Benjamin Joseph Miller

Last November, the City of Toronto published its “Whole-of-Government Framework to Guide City of Toronto Relationships with the Community-Based Not-for-Profit Sector.” The goal of the framework is to build on the many positive values and practices that already exist. The City should be applauded because pursuing this kind of framework is indispensable to overcoming institutional barriers to social innovation. Social innovation is difficult to define but essentially consists in using new approaches to tackle entrenched problems. The brilliance of the city’s approach is that it recognizes a thousand experimental sparks don’t make an innovative fire unless the wood is set up to sustain the heat.

The status quo: A thousand lonely sparks

Many governments relate to the “public benefit not-for-profit sector” through a collection of ad hoc one-on-one relationships with not-for-profit organizations. Each one of these organizations may individually deliver innovative projects that meet social needs, but their funding does not last long enough to scale them and governments are systematically unable or unwilling to integrate these successful pilot projects into core services. Lessons learned, promising practices, and the social benefits of these projects are difficult to sustain within departments, much less translate across departments or communicate cumulatively to decision-makers or the public. In this environment, if the kind of collaboration needed to take on systemic issues happens, it is typically because of personal relationships rather than institutional catalysts. To move away from this environment, government’s relationship to the sector must be more deliberate.

Deliberate relationships: The wood that sustains

Wellesley Institute uses the term “deliberate relationship” to describe a relationship between the government and public benefit not-for profit sector as a whole, usually through crucial intermediary organizations. These relationships are characterized by a focal agreement like the City of Toronto’s. These agreements explicitly lay out the principles, and sometimes practices, that governments and not-for-profits will abide by in matters common across sub-sectors and departments (like funding and policy consultation).

In pursuing this kind of relationship, the City of Toronto has committed to publicly recognizing the contribution of the sector; proactively sharing best practices across departments; creating a standing city-sector advisory table to increase collaborative decision-making; and reviewing funding applications and reporting requirements, among other things.

By recognizing the sector’s collective work, the city is helping to promote a more cohesive and self-aware civil society. This will help overcome the lonely experience of many not-for-profits toiling away at their own mission without any broader consciousness of the sector of which they are a part.

By creating formal mechanisms to share best practices and get the sector’s input on policy, the city makes knowledge dispersion a matter of course rather than a struggle, the rule rather than the exception.

By working with the sector to craft funding applications and reporting requirements, the city has the potential to reverse decades of negative effects of short-term funding cycles. These negative effects include increasing time spent on reporting and duplication of efforts to fill in the forms of different funders as well as the precarious employment position of fundees. Indeed, if all the city did was move towards a more multi-year funding model that supported the core capacity of organizations as well as programs, that would be a major win for social innovation.

Plus one big innovation: Not-for-profit sector as an economic sector

Finally, the City of Toronto has also committed to including the public benefit not-for-profit sector in its more traditional economic development policies by “establish(ing) a Not-for-Profit Sector Specialization within Economic Development and Culture Division.” This action responds to Social Planning Toronto’s remark that, despite being “a large, stable, recession-proof, export-proof, high-multiplier element of a fully diversified economy”, the sector is not covered by traditional economic development policies.

In fact, the charitable and not-for-profit sector has tried for a long time to get governments and the public to appreciate the sector’s economic importance. Most people don’t realize that Canada’s charitable sector alone “generates $176 billion in income, employs two million people and accounts for more than 8% of Canada’s GDP.” Charities, especially large ones like the University of Toronto or St. Michael’s Hospital, can be enormous income generators. The primary difference between the public benefit not-for-profit sector and the private sector, according to some, is that in the former the “profits” keep circulating in the public sphere rather than being accumulated by any private actor.

In sum, the City of Toronto has taken a major step to restructure its relations with the public benefit not-for-profit sector. The dividends will be paid in the increased reach of the work not-for-profits already do, as the organizations receive sustainable support, their results are shared across departments, and their impact informs policy directly. Now we have to wait and see how the fire spreads.

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Benjamin Miller is a JD/MPP Student at the University of Toronto and co-founded the Charity Law Interest Group at the Faculty of Law. He works at Community Legal Education Ontario where he develops resources to help not-for-profits comply with Ontario’s corporate law. His writings have appeared in The Philanthropist, Globe & Mail, Policy Options, and University Affairs.