This is an excerpt from our newly published book, Cancelling Billionaires Before They Cancel Us: The Urgent Case for a Wealth Tax. In it, we tackle one of the most insidious tools that billionaires use to starve public coffers in Canada: their private foundations. These foundations hide the ultra-wealthy’s vast wealth from taxation, then funnel that money toward their pet projects.
It’s one of the reasons why our book calls for a wealth tax aimed exclusively at the super-rich, those with fortunes of $25 million or more. That money should be spent by democratically-elected governments to benefit the needy or accomplish other important goals, not diverted to launder the reputations of billionaires.
This excerpt has been edited and reduced in length.
Private foundations are curious entities.
They are charitable organizations and must be registered in Canada in order to issue tax receipts for donations. But, unlike the tens of thousands of other registered Canadian charities, most private foundations do almost nothing that Canadians would recognize as “charitable.”
They are almost always set up and controlled by wealthy families, and do not raise funds from the public. A family typically makes donations to its own foundation and, once made, the donation becomes part of that foundation’s stockpile of funds, sometimes adding up to hundreds of millions of dollars.
Only a small fraction of these ever-growing stockpiles ever leaves the foundation and ends up in actual charitable activity. And much of the money that does trickle out ends up going to charitable institutions (universities, hospitals, concert halls) that offer desirable naming rights in return.
Of course, the wealthy have the right to create large stockpiles of their own money, and to give it away or not give it away as they choose. But that’s not what is going on here.
Rather the money in these stockpiles is money for which the wealthy donors have received major tax concessions, depriving the country of revenue. This means that much of the money in these foundations is really taken from the public purse; it is public money. In making a donation to its foundation, a wealthy family is putting in some of its own money, along with some public money (often, mostly public money). The family then gets to effectively control all the funds in its foundation, distributing them to the charitable causes of its choice, when and if it chooses. This is an extraordinary amount of power over what amounts to a great deal of public money.
Furthermore, foundations are constantly investing their funds, enabling them to grow, often by more than the 5 per cent a year which foundations are required to disperse. This means that a foundation’s annual investment earnings could cover the foundation’s annual 5 per cent payout, allowing the original donation amount to remain untouched inside the foundation, perhaps forever. Also, these investment earnings are allowed to accumulate tax-free within the foundation, adding to the amount of public money in these foundations.
As a result, an enormous amount of money—about $107 billion—sits idle in private foundations, doing almost nothing to help millions of disadvantaged Canadians who could benefit enormously if these public funds were distributed to real, operating, frontline charities. At least half of the $107 billion, or $53.5 billion, is public money, since donors would have received Canada’s 50 per cent tax credit for charitable donations entitling them to get back roughly half their donation in tax savings.
But this no doubt understates how much public money there is in private foundations. A significant amount of the donations in these foundations has been made in the form of corporate shares. Tax savings from donations made in corporate shares can range considerably but typically amount to 60 to 70 per cent of the donation and can be as high as 80 per cent. (Of course, not all donations to private foundations are made in the form of corporate shares.) But if we take all these factors into consideration, we could come up with a conservative estimate that about $65 billion of the money held in private foundations is public money. Yes, $65 billion.
Surely this suggests the public has a strong interest in what happens to that money.
Private foundation money barely flows to poverty relief
What do Canada’s wealthiest people do with the astronomical amount of money warehoused in their foundations? We looked at the 50 largest private foundations in Canada and how they distributed just over $2 billion between 2018 and 2022.
There were some startling findings.
While one thinks of charitable giving as being primarily about poverty relief, that certainly isn’t the case when it comes to the charitable priorities of some of the wealthiest Canadians. The owners of Canada’s largest private foundations directed only a small share—5.8 per cent—of their annual distributions to groups engaged in poverty relief.
So, if Canada’s wealthy have little interest in helping the poor, where do they distribute their money? Here are the top ten recipients and the amounts they received from Canada’s 50 largest private foundations from 2018 to 2022:
· University of Toronto—$303 million
· University Health Network—$115 million
· Technion (Israel Institute of Technology)—$97 million
· United Jewish Appeal—$82 million
· Friedberg Charitable Foundation—$73 million
· Schroeder Ambulatory Centre Foundation—$68 million
· McGill University—$62 million
· BC Parks Foundation—$54 million
· Centraide—$47 million
· HESEG Foundation—$44 million
Again, the wealthy are entitled to their own preferences. Except that, when they receive tax relief for their donations, they are not just distributing their own money. Much of the money they are giving away—somewhere between 50 per cent and 80 per cent of it—is the public’s money.
