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Are there legal issues for pension funds making charitable donations right now?

April 08, 2020

Canadian Investment Review talks to Simon Archer about the ability of pension funds to make charitable donations

The Canadian Investment Review spoke to Simon Archer about the COVID-19 crisis, and whether pension funds can make charitable donations right now.

Simon Archer, partner at Goldblatt Partners LLP, highlights the distinction between a pension fund acting as an operations manager and employer compared to one that acts as a pension fund investor. For instance, a pension fund as an employer would have a budget for operational activities, which could include charitable giving as part of its communications and marketing budget. But it would be a separate question for a board of trustees to donate money to charities as an investment activity rather than as an act of operations management.

For example, if an organization’s management has an annual operations budget and has given employees days off for charitable activities in the past, says Archer, choosing this year to donate a similar amount to charity instead is a different decision than asking about fiduciary issues. Rather, it’s a decision about how management allocates its annual budget and would likely be permitted.

He also notes that pension funds may also consider whether their operational budgets are consistent with regulatory requirements for expenses from pension funds.

In the past, Archer has been asked about whether pension funds can donate to charity and he’s always said no. “These were smaller funds without the same kind of, what I’ll call, operating budget that others have, and you’re conservative advice is, if it’s not authorized under your trust agreement or as a legitimate expense of the pension fund in the administration of the fund, then you better not do it, or you better find another way to provide the community service.”

Another option is for a pension fund to introduce a staff-led initiative, which it then supports as an employer and not a pension fund trustee. “That’s not going to be second-guessed by a beneficiary who says, ‘Why are you giving money away when my pension is underfunded,’ or something like that,” Archer says.

Read the entire article here or here.


Simon Archer

Practice Areas

Pension & Benefits Law