Giving circles gain momentum

Play it forward giving circle

Play it Forward giving circle logo (Lynn, Massachusetts)

Collective giving through giving circles has been growing in Australia over the last four years. Since James Boyd introduced the Impact100 model to Western Australia in 2012, four more Impact100 groups have sprung up in Australia – Impact100 Melbourne (disclosure – this year I have joined the management and grantmaking committees), Impact100 SA, Impact100 Fremantle, and launched just this year, Impact100 SydneyWomen & Change in Queensland is also based on a similar model.

The basis for the idea is to gather 100 people together to each make a donation of $1,000 which will then be paid out as a high impact grant of $100,000 to a small not for profit charitable organisation – creating a transformational and significant change for both the community and the charity.

The Impact100 groups work closely with community foundations to administer their funds and comply with tax and legal requirements.

The democratic and participatory part of the Impact100 groups is that the members decide on a theme or focus for granting, and after a shortlisting process, every member votes as to where they want the funds to go.

This year’s focus areas are:
Impact100 WA – arts & culture, education, environment, family & community or health & wellness
Impact100 Fremantle – creating a culture of connection
Impact100 SA – strengthening families
Impact100 Melbourne – Melbourne – Diverse and Inclusive (including health/education/environment)
Impact100 Sydney – making a positive difference to the lives of Sydney’s young people
Women & Change -social welfare and/or education support.

If you are a grantseeker, check out the websites for information on deadlines, how to apply and grant guidelines.

If you are interested in becoming a member/donor, the websites have information on how you can get involved too.

So what do we really mean by impact?  The launch of Impact100 Melbourne’s theme for 2016 was held recently.  Bridget Allen, Big Impact for Women Project Manager at McAuley Community Services for Women, the recipient of the 2014 grant, spoke about how $100,000 made a significant difference to their organisation.

Funds from the 2014 grant went towards a homelessness program which provides accommodation and support for women who are homeless as a consequence of family violence or mental illness (the Big Impact for Women Project).

In 2015, McAuley Community Services for Women helped around 1,000 women and children to rebuild their lives, supporting them on their journey towards independence and safer futures.

McAuley House provides a safe place to stay, intensive case management support and support to develop independent living skills for a safe sustainable future beyond McAuley.

Big Impact for Women Project focused on enhancing internal operations and processes across the organisation.   This was achieved by improving their case management processes, redesigning their skills development program, and being innovative in their approach using a model of analysis, design, development, implementation and evaluation.

This resulted in a new best practice case management framework which is client focussed, streamlined, individually tailored and reduces duplication, new client assessment tools and new client driven goal planning tools.  Funds from the grant were also applied to strengthening the suicide response procedure, new exit feedback procedures , a new practice manual, a peer / buddy support system and a paperless system.

All of this has led to the capacity for the organisation to have a broader reach and deeper organisational impact, greater staff capacity building, the ability to focus on projects and not be reactionary, the opportunity to reflect and grow, and the possibility to replicate and create a ripple effect from the success of the program.

McAuley Community Services for Women noted that “not many philanthropic trusts support sustainable projects that continue long after the grant has run out. Impact 100 does.

Outcomes like this show that collective giving really can punch above its weight and that the fastest growing trend in philanthropy is not just a flash in the pan.

ozphilanthropy would love to share some of the other stories of the impact created through giving circles.  What are your experiences thus far?



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What the US gives US

usfoundationfunding Bradford K Smith, President of the Foundation Center, was in Australia in 2014 to talk about transparency in philanthropy and the Glasspockets project and the future of philanthropy.

He is back again, to launch a report developed in collaboration with Philanthropy Australia and the United States Studies Centre at the University of Sydney, examining what funding flows into Australia from foundations in the US.

One of the key goals of the Foundation Center is to understand who is funding what and where.  This is very helpful for philanthropists who wish to engage in an issue, and not need to re-invent the wheel, but to learn from others already working in the same areas.  The Foundation Center was established in 1956 after some foundations were accused of un-American activity in the McCarthy hearings.

