Introduction

Background

1. The Canadian Race Relations Foundation is a federal Crown corporation with a mandate to contribute to the elimination of all forms of racism and racial discrimination in Canadian society.

2. The Canadian Race Relations Foundation Act specifies that the corporation may achieve its mandate through activities such as

• undertaking research and developing a national information base
• establishing links with public, private, and educational institutions and libraries
• facilitating consultation and information exchange on race relations policies, programs, and research
• promoting effective race relations training
• increasing public awareness
• collaborating with business, labour, volunteer, community, and other organizations and all levels of government to institute and support programs and activities
• supporting and promoting the development of effective policies and programs

3. The corporation was founded in November 1997, after the Canadian Race Relations Foundation Act came into force on 28 October 1996. The corporation was created as part of the 1988 Japanese Canadian Redress Agreement, which acknowledged that the treatment of Japanese Canadians during and after the Second World War was unjust and had violated human rights. The government established a $24-million endowment fund, of which $12 million was contributed on behalf of the Japanese Canadian community to commemorate its members and the injustices they had suffered.

4. To support its mandate, the corporation set 4 strategic objectives for its 2017–20 planning period:

• Identify key questions of racism and racial discrimination.
• Be recognized as the leading national comprehensive resource on racism, race relations, and related best practices and solutions.
• Engage Canadian youth and other groups in addressing racism and race relations.
• Develop and promote educational resources on the Canadian Charter of Rights and Freedoms and the Canadian Multiculturalism Act. Use their inherent values as a tool for building a common understanding of our individual responsibilities and for exploring the nature and limits of rights in Canada with respect to speech, religious beliefs, and discrimination.

5. The corporation derives its primary source of income from the investment of the original $24-million endowment fund and other investments, whose combined value fluctuates. It also receives donations, funds from partners for project administration, and government grants and contributions for specific projects. However, it does not receive regular annual funding from the government. Between April 2017 and March 2020, the corporation’s interest and dividend income, minus all the portfolio investment fees, averaged just over $700,000, its other revenues averaged about $180,000, and its expenses averaged about $980,000. The combined value of its investments and their proceeds can fluctuate sharply—as was the case in March 2020, when significant losses occurred because of the COVID-19 pandemic and declining oil prices. The corporation’s investments and the endowment fund diminished by approximately $4 million to become a combined value of about $26 million during the 2019–20 fiscal year.

6. The corporation is a registered charity under the Canadian Race Relations Foundation Act. Located in Toronto, Ontario, the corporation conducts its activities nationally. The number of its employees has varied over recent years. At the time of our examination, it had 6 employees, including the Executive Director, who is appointed by the Governor in Council^{Definition i}.

Focus of the audit

7. Our objective for this audit was to determine whether the systems and practices we selected for examination at the Canadian Race Relations Foundation were providing it with reasonable assurance that its assets were safeguarded and controlled, its resources were managed economically and efficiently, and its operations were carried out effectively, as required by section 138 of the Financial Administration Act.

8. In addition, section 139 of the Financial Administration Act requires that we state an opinion, with respect to the criteria established, on whether there was reasonable assurance that there were no significant deficiencies in the systems and practices we examined. We define and report significant deficiencies when, in our opinion, the corporation could be prevented from having reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively.

9. On the basis of our risk assessment, we selected systems and practices in the following areas:

• corporate management practices
• management of outreach and awareness activities

The selected systems and practices, and the criteria used to assess them, are found in the exhibits throughout the report.

10. More details about the audit objective, scope, approach, and sources of criteria are in About the Audit at the end of this report.

Findings, Recommendations, and Responses

Corporate management practices

The corporation had weaknesses in assessing its performance and in risk management, requiring improvement in board oversight

11. The corporation had good management practices in many of the areas we examined. However, several areas needed improvement. The corporation did not set performance indicators that would have allowed it to readily assess how it was accomplishing its strategic objectives, although it did regularly monitor the implementation of its activities and events. Furthermore, in the absence of comprehensive risk management, the corporation was unable to assess how successful it was in mitigating its risks. Both of these weaknesses contributed to the board’s inability to effectively oversee these systems and practices.

