The following was a speech delivered by HCF President & CEO Rudi Wallace at the Foundation’s 2024 annual general meeting.
Good afternoon,
Thanks for making the time to be here with us today, as we close out this past year, and look to the next.
I’m going to start with a bit about me so folks who don’t know me can get a better sense of who I am and those things in my life that have shaped me and my worldview and give you greater insight into what will shape my time as President and CEO of Hamilton Community Foundation. I’ll then speak about my sense of where Hamilton is, both the strengths and opportunities ahead as well as the significant challenges our city faces. I’ll close by painting a picture of the trajectory that Hamilton Community Foundation is on, the questions we are wrestling with, and a shared vision and mission for the future that centres our values of Equity, Reconciliation, Courage, Relevance, Accountability and Collaboration.
Mine is a common story. The second of two children of my parents, immigrants from former British and French colonies, both of whom share ancestries shaped by the practice of indentured servitude. It will become apparent that colonialism and its legacy has shaped and molded my family, and therefore me. Even my name has been shaped by my grandfather’s adoption of the name “Wallace” to teach in the English Empire.
Shaped by colonialism…
My parents came to Canada as students, settling in Vancouver, getting married; with my sibling and I arriving on the scene shortly after. Eventually, my parents moved us to Victoria, where I grew up. Victoria and the BC coast are beautiful, but growing up, one thing that was dramatically different from Vancouver and from Hamilton as well, is that there weren’t a lot of kids or families that looked like me; as a son of immigrant parents who, while keeping us connected to our histories and overseas families, also did their best to fit in and be “Canadian.” So, as a result of this duality, when my family and I return to where my parents were born, I don’t quite fit in, I don’t belong.
And while culturally I feel at home and comfortable in “Canada” I often don’t quite fit in or belong here either. My history and experience, how I look has often led to my othering from the more “Canadian” experience of my “white” friends growing up in Victoria. This experience is common among kids of immigrants in Canada. I’m sure there are many Hamiltonians who feel or felt something similar.
And this in-between space of being born in Canada, growing up in Canada, but with the kind of visible and racialized immigrant experience and history, never quite belonging anywhere and always being aware of my difference. This too has shaped who I am.
Ultimately, my parents were shaped by their faith and instilled in my sister and me a more collective outlook of the world; one in which we started volunteering, even as children, at service agencies working with youth, unhoused populations, and seniors. They instilled in me from a very early age a sense of civic and moral responsibility to give back to my community in service to collective good. Like many immigrants my parents studied and worked hard, and “made it” which, for them, made giving back that much more important.
All this led me to the University of Victoria to study political science. While my parents remained very supportive, there was quiet disappointment, and subtle hints that political science was a great first degree…before going to law school. When I ended up going to the University of Ottawa for post-colonial studies and community development — in the political science department — my parents saw the writing on the wall.
My education further developed my understanding of the world, and after grad school I took a frontline non-profit job at the Mustard Seed Food Bank back in Victoria. My time at this multi-service nonprofit was at the intersection of the housing, mental health and opioid crises, including the introduction of fentanyl on the streets of Victoria. This is where I cut my teeth working with unhoused populations, low socioeconomic demographics and equity-deserving communities. These experiences shaped my community development approach and my leadership approach, teaching me that lasting impact requires centring the voices and lived experiences of the people being served. It also made me realize that systemic change is required to address and/or mitigate the challenges faced by marginalized communities. This realization led me to Victoria Foundation and philanthropy.
Foundations have significantly more resources and social and political capital than most organizations working for social change. I made the move to Victoria Foundation to try and shift funding practices and community development models. I’ll be honest, I wasn’t too thrilled or supportive of foundation funding models and practices working front line. Often funding was tied to projects on short timelines, and funders would either cast a very wide net funding many things at very small levels or they’d fund something well for a few years and then pivot to something different, leaving funding gaps with little time for community to adapt or prepare for the shift. I wanted to change all that. And I still do.
