Four months ago, nobody could have imagined the magnitude or the speed at which our lives would change. The COVID-19 pandemic has affected virtually every aspect of our lives — even the content and delivery of our annual report is different this year as we look to meet stakeholder needs in new ways.
There is no doubt we will continue to face disruption for some time. So how do you keep advancing in tumultuous and uncharted seas? For the Foundation, our values — responsiveness, collaboration, inclusiveness, accountability, empowerment — are our compass.
At the onset of the crisis locally, HCF responded, establishing the Pandemic Response Fund and making 16 emergency grants within days of the lockdown. The fund works to assist vulnerable Hamiltonians now, sustain or expand critical services over the longer term and continue responding to emerging needs throughout Hamilton’s recovery and rebuilding.
Collaboration has underscored our community’s response, as teams, funders, government, corporations and many others have come together for the common good. We’re humbled by the number of donors — long-time and brand-new — who have stepped up to support our pandemic response. New and strengthened relationships and ways of working have been forged that will continue to benefit our community past the crisis.
Inclusiveness is not only an HCF value, it’s part of our mission and vision. Although the pandemic touches all of us, the fact is that we are not all in the same boat; some of us are on ocean liners and some of us barely have our heads above water. Reducing inequities will always be fundamental to our work, but especially now as we address the disproportionate effects of COVID-19.
Of course, none of our work would be possible if it weren’t for donors over six decades, who believed in us and in the foundation model, and the foresight of successive boards who prepared us to weather this monumental storm. We do not take that trust for granted; accountability to all of our partners and stakeholders remains a priority. On that note, we thank our retiring board members — Dr. Juliet Daniel, Dr. Bill Evans, Milé Komlen, and Marita Zaffiro — for their wise counsel, especially during these last critical months. We also say goodbye to Sheree Meredith, who has retired after many years of excellent leadership to our Philanthropic Services team.
While our five values are both interdependent and equal, it is perhaps empowerment that is our guiding beacon at this strange and unique time.
By increasing the capabilities and resilience of individuals, groups and organizations, we will strengthen our community.
Like all cities, Hamilton faces a long and winding journey to recovery. We will get there. And the Foundation will be there to support our city all along the way. In these uncertain times, count on this: we are here for Hamilton, now and forever.
We’d love to hear from you! Please take a minute to give us your feedback.
Bringing people together on issues that affect Hamiltonians is one way the Foundation works to serve its city.
Over the past year, Hamilton Community Foundation has worked towards its strategic goal of increasing the health and prosperity of individuals and neighbourhoods. This included ABACUS, the Foundation’s initiative to increase the likelihood of young Hamiltonians completing high school and going on to post-secondary, supporting school systems to address anti-bullying and our long-standing commitment to working with citizens to build neighbourhood vibrancy.
With the local onset of the COVID-19 pandemic in March, the Foundation quickly changed course to meet Hamilton’s immediate and urgent needs. While a number of our leadership initiatives are on pause, we encourage you to read about them and their intent; and to follow their progress in future, knowing that we will continue to listen and learn from our community, and to reshape our efforts as needed through Hamilton’s recovery.
Though such a sudden and profound shift in the needs of our community could not have been imagined, a key underpinning to HCF’s leadership work is responsiveness. Recognizing both the immediate and longer-term challenges COVID-19 would pose, HCF developed a pandemic relief strategy that both incorporated new areas of focus and shifted priorities within our ongoing leadership work.
Bringing people together on issues that affect Hamiltonians is one way the Foundation works to serve its city.
Over the past year, Hamilton Community Foundation has worked towards its strategic goal of increasing the health and prosperity of individuals and neighbourhoods. This included ABACUS, the Foundation’s initiative to increase the likelihood of young Hamiltonians completing high school and going on to post-secondary, supporting school systems to address anti-bullying and our long-standing commitment to working with citizens to build neighbourhood vibrancy.
With the local onset of the COVID-19 pandemic in March, the Foundation quickly changed course to meet Hamilton’s immediate and urgent needs. While a number of our leadership initiatives are on pause, we encourage you to read about them and their intent; and to follow their progress in future, knowing that we will continue to listen and learn from our community, and to reshape our efforts as needed through Hamilton’s recovery.
Though such a sudden and profound shift in the needs of our community could not have been imagined, a key underpinning to HCF’s leadership work is responsiveness. Recognizing both the immediate and longer-term challenges COVID-19 would pose, HCF developed a pandemic relief strategy that both incorporated new areas of focus and shifted priorities within our ongoing leadership work.
People who give to Hamilton Community Foundation share the desire to make a difference for Hamilton, forever. Donations to HCF are pooled and invested; investment income is the primary source for making grants.
