment earnings on these donations, minus granting and operating costs. Funds include both endowed and flowthrough funds. Endowed funds are held permanently and grant from investment earnings. Flowthrough funds are fully distributed as grants over a pre-determined term.
Chart 11
The fund balances have grown 55 percent to $198 million at the year ended March 31, 2020 from $128 million in 2013. Donations of $35.1 million included $4.4 million in flowthrough donations that were largely distributed as grants in the year and, as a result, do not remain in the fund balances at year end. This results in a modest total funds balance growth of 4.8 per cent for the year. The number of funds has grown 19 percent to 377 from 318 in 2013.
Donate Today