Mandate
The LFO is a unique grant-making organization – unique because of its granting objects, and unique because of the source of its revenues.
Financial Overview
The Law Foundation of Ontario (LFO) has a distinctive mandate and funding arrangement through which a substantial but variable source of interest income is put to use in making the justice system more understandable and accessible.
• Who Funds LFO?The LFO neither charges for services nor receives tax dollars. Instead, it is entrusted by law with the interest from mixed trust accounts held by lawyers and paralegals. These professionals routinely hold money in trust for clients – in connection, for example, with the sale of a house or the settlement of a law suit.
Unless the sums are large or will be held for a long period, they are deposited into mixed trust accounts. While the interest generated by any single deposit is typically very small, the total interest earned by these accounts averaged $47 million annually between 2000 and 2008 in Ontario.
Similar foundations and funding models exist throughout Canada and the United States, and in various other jurisdictions.
• How Much Money Does LFO Get?The LFO’s revenues can be highly variable – based mainly on interest rates – and the foundation has much less direct control over its revenue than does a private business or a government. Two broad factors determine its revenues in any given year.
Economics and Interest Rates – When the economy is healthy, there are more and bigger real estate and business transactions, and balances in mixed trust accounts are therefore larger. Interest rates in turn determine how much those balances earn.
And while interest from mixed trust accounts makes up by far the biggest portion of regular LFO revenue, it also earns some additional income by investing funds that have been set aside for specific purposes and longer-term allocations. Again, economic conditions and interest rates impact these returns.
Agreements with Financial Institutions – Major banks and other institutions are approved to hold mixed trust accounts based on agreements LFO negotiates with them. It looks for favourable interest rates and service charges – taking into account the significant monetary value of mixed trust accounts, and the societal value of the work the LFO does. Terms can vary significantly over time and further influence the LFO's revenues.
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Class Action Settlements |
• And What Does LFO do With Its Funds?
By law, 75 per cent of the net interest from mixed trust accounts goes automatically to Legal Aid Ontario (LAO). This is the provincial government agency that provides legal assistance to low-income Ontarians. LFO funding on average made up 10 per cent of LAO revenues between 2000 and 2008, with the large majority of the rest of LAO’s funding coming from the provincial government.
The LFO uses the rest of its funds to support the work of diverse organizations that are helping more Ontarians to understand the law and to use it to improve their lives. It also promotes high professional and ethical standards among lawyers and paralegals, through programs for both students and practicing members of these professions.
Each year, the the LFO awards millions of dollars to dozens of carefully selected grantees, including both new and long-standing partners. There is a particular focus on the needs of under-privileged client groups, and on promoting legal career paths that advance the public interest.
More information on the LFO’s objectives, full financial statements, and a list of all grants approved are included in its annual reports.
Mixed Trust Account Revenues and LAO Contributions ($MM)
1 The 75% is calculated after deducting bank service charges and LFO operating expenses (service charges being the larger of these two items). There is no requirement for other LFO revenues, such as investment income and class action-related revenue, to go to LAO.
2 These percentages are calculated with reference to LAO’s fiscal year ending March 31.
Grant-making
The LFO disburses its grants in two ways: mandatory funding to Legal Aid Ontario, and discretionary grants. By law, 75% of the LFO's revenues are automatically directed to Legal Aid Ontario. The LFO's discretionary grants are made in accordance with its statutory mandate for the following objects:
• Legal education
The Foundation encourages excellence in the legal profession, and is committed to enhancing the public’s experience with the law.
Some examples include the funding of law school enrichment programs, opportunities for law students to engage in public interest law, and continuing education programs and conferences for lawyers.
Equally important is the LFO's support of public legal education through a variety of means such as the development of educational materials, legal information workshops, and programs for school children to learn more about the law to increase civic awareness.
The Foundation encourages and promotes new thinking about current and emerging legal issues which significantly affect the public interest.
Recent grants have been made to conduct research on environmental issues, immigration and refugee law, tenants’ rights, women’s rights, aboriginal law, intellectual property, and the administration of justice, amongst others.
In addition to supporting Legal Aid Ontario, the Foundation promotes access to legal services for the public.
Examples of these kinds of grants include funding to pro bono programs of both the legal profession and law students; a pilot project to provide legal services to street youth, and to organizations offering legal services to recent immigrants who do not speak English.
The LFO makes significant grants to major Ontario law libraries for acquisitions, technological upgrades and the development of research databases. It also makes grants to smaller libraries such as those found in legal clinics and public interest organizations.
• Costs assistance to parties to class proceedingsFor more information, please visit the class proceedings section of our site.
LFO Evaluation Results
In 2010, the LFO commissioned an independent evaluation in order to:
- Look at its grantmaking, financial management and organizational effectiveness, and
- Determine, to the extent possible, the degree to which LFO is achieving its desired results.
The evaluator concluded that the LFO has the key elements in place that are necessary to assure effectiveness, and that the LFO is indeed moving towards its desired results. The LFO's management and administrative processes, all of which have been significantly revised over the past four years, contribute substantially to the overall strength of the organization. The LFO's grantmaking structures and processes are sound, the LFO has positive relations with its grantees, and is achieving its goal of being a catalyst by enabling grantees to leverage their LFO grants for increased funding, partnerships and recognition.
The evaluator recommended that the LFO continue its efforts to strengthen certain aspects of its work:
- The LFO should continue to implement strategies to maximize revenues;
- The LFO should continue to assess the priorities placed on and within each of its granting programs to ensure it is satisfied with the balance between grantmaking goals and available resources;
- The LFO should develop a more detailed performance measurement system to guide the collection of information about its grants over the coming years. This body of information, once sufficient in size, will improve the LFO's ability to answer the question of the impact of its grantmaking activities;
- After a recent period of extensive organizational change, the LFO should continue to invest in its human resources to bolster stability and productivity.
The LFO will review these recommendations as it develops its strategic plan for 2011-2016.
