Trudeau Foundation: Facts to tackle foreign influence
Reading your comments in the weekend newspapers on the events at Pierre Elliott Trudeau Foundation, these facts may help your understanding. Lies can travel around the world and back before the truth can tie its boot laces.
One of the aims of hostile foreign influence is to destabilize democracies by feeding polarization and distrust, and undermining public institutions. Canada's freedom and openness make us highly vulnerable to this. One antidote is informed citizens.
“Democratic values cannot be taken for granted. We must not become complacent in thinking that our long-standing democracies are not susceptible to foreign interference. The openness of our societies is what make us vulnerable, but it is a core component of democracy that contributes to our resilience and cannot be compromised.”
Both the Conservative Party and the Trudeau Foundation have asked the CRA to review its donations for foreign influence. With the Trudeau Foundation’s mass board resignations last week, which may signal unknown issues, an audit would answer Canadian’s legitimate questions about this high-profile public charity.
Answers to your questions:
How much money does the government give the Trudeau Foundation?
In 2002, the Federal Government gave $125 million to create the Trudeau Foundation. There has been no government funding since. This Parliamentary decision was unanimously supported and then Canadian Alliance members welcomed Sasha Trudeau and the Trudeau family’s involvement in the Trudeau Foundation.
Current Prime Minister Justin Trudeau stepped away from the Trudeau Foundation when he was elected but other Trudeau family were involved. Sarah Coyne, Pierre Trudeau’s daughter, was one of the directors who resigned last week.
What about the Foundation's finances? How much a year has it earned in investment income and how much was offered in scholarships and administrative costs to operate the charity?
The Trudeau Foundation is transparent, with audited financial statements included in its posted annual reports along with detailed information about its work. In addition, its annual filings can be viewed on the CRA Charities Directorate website and the historical filings on CharityData.c
Trudeau Foundation has earned $24.5 million on its investments over the last five years 2022-2018, which is 95% of its total revenues. It has received $778,410 in donations and $626,000 from foreign sources.
With financial market fluctuations, a five-year picture is most appropriate.
Foreign revenue
Over the five years, Trudeau Foundation has received $626,000 from foreign sources. This may also include funding from the US Fulbright scholarship program which Trudeau Foundation has a partnership with. Foreign revenues account for 2.4% of revenues over the five years. This does not include the Chinese donations made in 2016 and 2017. Historical information is available at CharityData.
Every charity must disclose foreign donations over $10,000. These foreign donations are reported annually in Schedule 4 which is confidential information not available to the public but seen by the CRA Charities Directorate. Canada has sufficient regulation to monitor foreign donations to charities.
Donations include donations made by directors, members, and officers. Directors and members donated $149,958 (61% of all donations) in fiscal 2022, and $188,756 (94% of all donations) in fiscal 2021. The grants from other foundations come from CanadaHelps, the online giving portal, and $5,000 from Westmount, Quebec’s Clarus Foundation.
Spending
Since 2018, Trudeau Foundation has spent $23.0 million on scholarships, fellowships, and convening academics. Its annual report has more details on scholarship recipients, their academic area of focus, and their university. The foundation has spent $4.0 million to manage and administer the charity.
So, for every $1 in administrative spending, Trudeau Foundation grants $5.75 in scholarships. One would always like to see more productivity, but this is reasonable.
The fundraising costs look extremely high relative to donations, especially considering most of the donations come from directors and members. However, the fundraising costs are an immaterial $310,000 in fiscal 2022.
How much remains of the original $125 million grant?
All of it! The $125 million grant is today worth $150.8 million. (This is the figure Trudeau Foundation reports in its 2022 annual return which excludes its assets used for its charitable purposes. This figure is technically a two year average.) Trudeau Foundation’s audited financial statements report $141.6 million in investments at the end of August 2022 compared with $165.7 million at the end of August 2021, reflecting the investment returns and losses on the investment portfolio in 2022 (see Financial Note 4, p.65) The audited financial statements do not disclose which assets are used in its charitable purposes so the figure reported in Box 5910 is more appropriate.
How much does Trudeau Foundation hold in real estate?
Trudeau Foundation does not have real estate holdings. It rents its office on Sherbrooke Street in Montreal.
Charity Intelligence does not have a research report or rating on the Trudeau Foundation as it is not funded by you. Looking just at donations, the Trudeau Foundation is a “small charity”. Although a charity with $141 million in investments would rank among Canada’s largest 100 private foundations. Trudeau Foundation, while called a foundation, is technically registered as an operating charity.
So what’s the fuss?