Eventually, at a Victoria Foundation board retreat a bespectacled man from Hamilton named Terry Cooke came to speak and painted a vivid picture of a different way of operating as a foundation: one that deployed its endowment, its capital, for social impact; one striving to use all of its assets for its mission and mandate. And while I had started to learn more about how foundations could deploy more resources beyond just granting, Terry’s presentation crystalized for me the need and responsibility we have as foundations to think differently about our business model and our community development practices.
I’m happy to say that Terry and Annette’s ongoing advocacy and tireless work to shift the culture and behaviours of foundations across the country is paying dividends, with more and more foundations charting new paths to better deploy their resources for the public good.
So, when the Vice President, Grants and Community Initiatives role came up at Hamilton Community Foundation, I threw my name into the mix. To my surprise, I was offered the job. And I accepted. My partner and I packed up and moved to Hamilton during the COVID-19 lockdowns in January 2021, in the dead of winter; bought a house, got a giant Newfoundland dog, had our first kid and we have a second kiddo on the way. Folks keep telling my partner and I that every time we do something, it’s never small. We always dive in together. But it was important to us to put down roots for our family. We wanted to commit to this move across the country and to our new home and our new city.
And four years in, I find myself in the new role as President & CEO of the Hamiton Community Foundation, committed to an equitable, vibrant, diverse and inclusive Hamilton, driving positive change by connecting diverse people, ideas and resources. All underpinned by our values of Equity, Reconciliation, Courage, Relevance, Accountability and Collaboration.
So, Hamilton. I always get asked, what do you like about Hamilton and don’t you miss Victoria? I’d be lying if I said I didn’t miss Victoria, it’s where I grew up and started my career, met my partner and got married, and where my parents live.
But Hamilton is my family’s home. It’s where we’ve bought our first house, in the lower city in a neighbourhood that looks onto the escarpment. My daughter was born at St. Joe’s, and that’s where her little sibling will be born. It’s where we shop, get coffee, go to daycare. I love and appreciate all of Hamilton, but give me Ottawa Street and East Hamilton any day of the week.
I see a “big small” city teeming with histories, diversity, different languages, cultures and a dope food scene. I see Indigenous resurgence and language revitalization, a strong activist community advocating for social justice and a strong arts scene full of potential that needs more commitment and increased investment from civic leaders. I see non-profits taking risks and innovating to house those most vulnerable of our neighbours as different levels of government fall short of their responsibility in this area. I give the City of Hamilton credit here stepping up with a real plan with the Hamilton Housing Sustainability and Investment Roadmap, and while there is lots of work to do there, we also need the province and the feds to step up their game.
Hamilton. A real city with all the opportunities and amenities, with the grit and all the challenges. Over the last four years I’ve experienced the collective nature of Hamilton; a city steeped in a strong labour and union movement, shaped by a collective chip on its shoulder creating a sense of community and a resilient spirit, centred on taking care of and supporting neighbours. From the mutual aid groups that arose during the pandemic to the emerging solidarity networks across equity-deserving groups to improve the lives of their communities. Upwards of 30 percent of Hamiltonians are not born in Canada. Our diversity is our strength. Don’t let anyone tell you otherwise.
Hamilton is a solid cycling city with good infrastructure and a strong biking culture, it has trails and natural environments, world class education institutions, a robust nonprofit sector, a healthcare hub for the region, and while diminished, a legacy industrial sector building its way back. On a personal note, I’m in love with the escarpment as a topographical wonder (though being from Victoria I don’t think I can call it “the mountain”, but a wonder nonetheless!) especially in the fall, my favorite time of year. And what I found most surprising, was the centrality of neighbourhoods with something I’ve come to know as porch culture. I’ve never experienced this before, neighbours just sitting and chatting while sitting on their front porches. As we moved into our new neighbourhood, people got off their porches and came over to say hello. Absolutely foreign to me. But four years in, my daughter is running after the older kids in our neighbourhood, as folks are sitting on each others’ porches chatting and sharing life with each other. The sense of community at a neighbourhood level is something I’d never experienced before, and watching my daughter grow up in that is a sight to see.