As a Foundation donor, you can create your own fund or give to an existing one. We are pleased to work with you and your professional advisor to find the approach that meets your goals and circumstances.
Amounts, when shown, reflect each fund’s balance. Amounts granted from these funds are identified in the Grants by Fund Type list.
Giving to the Community Fund provides HCF with the greatest flexibility to respond to Hamilton’s needs. Donations of any amount are welcome. Donors whose accumulated endowed donations total $5,000 may choose to have a named fund within one of three Community Funds: Unrestricted, Arts and Environment.
All donations to the Arts or Environment funds will be matched by the Foundation on a one-to-one basis up to $1 million. The following lists identify the individual named funds within each of the three sub-funds.
Other charities have placed these funds with HCF for long-term investment.
| Burlington Community Foundation Fund | 74,566 |
| Hamilton Public Library funds | 1,619,383 |
The Foundation owns and is beneficiary of life insurance policies donated by Judith McCulloch, Joan VanDuzer, Ronald J. Zabrok and three anonymous donors.
Total face value: $872,000
At the time of publication, the Foundation had been notified of a charitable donation (subject in some cases to the life tenancies of others) in the following estates or trusts:
Gerda Erika Beretic, Betty Isabelle Bethune, Roger Gilles Brabant, Adam Hugh Clark, Joyce V. Clark, Margaret Hambly, John Dennis Holmes, Kathryn Elizabeth Jones, Barbara Isabel Malcolmson, Josephus Franciscus Maria Mensink, John William Pike, Mary Joan Bonner Renison, George K. Seliga, Julie Slowca, Dorothy Ann Smith, Maria Swarchuk, Vincent M. Wagar
We gratefully acknowledge the generosity of all our donors this year:
Hamilton Community Foundation offers donors powerful and diverse opportunities to drive positive change. We are unique in that we enable donors to recommend grants to the widest possible range of charitable organizations and initiatives: arts and culture, health and human services, environment, recreation and education. The pie chart shows how our total 2019-20 granting is distributed by sector, and reflects Board-directed granting and the philanthropic interests of those who have established donor-advised and designated funds.
The lists below show our grants in two ways:
These lists show the total amounts granted from all funds at Hamilton Community Foundation, identified by fund type. It also shows our community leadership project supporters and spending. Funds marked with an asterisk (*) contribute to the Community Fund.
| Total grants approved | 11,099,227 |
| Adjustments for deferred grants | (169,549) |
| Total grants paid | 10,929,678 |
| Total community leadership projects | 533,679 |
| TOTAL GRANTS AND COMMUNITY LEADERSHIP | 11,463,357 |
These lists show the details of all grants to all organizations in 2019-20:
In addition to the grants below, the Foundation provided grants totalling:
The 2019-20 year included record-breaking highlights, as well as previously unexperienced challenges resulting from the COVID-19 pandemic outbreak in the last quarter of the financial year. The continued support from our many donors resulted in total donations at $35.1 million, the second highest in HCF’s history including donations of property and private equity of $27.7 million. Grants and community leadership spending also reached a record high of $11.5 million. During the year, Burlington Foundation, launched by HCF in 1999, determined that it had reached the size and stage where it wished to manage its own investments rather than maintaining them in HCF’s pools. We congratulate them on their growth and more than 20 years of serving their city.
The investment markets to the end of January 2020 were very promising, with our portfolios recording returns at +10 percent for the first 10 months of the financial year. In direct contrast to strong donation levels and grants made, the global pandemic led to a significant market collapse in February and March resulting in an annual public market return of -8.4 percent, mitigated by our impact investments for a total return of -6.9 percent for our overall portfolio. Unlike previous financial crises, the pandemic has a direct impact not only on HCF’s investment return; it directly affects HCF’s core mission of creating a vibrant, inclusive and diverse Hamilton.
What we currently know from a financial and operational perspective:
Lastly, in this unpredictable time, we will continue to communicate with our stakeholders often to ensure you are aware of our work and status.
In keeping with our commitment to financial accountability and transparency, full audited financial statements are here. If you have any questions regarding our financial highlights, please contact Annette Aquin at a.aquin@hamiltoncommunityfoundation.ca or by phone at 905.523.5600 x 243. You may also access the HCF T3010 tax return information here.
We thank the following for their contributions this year.
Auditors
BDO Canada LLP
Bankers & Custodian
Bank of Montreal and BMO Private Banking
Investment Managers
Connor, Clark and Lunn Private Capital Ltd.
Jarislowsky Fraser Ltd.
Solicitors
Gowling WLG
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.
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