This raises the question: Should wealthy donors be able to compel the public to contribute such large amounts to their favourite causes?
Well, let’s look at those favourite causes.
Among the top recipients of funds from the 50 largest private foundations were the University of Toronto and McGill University, presumably because a number of wealthy Canadians wanted to contribute to their alma maters, and also wanted their names prominently displayed at these prestigious institutions. Indeed, the importance the wealthy attach to having their names publicly honoured likely explains a great deal about why foundations disburse such large amounts to universities and hospitals.
Of course, groups serving the poor or racialized communities would also presumably be willing to display the names of wealthy benefactors. But having their names emblazoned on a shabby homeless shelter wouldn’t likely have the same cachet. Nor would a homeless shelter even be located in the sort of neighbourhoods that the wealthy and their friends would be likely to pass through and notice. But this suggests that a lot of public money is being donated to prominent institutions largely to satisfy the egos of the ultra-wealthy.
Of course, U of T and McGill are important Canadian universities. However, they also have huge endowments; U of T has the largest endowment of any Canadian university, with $3.2 billion, and it also received the largest amount of funding from the top 50 private foundations, totalling $303 million. McGill, with an endowment of $1.8 billion, received $62 million.
This means that the private foundations were able to direct huge sums of public money—in the range of $235 million—to just two universities, even though dozens of other Canadian universities have much smaller endowments but also have needs that are as large, or larger. Dalhousie University in Halifax, for instance, has an endowment of $681 million, Memorial University of Newfoundland has just $158 million, while University of Regina’s endowment is only $126 million, and Lakehead University in Thunder Bay has just $68 million.
But this is what happens when philanthropy enables the wealthy to direct a significant chunk of government funds to its favourite universities rather than to where the funds are most needed. Certainly, if the Canadian government had an extra $235 million in public funds to distribute to Canadian universities, it would be odd for all of it to be given to just two universities.
Propping up Israel’s occupation of Palestinian land
The third largest recipient of funds from the top private foundations was actually an Israeli university, Technion-Israel Institute of Technology, which received $97 million. This means at least $48 million—probably closer to $60 million—of the money going to Technion would have been provided by Canadian taxpayers. Technion is known to have extensive ties to the Israel Defense Forces (IDF), which for decades has been involved in enforcing Israel’s occupation of Palestinian territories—an occupation that the United Nations has long considered be in violation of international law and that a 2024 advisory opinion from the International Court of Justice found to be unlawful.
It’s hard to imagine the Canadian government, which prides itself in supporting international law, giving a grant of $60 million to a foreign institute with close ties to the Israeli military. But allowing $60 million of the public’s money to be delivered through the tax system makes it much harder for the public to see what’s going on.
Three other of the top ten recipients of the foundations’ benevolence were also charitable organizations which give substantial sums to Israel. The United Jewish Appeal, which received $82 million from the top 50 private foundations, and The Friedberg Charitable Foundation, which received $73 million, both directed significant amounts to organizations in Israel, although it’s not clear from their financial reporting how much went to Israel and how much stayed in Canada. And the HESEG Foundation, which provides scholarships to “lone soldiers” (foreigners who remain in Israel after completing two years of service in the IDF) received $44 million from the top 50 foundations.
Founded in 2005 by Canadian billionaires Heather Reisman and Gerry Schwartz, HESEG has received millions of dollars in charitable donations, although the Canada Revenue Agency (CRA) has clarified that donations to the armed forces of a foreign country do not qualify as charitable for tax purposes. In a 2024 letter to the Ne’eman Foundation revoking its charitable status, the CRA repeatedly stated that providing funds to agents supporting the Israel Defence Forces and lone soldiers are not activities in furtherance of a charitable purpose.
Also receiving support from the top fifty foundations—and therefore from the Canadian public—are a number of very well-funded American universities, including University of California (Berkeley), which received $29 million. The foundations also distributed charitable funds to two American universities which have staggeringly large endowments: Stanford, with an endowment of US$36.5 billion, and Harvard, with the largest U.S. endowment of US$49 billion. Again, it’s hard to imagine the Canadian government giving grants to these overendowed foreign universities, especially when so many Canadian universities are struggling financially.
The priorities of Canada’s super-wealthy are quite different than the priorities of ordinary Canadians when it comes to what causes they support. But when the granting is done through the tax system, the Canadian public isn’t really aware that millions of public dollars are going to some of the wealthiest, least-needy institutions in the world.
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This is very important information. Thanks for covering it, and exposing the degree to which our tax system benefits the obscenely wealthy, not to mention the degree to which they use that money to support elite institutions and the genocidal Israeli economy