Public Accounts Committee on Dec. 4th, 2012

[Rubin Friedman]

We will be putting it through the usual method we have for advertising for board members. We have gone through the existing board members to see if we can find contacts. I'm serious—this was not meant as a rebuttal to you—I'm really serious that if anyone can help us to find a qualified person with an expertise in finance who would be willing to serve on the board of the Canadian Race Relations Foundation, please forward the name.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Okay. I'd like to have more specifics of what your organization actually does, what the accomplishments are. As an example, you mentioned that you're doing specific education on interfaith and belonging. Give me another four or five measures that you are implementing or that you have implemented that have proven to be successful programs.

[Rubin Friedman]

We have worked with cities across the country to implement policies on anti-racism. We did that in partnership with UNESCO and the Federation of Canadian Municipalities. We work in partnership with the Province of Ontario to deliver training across Ontario. We have worked in the past with various community organizations on their specific initiatives. We have organized round tables with Ryerson University, the Ontario Human Rights Commission, and other players such as these across the country.

That's the type of initiative we have taken. We have collected guidelines, materials, and research from across the country which is in our resource centre. We're currently looking at ways to make those resources more available, to make people more aware of their existence, and to increase access to it over the next year or two.

[The Chair, NDP, David Christopherson]

Time has expired, sir. Thank you both very much.

Moving along now to Mr. Ravignat. You have the floor.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Mr. Chair.

The first thing I would like to do, Mr. Friedman, is congratulate you on the great work you do. I know of the foundation and some of its work. Over the years, you have done some great work. In particular, a national video competition for ages 16 to 20 is dead on. It's the kind of thing 16 to 20 year olds are looking for, creating a YouTube video or something. I think it's a great initiative. I assume it goes through the school system and that's the way they will plug into it.

I have a couple of questions with regard to the change in the number of board members. I know there is an attempt to create a balance between those who are experts in finance and those who are experts in race relations. I wonder if you could talk about some of the consequences of going from 19 to 10 members.

[Rubin Friedman]

The consequences of going to—

[Mathieu Ravignat, NDP, Pontiac, QC]

From 19 to 10 members, and what that means for the ratio going forward.

[Rubin Friedman]

Actually, our challenge on the board is to have other than visible minorities on it. We have a few, but I see the real challenge in going from 20 to 11 in terms of representing different regions in the country. It's hard to represent everything with 20, and it's even harder to represent everything with 12. In terms of representation, that's a challenge for sure.

On the other hand, since we are open to working with so many different organizations, and since we maximize our impact through partnerships and cooperative projects, a lot of that issue of representation is diminished. It's not entirely eliminated, but it is diminished.

When we choose people for our board, we have to be concerned about how many females are on the board, how many people are from the west, how many people are from the east, while still keeping our travel and participation costs down.

Those are the elements we try to balance. You're right that it's a challenge. It's a challenge which we are faced with every time we have to replace someone on the board.

[Mathieu Ravignat, NDP, Pontiac, QC]

My second question is related to something the Auditor General pointed out with regard to your self-evaluation framework. Any organization that doesn't take a good look at itself is problematic. You want to hit certain measures of success. I'm just wondering what work you have done on that.

[Rubin Friedman]

We have reviewed the complete series of questionnaires we were using. We have looked at what other organizations and crown corporations have done in terms of self-evaluation. The general conclusion is that one has to ask a series of important, significant and meaningful questions, but one shouldn't ask too many of them. It gets repetitive. It becomes difficult. The other important thing is to use evaluations that you can do something about.

I would point out that all members of the board are appointed by governor in council. This means there's a process we go through, and it's not a simple outreach to an individual who we think can do a job. There's a whole series of steps that we go through before someone is actually appointed.

What have we done? We've done what I said. We've completely reviewed the questionnaire. I was at the point of putting together the final self-evaluation questionnaire when I was asked to be the principal administrator. I suppose that as soon as the executive director arrives on the scene, I'll get back to doing that.

[Mathieu Ravignat, NDP, Pontiac, QC]

My final question concerns research. I know your mandate has a research component. Have you engaged in research partnerships? For example, there's the Social Sciences and Humanities Research Council, and there are a number of universities and faculties that specialize in these issues.

