The following letter to the editor was sent in response to a proposal to establish a community foundation for charitable giving using a portion of the proceeds obtained by the town through the sale of COLLUS and the regional airport. A final decision on the community foundation has been pushed to 2021.
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Editor,
This is to object to proceeding with the proposed foundation Collingwood Initiative.
As I understand it, the town would prime the pump with $3 million initially, then plan (hope?) for ongoing private donations of a further $1 million, to be matched by town funds to initiate the foundation.
Not well defined in the proposal is how the endowment would grow beyond year one. Would this require further injections of town cash? Are you hoping for an ongoing stream of private donations?
At some point does the town back out and leave the foundation to stand alone and grow solely on the basis of private donations, legacies, etc? Have you researched the likelihood that that can happen? How realistic is that?
It seems the concept is to allow the town to eventually back out of the business of funding soft services and allowing the foundation to fund these services out of (mainly? exclusively?) donated funds.
What is the problem you are trying to fix? What is wrong with continuing the existing practice of town funding these services out of current income? I suggest that imposes a certain discipline on these expenditures, by exposing the grant requesters to public scrutiny through council. What’s wrong with that?
I see a few big problems with this proposal:
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We tie up (initially) $4 million for several years in a fund – frozen – where that money cannot be applied to anything other than (you hope) earning a return on equity before the foundation can start funding public services out of income.
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There would very probably be an ongoing requirement for further town funding until (if?) an adequate stream of private money grows the foundation’s equity to a level such that the foundation can assume the role of funding grant requesters. So that would probably require annual contributions of further millions of dollars each year, assuming future councils buy into the concept – not at all a sure thing.
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A $5 million investment in today’s investment climate would do well to generate a three-per-cent return, (and could easily be less – possibly even a loss.) However, at, say, three per cent, that would yield $150,000 in year one. There would be some costs: facilities of some kind, an office, a phone and a computer at a minimum; an administrator’s salary and benefits; transaction and bank fees; possibly a financial advisor’s fee. So one could foresee the entire year’s return eaten up just in overhead for the first few years.
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Meanwhile that frozen $4 million could be applied immediately to some uses with medium- or long-term utility to taxpayers. There are many potential uses that could qualify for some or all of that cash: debt retirement; infrastructure improvement; acceleration of parks and recreation projects; the Waterfront Master Plan; Heritage Drive improvement; the water filtration plant expansion; the terminals (God help us!); etc.
I ask you to consider that the cash that you propose to invest in the foundation was acquired from the sale of town-owned assets – Collus and the airport. The equity in those assets was generated over many years, in part from power and water bills paid by all taxpayer residents. That is one-time money. It should then be invested in projects that have long term value to all taxpayers in the community.
Sorry to say, but the foundation idea is well-meaning, but ultimately a non-productive use of the legacy fund
Please vote this down.
John Megarry
Collingwood, ON
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