12. The analysis supporting this finding discusses the following topics:

• Corporate governance
• Strategic planning
• Corporate risk management

13. The Board of Directors is responsible for the overall management of the corporation and for ensuring the achievement of its mandate. The Canadian Race Relations Foundation Act requires the board to include a chairperson and up to 11 other directors, who are appointed by the Governor in Council on the recommendation of the minister designated for the purposes of the Canadian Multiculturalism Act. The Minister of Canadian Heritage was the designated minister during the period covered by the audit. As of the middle of March 2020, the board had full membership. The board is supported by 6 standing committees:

• Executive
• Finance and Audit
• Governance
• Human Resources
• Investment
• Nominations

14. The board also established an ad hoc committee to provide leadership and oversight over the development of the corporation’s 2020–23 strategic plan. The board’s Investment Committee included an external advisor. The corporation is not required to submit annual corporate plans to the government.

15. Our recommendations in this area of examination appear at paragraphs 23 and 28.

16. Analysis. We found that the corporation had good corporate governance practices, but an improvement was needed in board oversight (Exhibit 1).

17. Analysis. We found that the corporation had some good practices for strategic planning. However, we found weaknesses in performance measurement, monitoring, and reporting (Exhibit 2).

18. Weaknesses—Performance measurement, monitoring, and reporting. We found that the corporation had weaknesses in measuring and therefore monitoring and reporting its performance. Our findings for both strategic and operational performance measurement, monitoring, and reporting are discussed here, because the corporation had combined these elements in its annual business plan.

19. In its strategic plan, the corporation had set its strategic objectives and described core activities that it would undertake to achieve those objectives. We found that the corporation had not defined specific indicators for achieving those objectives or for their core activities. The objectives and core activities were carried into its annual business plan, which identified means to achieving each of the core activities. However, while the corporation included some performance indicators for these means, in many cases, it had not established performance targets, which would have helped it measure whether the activities were effective.

20. For example, there were no specific performance indicators for the strategic objective of identifying key questions of racism and racial discrimination. The corporation identified round tables as events that would contribute toward identifying race relations issues. However, it had not set a performance target for measuring whether the round tables were well attended by an engaged public, one of their defined success factors.

21. We also found that without specific indicators for its strategic objectives and targets for its activities, the corporation could not fully assess or clearly report on progress in its 2018–19 annual report, which only described the relevant activities and events.

22. These weaknesses matter because improving how it measures its performance would allow the corporation to better assess its effectiveness in achieving its objectives with its limited resources. Furthermore, reporting to the board clearly on the corporation’s performance against its strategic objectives would strengthen oversight and is important for transparency and public understanding of how the corporation is achieving its mandate.

23. Recommendation. The corporation should develop performance indicators and targets that would allow it to measure, monitor, and report to the board and the public on its progress against strategic objectives and on the effectiveness of its activities.

The corporation’s response. Agreed. In developing the corporation’s 2020–23 strategic plan, the board recognized an opportunity to improve the assessment of the corporation’s performance and began the shift to an outcome-based logic model. As part of this process, the corporation will develop the appropriate performance indicators and targets during the 2020–21 fiscal year to measure, monitor, and report on the corporation’s achievement of its strategic objectives.

24. Analysis. We found that the corporation had weaknesses in risk management (Exhibit 3).

25. Weaknesses—Risk management. We found that the corporation needed to improve its risk management practices. While it had good risk management practices for managing its investments—which are important because investment returns are the corporation’s main source of funding—we found that the corporation did not approach risk management systematically.

26. The corporation formally updated its risk register in March 2020—its first update since 2016. In the 2020 update, it identified about 20 risks and their potential barriers, many of them linked to its limited resources. However, it had not clearly assessed the likelihoods and impacts of these risks. Therefore, the update did not provide a complete basis for prioritizing risks for the attention of management and the board. The corporation had also not defined and documented risk tolerance levels or established actions and timelines for mitigating risks. We found that without these, the corporation was unable to effectively monitor or report on how it was managing important risks.