The then President of the Carnegie foundation, John Gardner, saw that “opaqueness” led to vulnerability, and that transparency in the philanthropic sector with sound standards for reporting would be of benefit in strengthening the sector.  The Foundation Center endeavours to understand philanthropy through transactional activities – that is, what grants are distributed – by whom, to whom, and their size.

Which brings us to the report.  U.S. Foundation Funding for Australia looks at grants of at least $10,000 from 1000 US foundations which direct their money to Australia or elsewhere in relation to Australia or Australia/US relations from 2011 – 2013.  Seema Shah, Director of Knowledge Services at the Foundation Center gave the following summary: In that period, 71 foundations distributed $95.1 million (US) to 208 recipients, mostly in health with $29 million coming from the Bill and Melinda Gates Foundation.  Half of the grants were for economically disadvantaged populations (for example $1.3 million to indigenous programs) and one quarter of the grants not for a specific population or cohort (ie arts or environment) and12% of the grants went to organisations within the US who have an Australian focus or program.

The report outlines the top ten donors to Australia, key motivators for US donors to contribute in Australia (such as personal connections, corporate interests, regional interests or issue interests) and also notes that there is not yet much collaboration between US and Australian foundations.

The report also gives a state by state distribution spread – 25% of funding to Victoria, 23.8% to New South Wales, 23% to Queensland 5.3% to the Northern Territory and 3% or less to each of the other states and the ACT.

Stephen Heintz, President of the Rockefeller Brothers Foundation, whom I wrote about in my previous post, concluded the launch of the report with a strong argument for transparency in philanthropy.  Beyond general accountability, foundations receive the privilege of a tax benefit, so the public has a right to know what has happened to these funds.  Transparency is also useful for communication to grantees so that they can know who is funding in their areas, and transparency is good for philanthropists so that they can cooperate and collaborate with each other on common interest areas – it is helpful for them to know who their potential partners are.

Stephen noted that transparency is a journey, and donors, philanthropists and foundations can be transparent without being self-promoting, or immodest.  While there is some argument and push back in Australia, particularly from Private Ancillary Funds about the need to maintain privacy and anonymity, transparency can be helpful for grantees even to know when their applications will not be accepted.  Communicating what is funded and what is not funded can help reduce irrelevant requests and will enable grant seekers to not waste time on applications and proposals which will not be funded.

Transparency doesn’t have to be all at once, and it doesn’t have to be all or nothing.

Here are a few notes from the panel discussion and Q and A which followed the launch of the report.

Transparency adds to the “potential of philanthropy as an industry for good” – and enables the retention of knowledge held by individuals within organisations.

Most “causes” have no idea how much money is being contributed to them across the board – transparency can help with this.

Philanthropists want company, they don’t like to be alone on issues for too long – so transparency can help everyone see who is doing what.

Some of the larger foundations see transparency as a way of promoting their grantees and the work they are doing, rather than promotion of the foundation.

The journey from privacy to transparency needs to move at a pace that people are comfortable with.  It would be difficult for the regulator (the ACNC) to impose transparency requirements on foundations – information is currently held by the Australian Tax Office as a custodian for the community.  This last led to the idea of Philanthropy Australia acting as an honest broker of information (and for a representative of a PAF who wants privacy to agree that they might be comfortable sharing their granting information in an anonymous setting).

There are two immediate tangible outcomes of this report:

  1. for Australian philanthropic organisations to identify potential funding partners
  2. for grantseekers to find new sources of funding

The only downside to this report on US funding in Australia is Sarah Davies’ (CEO of Philanthropy Australia) comment: “The fact is we know more about the granting practices of US foundations and their Australian grant recipients than we do about Australian foundations.”

Let’s hope that work of this nature will stimulate the appetite for Australian donors, funders and foundations to embrace the idea of transparency and information sharing, for the benefit of the whole sector.

What do you think? Is our culture of giving so different to that of the US that we can’t stomach the idea of replicating this kind of data collection, or is there an opportunity for us to share more information?

I look forward to your comments.



