Non-qualified donees reap rewards after hard fought battle for regulatory change

TORONTO/TREATY 13 – In her 10 years at the helm of Laadliyan, a non-profit empowering South Asian women, Manvir Bhangu has never managed to get a grant from a Canadian foundation.

That changed last week when the Peter Gilgan Foundation announced Bhangu’s non-profit is one of 15 recipients of the foundation’s new GTA Community Grants program. The foundation distributes dozens of grants each year, but this is the first time they’ve granted directly to a non-charity.

The contribution was made possible by a change in federal law last June, which allowed foundations to grant directly to so-called non-qualified donees — social purpose organizations without charitable status. About six months later, the Canada Revenue Agency published a document spelling out what the new law means for granting relationships.

The impact of that hard won change is now being seen on the ground.

“The board has always felt that solutions can come from anywhere,” said Elizabeth McCallion, the foundation’s program director. “But our legal advisors, and accountants, and smart people were obviously — before the CRA guidance changed — they weren’t really open to experimenting.” 

The timing of the policy change was good for the Peter Gilgan Foundation. 

When the pandemic hit in 2020, the foundation began offering unrestricted grants to community-based charities. It was very different from how the foundation had worked previously, but it went well and the board was impressed with the impact achieved. 

At the same time, foundation staff were keeping tabs on the McConnell Foundation, as well as the Toronto Foundation, which were supporting non-qualified donees with success.  

When the time came to sketch out parameters of a new granting program targeting the Greater Toronto Area, McCallion and her colleagues proposed non-qualified donees be eligible, referencing the new, more expansive law. 

According to Stephanie Trussler, the foundation’s executive director, the board had some reservations about how the change would affect the foundation’s operations: how would it walk the “tightrope” between remaining accountable as a charity, but accessible to grassroots organizations? 

When non-qualified donees received foundation funding in the past, it was indirectly disbursed through a trustee organization or a shared platform offering oversight.

But conversations with peer foundations eased their concerns and ultimately the board gave direct granting the green light. In the following months, the GTA Community Grants program received 159 applications — nearly half from non-charities. 

The foundation selected six non-qualified donees, including Laadliyan, Thorncliffe Park Autism Support Network and the Toronto Black Farmers and Growers Collective, who received grants totalling $90,000. The program’s total budget is $232,500. 

Bhangu’s organization will use its $15,000 grant to host four mentorship events designed to give South Asian girls first-hand experience with a variety of industries. 

“Oftentimes we grow up as girls hearing that, in my community especially, ‘You can be educated but ‘just enough’ because you have to be married, you have to be a mother and you have to be a wife,’” she said. “But we don’t want girls to limit themselves in that way.”  

Dreaming big hasn’t been a problem for Bhangu and her teammates at Laadliyan. 

Over the last decade, they’ve run programs connecting South Asian girls with grandmothers, breaking biases about the superiority of sons over daughters, hosted a podcast about periods, body image and gender-based violence and helped over 400 international students resist mistreatment through mental health, legal and food security support. 

But raising the funds necessary to sustain their work hasn’t been easy. Donors often ask for charitable tax receipts, which the non-profit can’t give, and most foundations haven’t been willing to invest the time to figure out how to flow funds to non-qualified donees. 

“We have looked into charitable status, but it’s extremely expensive and extremely rigorous as a process, which we just don’t have capacity for,” Bhangu said.

Legal fees to start a charity can tally as much as $15,000 and the process can take over six months. 

But despite lacking charitable status, the non-profit does have something the Peter Gilgan Foundation was looking for. 

“We know that solutions to society’s problems can come from anywhere, and often solutions to problems facing a community will come from the community itself,” said Trussler. “We wanted to be able to support those grassroots problem solvers.” 

Bhangu said she’s grateful for the foundation’s support — both for the programming it will allow her team to run and for the doors it could help open in the future. 

“Every time we get money — and especially when there’s a name that is recognizable attached to it — that helps us seem more legitimate to our community members and to other funders,” she said.  “I’m very excited to have that name attached to ours — to do the work, to create impact and to leverage that to do the next big thing.”