27. These weaknesses matter because a more structured approach to risk management would help the board and management ensure that the corporation has effective practices to mitigate risks that threaten the achievement of its mandate.

28. Recommendation. The corporation should clearly rank its key risks by assessing their likelihoods and impacts and establish risk tolerance levels and required actions for top risks. These actions should identify responsibilities, timelines, and expected results, and their implementation should be monitored regularly.

The corporation’s response. Agreed. Further to the risk assessment completed in 2020, the corporation will establish risk tolerance levels and develop a corporate risk register that will include clear ranking of risks and risk mitigation strategies. The corporation will develop more detailed action plans for mitigation strategies, as appropriate. These action plans will assign responsibilities and establish timelines. The corporation will update the corporate risk register as required and monitor it regularly. The corporation expects to complete this work by the end of the 2020–21 fiscal year.

Management of outreach and awareness activities

The corporation carried out activities and events but lacked formal processes for developing and delivering many of them

29. We found that the corporation carried out many outreach and awareness activities and events but had not formalized guidelines for developing and delivering many of them.

30. The analysis supporting this finding discusses the following topic:

• Management of outreach and awareness activities

31. To support its strategic objectives (see paragraph 4), the corporation carried out outreach and awareness activities and events, such as

• holding round tables
• developing research projects
• hosting webinars
• maintaining a clearing house of relevant information
• delivering its Youth Ambassador Program
• producing teacher and student guides

32. Despite the corporation’s small number of employees, the participation of partners and board members helped it hold many activities and events, as detailed in its 2018–19 annual report. For example, it held its 10th biennial Awards of Excellence Gala, participated in over 160 community events, produced a “Science of Racism” video, hosted 7 webinars, delivered National Youth Network workshops in 3 regions through partners, and added over 400 resources to its clearing house.

33. Our recommendation in this area of examination appears at paragraph 37.

34. Analysis. We found that the corporation had some good practices for the operational planning and performance monitoring and reporting of its outreach and awareness activities. However, it needed to formalize its processes to help employees develop and deliver activities and events more efficiently and effectively (Exhibit 4).

35. Weakness—Development and delivery of outreach and awareness activities. Overall, we found that the corporation lacked some written processes or tools that would help employees develop and deliver a wide variety of its activities and events. Officials described many processes to us verbally, illustrating this with a few forms. For example, for its Directions Journal publication, officials described what type of review could have been performed to determine whether an article was suitable for publication, and they showed us a peer-review form. However, the analysis of suitability and when to use specific peer reviews was not documented. We noted that the corporation started documenting some processes and developing some tools during the period covered by the audit. For example, for round-table events, the corporation identified tasks that employees and partners had to perform from the time an event was confirmed (such as developing memoranda of understanding with partners) until after the event was completed (such as administering participant surveys).

36. This weakness matters because written processes and tools could help employees develop and deliver activities and events more effectively and efficiently. They would also help new employees become productive faster when there is employee turnover, as was the case in 2019 when the corporation hired 2 new employees to replace 2 who had left. This is especially important for a small organization, because corporate knowledge resides in a small number of employees.

37. Recommendation. The corporation should assess, formalize, and document its processes and create appropriate tools for developing and delivering its outreach and awareness activities and events.

The corporation’s response. Agreed. Given the corporation’s small staff number, the impact of turnover can become acute. Therefore, the corporation recognizes the importance of creating reference documentation of its key processes and activities to ensure smoother continuity of its affairs and increased efficiency and consistency in their performance. As a result of this audit, the corporation had begun to implement this recommendation and will continue throughout the 2020–21 fiscal year.

Conclusion

38. In our opinion, on the basis of the criteria established, there was reasonable assurance that there were no significant deficiencies in the corporation’s systems and practices we examined. We concluded that the Canadian Race Relations Foundation maintained its systems and practices during the period covered by the audit in a manner that provided the reasonable assurance required under section 138 of the Financial Administration Act.