OTTAWA — Amid the furor over the Pierre Elliott Trudeau Foundation accepting a donation from sources with potential connections to the Chinese government, the foundation has another apparent problem: A history of not spending enough on the causes it is meant to support, including advanced thinking about the innovation economy in Canada.

Charitable foundations in Canada are required to disburse 3.5 per cent of their assets for qualifying charity purposes each year, so they don’t become tax shelters in which wealth just keeps piling up instead of being spent on the public good.

“Continuous shortfalls may lead to revocation of a charity’s registration,” the Canada Revenue Agency warns in bold type, on a page about the disbursement quota charities must meet.

The federal government endowed the Trudeau Foundation with $125 million in 2002, in memory of its namesake former prime minister. The foundation funds academic research and runs a mentorship program meant to encourage Canada’s brightest young minds.

One of the foundation’s causes is ecology and the environment, including how best to green the economy; its scholars and affiliates have published lately on the ethics of gene editing, artificial intelligence in medicine and how the slow deliberation of university work has to adapt to help fight online misinformation.

Foundations that spend less than they’re supposed to are not rare, as The Logic has documented. But it’s still a violation, said Kate Bahen, managing director of the watchdog Charity Intelligence Canada.

“The Trudeau Foundation is a high-profile, high-prestige charity,” she told The Logic in an interview. “You should make sure that you’re living up to the laws of Canada.”

It isn’t, according to Bahen’s calculations based on the foundation’s public filings.

According to that documentation, the Trudeau Foundation has spent just over $23 million on charitable purposes over the past five years. Its assets have varied between about $143.8 million and $153.7 million, a range that dictates a disbursement quota of nearly $25.9 million over that time.

Of the five years, only in 2019 did the foundation meet the minimum it was supposed to spend on charity, according to The Logic’s independent calculations. Over the last five years, it spent an average of just over $4.6 million a year on charity, falling short of the minimum by nearly $568,000.

The Trudeau Foundation’s communications department did not respond to questions from The Logic about whether any exemptions or special conditions applied to its spending.

The foundation’s key offering is a scholarship program for PhD students meant to guide them to become intellectual leaders, offering up to $60,000 a year for three years for living expenses, tuition, research and participation in the foundation’s activities.

In the beginning, the foundation was intended to support as many as 100 doctoral students and 20 mid-career researchers a year. In its last annual report it said it had 80 “scholars” (the doctoral students) and 24 “fellows.”

Meeting the minimum spending requirement could have funded nine or 10 more scholarships per year.

The law has loopholes, one of which is that disbursements above the minimum can be carried forward up to five years or applied to a shortfall in the previous year. 

The foundation’s investments had a brutal year in 2021–22, according to its annual report, losing more than $24 million in paper value. But assets are assets—up or down, whatever a foundation has, it’s supposed to put out at least 3.5 per cent.

“It’s really on the directors,” said Bahen. The system relies heavily on foundations’ overseers making sure that the organizations live up to all their responsibilities, she said, and ultimately most of them do. “If you are asked to sit on a charity board, there are courses you can take to be a director: What are you responsible for? What are your obligations?”

Most of the foundation’s directors resigned this week, along with CEO Pascale Fournier, citing “the circumstances created by the politicization of the foundation.” The Logic tried to contact several of them to find out whether the board had discussed the apparent shortfalls in its charity work.

One, Vancouver lawyer Duncan Reid, acknowledged the inquiry; he wrote back that he was too busy Friday to address it.

Another, Prof. Bessma Momani of the University of Waterloo, said through a spokesperson that she wasn’t available.

Former Liberal cabinet minister Allan Rock, who announced the public funding for the Trudeau Foundation more than 20 years ago, said Thursday that the foundation has been a victim of partisan attacks that are unfair in the face of its good and important work.

That work is the point of the disbursement quota, Bahen said.

“Great!” she said. “Do more of it!”

Starting this year, the federal government has increased the disbursement quota to five per cent of a foundation’s assets over $1 million.