Could you tell us a little bit about that?

[Rubin Friedman]

We have engaged in partnerships with others.

Our most recent research was an attitude survey with respect to how various groups in our society are perceived. That was carried out by Jack Jedwab and the Canadian Ethnic Studies Association. We have those results, and we released a number of them at our award of excellence symposium and dinner.

We're currently going through all of the results to see what we can release in the next phase.

[The Chair, NDP, David Christopherson]

Good. Thank you very much, both of you.

We'll move on. Mr. Hayes, you have the floor, sir.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you, Mr. Chair.

In thinking of this endowment fund, I'm thinking of myself as an investor. Maybe I'm going to donate $1 million to sit in an endowment in perpetuity, and the interest on that endowment will be used for the organization itself. That's my understanding of the way endowments work.

I'm challenged here, in that a significant portion of the endowment fund was invested in the stock market in 2008. I'm thinking again of myself as an investor. Probably I would put the principal endowment in a GIC to guarantee some interest, and then you start investing that interest.

Of the original $24 million, how much money was lost in the stock market problem in 2008?

[Rubin Friedman]

I know it was a significant proportion. I don't have the exact figure, but I can probably get it for you. I think it had a huge impact, and I believe we still are working to repay what was lost.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

How do you ensure that something like that doesn't happen again? Give me a sense of your portfolio mix now, in terms of what is guaranteed and what is still in the stock market.

[Rubin Friedman]

Our portfolio is now divided in two. Half of it we can't touch, except to transfer some of the interest from that side of the partition to the other side. On the latter side of the partition, we can withdraw the funds for operations. The fund is partitioned, and some of it we are not allowed to touch.

In terms of what happened in 2008, many charities suffered tremendous losses in 2008. We were not the only organization invested in the stock market. You may recall how many charities throughout North America were severely affected by that stock market... I wouldn't call it a crash, but to us it felt like a crash.

Let me draw your attention to the fact that before 2008 the foundation was drawing something like $2 million and more from the interest. At the time it didn't look like a bad investment strategy.

This is something about myself. I was in the Department of Multiculturalism when the Canadian Race Relations Foundation was created on paper, and I was an executive director of the Japanese Canadian redress secretariat. I remember during the discussions at the time, somebody saying, “Let's assume a conservative amount of interest. How about 10%?”

If you remember how people talked, that's why we ended up in the situation we did, and we certainly weren't the only ones.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

That's fair enough.

I have a question for the Auditor General.

One of your statements, sir, was:Its investment policy includes all the key elements necessary to guide the Foundation’s investment strategy.... However, management and the Board need more complete performance information to better monitor the investment portfolio.

What do you mean by “more complete performance information to better monitor the investment portfolio”? What does this entail?

Where would they get this performance information? How would it be found? What should they be doing as an organization to find that performance information?

[Nicholas Swales, Principal, Office of the CIDA, Foreign Affairs and International Trade, Passport Canada, Office of the Auditor General of Canada]

The observation was that in their policy, which they had reformulated in 2009, they laid out a series of performance measures. They were not just looking at a single measure; there was a series of them.

Our point was that they had not yet been getting information on all of them; they had only been getting information on some of them. The point was that if they felt that having this series of measures was appropriate, and I think that's a reasonable position for them to take, they should at least get the information on them and use that information to better manage the portfolio.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Is it your opinion that the direction they were taking is correct in terms of having laid out what it is they need to do, but that there are certain areas for which they haven't actually looked at the data?

[Nicholas Swales]

That's right, at the time that we did the special exam.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you.

Do I have more time, Chair?

[The Chair, NDP, David Christopherson]

No, you don't. Thank you.

We'll move along to Mr. Byrne, who now has the floor.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thanks, Mr. Chair.

Mr. Friedman, thank you and the other gentlemen on your staff for appearing.

Mr. Friedman, you have indicated to the committee some frustration about filling the board's full complement. Have you nominated or recommended to the minister the names of potential board members who have not been approved?

[Rubin Friedman]

I can't really speak to that. I can only speak to the process. I can't speak to the outcomes.