Exploratory study on the operational costs of Canadian granting foundations in Quebec

Description

This study is the result of a collaboration between Philab-Québec and the Béati Foundation. The research process is under the supervision of Jean-Marc Fontan (UQAM, sociology) and Jacques Bordeleau (Beati Foundation). The basic questioning aims to assess the weight represented by operating costs in the overall budget of a foundation.

How do you know if a philanthropic foundation is well managed? If it uses the donations received in a “responsible and optimal” way, in order to accomplish its mission and provide the public with the greatest “tangible benefit”? Often, to judge the management or performance of an organization, the media and individuals will base themselves on financial ratios, first and foremost that of management costs: what percentage of my donation goes to the payment of salaries, premises or other operational costs? This information is available on the Canada Revenue Agency database (item “management and administration expenses”). The media periodically refer to it when investigating the charitable sector, using it to identify model or delinquent organizations, depending on the interpretation of the said ratio. In general, the lower the expense ratio (traditionally below 35%), the more favorably the organization will be viewed – and vice versa, if it is high. But what about the facts? What exactly do we mean by operational costs or administrative expenses? Do the specific characteristics of a foundation (type, size, mission, etc.) affect this ratio, and how?