Yet, our city continues to face significant challenges. HCF has been at the forefront working to address these since 1954. This organization has a tradition of stepping into messy and hard work, with intentionality and care, working for positive impact and systemic change for the betterment of our neighbourhoods and communities. Past leaders, staff and board — have leaned into the complex and messy nature of this work and taken risks that other foundations and institutions wouldn’t: from our poverty reduction and neighbourhood work with Carolyn Milne at the helm, to our education and impact investment work with Terry Cooke and Annette Aquin. HCF has been the first through the door, a beacon of innovation and ingenuity in the nonprofit sector and in Canadian philanthropy. From dedicating all our unrestricted grant funding to deep and lasting impact on critical issues to building and shaping the social finance ecosystem in Canada, HCF has shown leadership and courage, always centered in its values.
The opportunity to build on this legacy and history with our many partners, is not only exciting for a lowly community developer like me, but a great responsibility. This is not lost on me as I step into this new role. Especially in our current context.
Hamilton is facing a series of intersecting crises during an increasingly polarized political landscape underpinned by increasing economic disparity between rich and poor. The housing, affordability, mental health and opioid crises are acute and are having a significant negative impact on our neighbours and our communities. Hamilton continues to have one of the highest rates of hate crimes per capita in the country. Inflation and cost of living are squeezing and hurting many families and communities. Gentrification has displaced so many, in particular along the planned LRT line. Throw in the backdrop of Canada’s ongoing failure to move the needle on the Truth and Reconciliation Commission’s 94 Calls to Action; admissions of anti-black racism in our institutions with little to no reform; geopolitical conflicts that play out between communities on Hamilton playgrounds and workplaces; the rise of populism and increased polarization; and the threat of climate change…
To say we have work to do is an understatement.
HCF is on a trajectory. It is our responsibility to build on the work of those who came before us. To bring folks together, renewing old partnerships and forging new ones around critical issues, always speaking truth to power and finding pathways forward for people and planet.
It’s also our responsibility to acknowledge and identify where HCF itself has work to do. We have to ask ourselves some tough questions as we look at the future we want to build for Hamilton. We have to continue learning and increase our understanding of the historic and ongoing implications and harm being caused by colonization on Indigenous Peoples of Turtle Island, who have been here since time immemorial. Colonization is not some historical fact, but an ongoing harmful practice in the Canadian context. What does that mean for HCF? What does Reconciliation and self-determination for Indigenous Peoples mean for HCF? I’m proud that last March we launched HCF’s Declaration of Action on Truth and Reconciliation, co-creating it with our urban Indigenous partners. The Declaration is just a first step; HCF is working to implement the Declaration’s short- and long-term goals, to measure our progress and to be accountable for what we have said we’re going to do. We have work to do.
What does equity mean to HCF and what does addressing the philanthropic funding inequities look like at HCF? How do we work to address the fact that Black-led organizations in Canada receive 0.03 percent of total philanthropic funding? I’m proud that we recently launched a Participatory Granting Pilot to democratize HCF’s funding, centring funding decisions in six equity-deserving communities, including Black, Indigenous, racialized, people who are deaf and people with disabilities, women and gender-diverse and 2SLGBTQIA+ communities. We’ve made progress here, building on HCF’s equity, diversity and inclusion plan and learning from our equity audits over the past 16 years. But we have work to do.
How do we continue to work toward aligning all of our assets with our mission and values while wrestling with the criticisms of philanthropy and foundations that what the philanthropic sector invests in to generate a financial return and make grants, may be contributing to the very issues we are trying to address through those grants? What does that look like for us? I’m proud that we’ve have helped shape the social finance ecosystem in Canada, and that 25 percent of our assets are either placed or committed to social impact investments and that we’ve committed $50 million of our capital over the next ten years to build supportive and affordable housing through our affordable housing program, SCAFFOLD.
But still, we have work to do.
When talking about taking on the President & CEO role, I consistently came back to a particular word to describe the process and opportunity: sobering. Where this organization has come from and where we, collectively, want to go, is a sobering prospect. The work ahead will challenge our practices and ways of thinking. It will be hard and likely make us feel uncomfortable. Adding the values of Reconciliation and Equity was a public statement to our community of where we are going as an organization, and what is important to us.
It’s up to us now, to demonstrate that in action, reciprocity and in relationship. I am honoured and deeply humbled that I get to go this journey with all of you here today.
Much gratitude.
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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