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Giving for the Common Good

stephenheintzThe Wheeler Centre hosted Giving for the Common Good, a talk with Stephen Heintz, President of the Rockefeller Brothers Foundation (which shouldn’t be confused with the Rockefeller Foundation), facilitated by Peter Mares.

The Rockefeller Brothers Foundation was established in 1940, has a corpus of around $790million USD and focuses on three areas: strengthening the quality of democracy, sustainable development, and peace building.
The Foundation made a commitment to divest from its investments in fossil fuels in 2014 and freely admits the irony of this given they are a foundation whose wealth was built on the oil industry. Now 50% of their grants  go towards preventing climate catastrophe.  Their change in investment approach started as an ethical question and moral debate which was strengthened by the work of one of their grantee organisations, the Carbon Tracker Initiative, a London based think tank on the carbon economy.

For the Rockefeller Brothers Foundation, philanthropy is about where their assets are invested as well as where their grantmaking goes.  This is important given there is around $55 billion USD given away by foundations in the US each year, which is a large amount, but small in relation to the scale of national budgets in the trillions of dollars.

Stephen spoke about sincerity in philanthropy, especially in organised philanthropy and the importance of transparency where private wealth is used for the public good on an institutional scale.  He also pointed out the level of transparency on the Rockefeller Brothers Foundation website which has a searchable grants database, the investment and divestment policies readily available, governance policies, and full biographies of staff and trustees.

Impact is an area even large foundations are careful about taking credit for.  Given the large number of players working across various issues, Stephen emphasised the importance of the need to be careful about attribution and causality – (not saying “because of our grant we achieved ‘x'”). However, he acknowledged the need for qualitative evidence and independent assessment of grants and their effectiveness.

He also talked about the importance of leveraging support through strategic philanthropy and working in collaboration with other donors.  He gave a quite clever metaphor of business and government as large ships of public and private policy being led in the right direction by the tugboats of philanthropy.

In concluding, Stephen returned to the theme of transparency and argued that when people see what philanthropy can do, then others will be more interested and enthused by it (for example the Giving Pledge). He also reminded us that philanthropy can and should be bold, as it is an opportunity to take risks, to test new concepts and even to fail some of the time.

Questions from the audience covered new and hybrid forms of philanthropy such as social enterprise and venture philanthropy, how the Rockefeller Brothers Foundation works with governments, the essential practices and attitudes of philanthropists – values, compassion, caring, humility and sincerity, and how to know when to stop funding something.

Stephen said that philanthropy can be bold and humble at the same time.  I felt that his talk and presentation embodies that ethos.  It was a stimulating talk reminding us of the power of the philanthropy and the role it can play in society.

What are your views on some of these issues like transparency and mission related investing?

I look forward to your thoughts.  Please use the comments box!


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Cause Report – 20 years of (r)evolution

john mcleodJBWere and NAB have launched John McLeod’s “The Cause Report – 20 years of (r)evolution in the nonprofit sector” which is the first major statistical analysis of the charitable and non profit sector since 1996.  The report will be available on the JBWere website from mid-March 2016.

John has sifted through masses of information from both the ACNC and the Australian Bureau of Statistics to collate an up to date financial snapshot of the sector, and how it contributes to our economy and society.  The report also captures information on government controlled not for profit entities such as public schools and hospitals which do not report to the ACNC and the ABS.

The report addresses the question – what does the not for profit sector look like as a whole? and continues the work of the 1996 Third Sector Report by Mark Lyons.

While there are acknowledged to be around 57,000 charitable organisations in Australia, there are also about 500,000 small and unincorporated not for profit entities.  The sector employs 8% of Australia’s workers and generates $200billion in income annually.  At the moment 10 new charities are registered daily, and the number of charities is doubling annually.

