Like so many days in this job, yesterday was both fun and educational. I spent it in Buffalo touring a number of sites that reinforced both the promise and the problems facing this struggling but beautiful Rustbelt city. My co-pilot for the trip was Graham Crawford, who shares my love of cities and is a thoughtful and passionate believer in Hamilton. Check out Kathy Renwald’s excellent piece on Graham’s “curating” of his gracious south-west Hamilton home in today’s Spec ( https://www.thespec.com/living/style/article/583439–stately-home-in-the-right-hands).
Our host and tour guide for the day was my old friend Bruce Fisher. Bruce is now a professor at Buffalo State and widely published and respected author, but previously served as Deputy County Executive (City Manager) in Erie County. (look for Bruce’s soon to be released book Borderland https://www.sunypress.edu/p-5347-borderland.aspx, a fascinating series of essays on the challenges of Great Lakes Cities on both sides of the border including Hamilton)
Among the many sites we visited yesterday, the high point may well have been the Fontana Boathouse, a remarkable Frank Lloyd Wright designed structure that now serves as a home for the West Side Rowing Club, welcoming the public and capitalizing upon Buffalo’s extraordinary architectural history (check it out herehttps://www.wrightsboathouse.org/building.html) .
We had a great discussion about some of the common challenges facing Buffalo and Hamilton and particularly lessons that we can take-both good and bad-from some public policy decisions that have shaped Buffalo’s recent history (here are some thoughts on that subject from an old Spec column of mine)
April 11 2009 Lesson our politicians can learn from Buffalo.
A very proud moment for us at HCF happened last week when we issued the first loan from our Community Investment Fund! For those who don’t know, HCF established a Community Investment Fund with $5 million of its unrestricted funds. Find more on community investing link here
In HCF’s case, the first loan has been made to Hamilton Artists Inc. a long-standing artist-run centre that “supports and reflects the diverse environment in which we live”. HCF provided HAI with a bridge loan while they worked to complete the construction of their new building at the corner of James and Cannon. Have you seen it yet? If not, prepare yourself for a stunning transformation at one of Hamilton’s most visible corners!
While it is HCF who has ‘made’ this loan, it is in fact a team effort. Critical support and expertise was provided by Nora Sobolov and her colleagues at the Community Forward Fund. And staff, volunteers and board members at HAI were diligent and responsive throughout this process. Their comments embody why HCF is committed to this project and to the premise of community investing.
“Thank you to the whole team at the Hamilton Community Foundation for supporting this project and enabling our confidence and security to restart the project and complete it with your loan providing the capacity to do so.”
With many other potential community investment opportunities emerging, I look forward to sharing here more stories of HCF using its assets in unique ways to support positive change in Hamilton.
Over the past few years I’ve had the opportunity to connect with many people who are committed to making their neighbourhoods safe, quality places to live, work and play. One of these people is Rebecca Doll – volunteer extraordinaire in the South Sherman hub and owner of the “Heart of the Hammer” café at King and Sherman.
I knew that Rebecca had the café for quite some time, but never had the chance to visit until this week. Suzanne Brown and I were doing a walkabout in the area and stumbled across the café. The timing was great since by this time we were dying for a cup of tea. What a lovely surprise to find this oasis tucked within a street that is obviously going through difficult times. From the bright and cheery art on the walls to the comfy couch and chairs, there is truly a sense of community in the café. It is a gathering spot for neighbours and friends to hear music, discuss their aspirations for their neighbourhood and enjoy the most wonderful brownies I’ve ever had.
If you are looking for somewhere to ease the stress of the day, grab a coffee or light lunch, stop in – and give my best to Rebecca. More information is available atwww.heartofthehammer.wordpress.com.
A powerful reminder by my friend Andria Spindel here https://modcpresidentblog.ca/ of the importance of tolerance and the celebration of diversity. Richard Kall was a colleague of mine at Ontario March of Dimes and an extraordinary man. We miss him.
Jeff Simpson nails the fact that growing economic inequality in Canada is a public policy choice, not an inevitability.
This week, with two cars and three drivers in the house, I have been walking from my house near the Mountain brow to my office downtown.
What a difference in perspective from my usual driveway-to-driveway experience!
From the top of James Street stairs overlooking a bustling city and a gorgeous harbour, past St. Joseph’s Hospital, the eager patrons at Steve’s Open Kitchen (voted #1 breakfast in town), the beautiful architecture of the terraces, James Street Baptist, St. Paul’s, the old Bank of Montreal and the Landed Bank and Loan Building, on into Gore Park, it provided a whole new and more insightful view of some of Hamilton’s better and lesser-known assets – and a great start to the day.
Today as I write this, it is hard to believe that my husband and I were part of the 300,000+ crowd on Parliament Hill celebrating our country’s 144th birthday. We were part of that sea of diversity, all wearing red and white, each of us waving Canadian flags.
One of the highlights of that afternoon celebration was hearing our Governor General David Johnston’s address. He said, “I want all of you to look at your neighbourhoods, your communities and this country, and ask yourselves what you want Canada to look like”. He went on to invite all Canadians to share his vision of “a Canada where families and children are supported and given the chance to thrive; where learning and innovation are strengthened to provide for a prosperous tomorrow; where volunteerism and philanthropy are encouraged as part of our daily routine.”
I have to say that my own personal pride swelled knowing that my city, my Hamilton, has embraced working towards making our city the best place to raise a child.
It swelled even more knowing that since 2004 Hamilton Community Foundation has been working towards reducing our city’s unacceptable poverty rates using a neighbourhood-based approach. Yes, we have much to be proud of.
I encourage you to read His Excellency David Johnson`s full address. I hope you too accept his invitation.
And, by the way, we did get a great photo of Will & Kate!
It’s not my usual practice to blog. However, following our June 21st AGM, I am choosing today to step out of my own personal “comfort zone” to do so.
There was an amazing spirit and sense of warmth around the table and once again I find myself counting my blessings to be part of the HCF family.
While all the expressions of thanks were more than well deserved, there was one acknowledgement, in particular, that truly resonated with me. It was Dr. Lindsey George’s thank you to our tiny but mighty force here at HCF…. Sharon Charters!
On June 13th I celebrated my 10th anniversary with HCF. During these ten years I have had the extreme good fortune and pleasure to work directly with Sharon. Not only is she one of the most loyal colleagues I have ever known, she is truly a gem in Hamilton’s crown. There isn’t a program in Hamilton that Sharon isn’t aware of, a co-ordinator that she hasn’t met, or a participant that she hasn’t helped or encouraged.
So, Sharon, 10 years later I cannot tell you what an important person you have been in my life, both professionally and personally.
Hamilton is lucky to have you…and so are we!!!
The Century Foundation provides a troubling but thoughtful analysis of the growing divide between rich and poor in the United States. https://takingnote.tcf.org/2011/06/graph-of-the-day-the-return-of-the-gilded-age.htmlThe piece underscores clearly the dire consequences of public policy choices that directly contribute to the shrinking of middle class America.
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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