In 2016, the Trudeau Foundation received a $200,000 pledge from Chinese billionaire Zhang Bin that, news reports seem to show would be reimbursed by the Chinese Government. Of this pledge, $70,000 was received in 2016, $70,000 in 2017, and the balance has not been paid. This could indicate an effort from the Chinese government to influence.
Foreign influence is something most Canadians are less aware of than Australians or Americans. While this donation is insignificant, foreign influence is important.
Trudeau Foundation made an unforced error in accepting this donation. It did not need the money. It was a naïve mistake in a different time when we were less aware of hostile foreign influence. Trudeau Foundation acknowledges this donation does not meet the high expectations Canadians have for charities. Last week, the money was returned.
“As an independent, non-partisan charity, ethics and integrity are among our core values and we cannot keep any donation from a foreign government."
Pascale Fournier, former President and CEO, Trudeau Foundation, March 1, 2023
Today, the larger issue is the board and management mass resignation. This is reportedly over “old guard” directors, who governed the foundation when the Chinese donation was made, not recusing themselves from the investigation that the other directors and management wanted. This is a red flag. Trudeau Foundation has called for an investigation and a CRA audit and clean bill of clearance would help restore donor and public confidence.
Since the resignations, Trudeau Foundation has asked the Auditor General to investigate in addition to its inhouse review of the donations by its law firm and accountants.
“We would eagerly cooperate fully with such an investigation.”
Ted Johnson, Board Chair, Trudeau Foundation, Letter to Auditor General April 14, 2023
This is welcomed. Canadians have legitimate questions and arms-length investigations are appropriate.
The Government has two seats reserved at the board table and should ensure two competent directors are installed to oversee the public interest. This falls onto the desk of Minister Francois-Philippe Champagne, Minister of Innovation, Science and Industry.
CRA Charities Directorate Audit
One aspect the CRA Charities Audit should also review is whether Trudeau Foundation has spent enough on its charity programs. Has it lived up to its charitable purposes?
From the information we have reviewed, it looks short in its spending by $2.8 million. All charities must uphold the laws of Canada. Charities with large endowments are required to spent at least 3.5% of their investments each year on their charity programs. This is notwithstanding a global covid pandemic, financial crises, or internal turnover.
The penalty for not meeting the spending requirements is 110%. If found short, Trudeau Foundation would pay a $3.1 million penalty payable to the Receiver General. Its directors would pay greater attention going forward to ensure it upholds the law.
Foreign influence or foreign investment
Before the calls for an end to all foreign funding of charities, let’s pause. Like financial markets, charity funding is global.
Foreign funding contributes to Canadian charities almost as Canadians and the Canadian government send to international charities. Canadian charities received $3.0 billion in revenues from foreign sources (1% of total revenues) and Canadian charities spent $3.8 billion outside of Canada (1.2% of total spending).
Foreign funding comes mostly to Canadian universities and medical research. Canada’s foreign spending is mostly in international development. Canada uses foreign aid to influence its values, for example, women’s maternal health and girls’ education. This is why CRA Charities Directorate oversight is critical to ensure our international funding is used for charity purposes.
The National Security and Intelligence Committee of Parliamentarians Annual Report 2019 identifies foreign influence as the most significant risk to Canada’s democracy. Within Canada’s charity sector, the report highlights the influence hostile foreign powers are flexing in Canadian universities.
“Certain foreign intelligence services and government officials (especially those of China and Russia) are also involved in the monitoring and/or coercion of students, faculty and other university officials. In some instances, students are pressured to participate in activities (e.g. demonstrations, spying on other students, etc.) which are covertly organized by a foreign power to further its political influence. Universities can also be used as venues for “talent spotting” and intelligence collection… Chinese threat actors have aggressively engaged in foreign influences activities in Canada as they have in Australia, the United States, and New Zealand.”
Remarks by David Vigneault at Economic Club of Canada, December 4, 2018, p. 98-99
This series of unfortunate events involving Trudeau Foundation have contributed to raise awareness of foreign influence. It has done much to meet the Trudeau Foundation’s goals towards empowering learning among us all.
To learn more:
Trudeau Foundation 2022 Annual Report and audited financial statements, Pricewaterhouse Coopers, Montreal
Sources:
Open Parliament, February 20, 2002 Pierre Elliott Trudeau Foundation proceedings
Mark Blumberg and Henri Pasha, Blumbergs’ Snapshot of the Canadian Charity Sector 2021, March 17, 2021
National Security and Intelligence Committee of Parliamentarians Annual Report 2019, March 12, 2020
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