Here are a few tasters of what the report includes:

  1. The top four charitable organisations by income have not changed substantially in the last twenty years – the Australian Red Cross, World Vision and the Salvation Army top the list though their rankings might have moved slightly.
  2. The sector has an asset base of $350billion – with most of the assets held in education and aged care in property
  3. While the 80/20 rule seems to apply to the rest of the world, in the charitable sector it seems to be 92/8 – ie 92% of the funds are held by 8% of the organisations.
  4. The income mix has changed only slightly in the last 20 years, with philanthropy steady at 8%, government funding increasing from 30% to 38% and self-earned income dropping to 54%.
  5. The proportion of individuals donating to the charitable sector has remained steady, however the good news is that the average donation has increased.
  6. 8.5% of the workforce is in the charity sector.
  7. Volunteering is valued at $30 per hour.
  8. Margins in the sector are around 5%.

At the launch John provided a snapshot of three sectors within the nonprofit sector.

Arts and Culture reflect the broader sector most closely in terms of income and expenses and demonstrate a 13% profit marketing and 4.4 volunteers per employee.

Grantmaking – ie trusts and foundations show 8 volunteers per employee (which I imagine is mostly board members and trustees) and holds $15billion in assets.

International aid demonstrates the lowest profit margins with income most closely aligned to expenditure – and with 74% of income coming from donations and bequests, while the religious sector remains the single largest cause for philanthropic gifts (even non-tax deductible).

Once the report becomes available you will be able to examine John’s intricate graphs and data in more detail.

The launch concluded with a brief panel discussion with John, Sarah Davies, CEO of Philanthropy Australia, and Daniel Madhaven, CEO of Impact Investing Australia, facilitated by Shamal Dass, Head of Philanthropic Services at JBWere.  This touched on how Impact Investing can fit into the income mix for charitable organisations, what the role of philanthropy is given its 8% contribution to the not for profit sector, and the opportunity for “social risk capital”.







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Philanthropy and the Arts – review

philanthropy and the artsPhilanthropy and the Arts is a new book by Professor Jennifer Radbourne and Kenneth Watkins (published in October 2015).

While it purports to be a best practice fundraising guide for arts organisations in Australia, it is more of a history of the development of fundraising within the Australian Ballet over the last twenty years, during Kenneth’s tenure there.

It is a fascinating read in terms of seeing how fundraising has changed and become more sophisticated over the years, and it emphasises the importance of aligning donors’ values with those of the organisation.

The key things that resonated with me were the importance of the role and value of the donor, the need to understand donors’ values, and finding a model of philanthropy that goes beyond fundraising to the essence of the intrinsic values held by donors.  This reflects Kay Sprinkle Grace‘s view that the purpose of fundraising is to enable donors to act on their values.  Philanthropy and the Arts recognises the challenges of competing for funds with so many other cultural organisations clamouring for the attention of donors, the slow growth of a culture of giving in Australia, and working against internal board resistance.  It notes the importance of small donors and that both asking and giving can be rewarding experiences.

While I did not agree with all of the authors’ views on leadership and desired attributes in fundraisers, it was great to read of their belief in the transformational role of the arts in society and their definition of philanthropy “as a voluntary action for public good”.

Ken Burnett, the guru of “relationship fundraising” would have been pleased with the acknowledgement of his approach.

The book highlights the role of fundraising and philanthropy in business and strategic planning, and notes that for fundraising to be successful, it must be given prominence (if not equal footing) with other departments within the organisational structure.

There was a little too much of what I call “fundraising speak” with terms such as “moves management”, “donor solicitation”, but overall the heart of this book lies in its commitment to the development of relationships with donors to make them feel an essential part of the Australian Ballet.

However, Fundraising in the Arts is not a how-to manual for every aspiring arts organisation in the country seeking to find that elusive dollar.  The Australian Ballet has had spectacular success in fundraising and philanthropy, due in no small part to Kenneth’s persistence and dedication (which we are very much reminded of all the way through), but it also has a different profile to most other arts organisations.  It also has a national reach, greater staffing resources and a much larger budget to allocate to its fundraising and philanthropy team. (and a 40 year track record in demonstrating its value and place in Australian society – though one could argue that the symphony orchestras should also be doing as well in philanthropy if longevity is one of the keys to success).

I tend to agree with Daniel McDarmid’s summary of the book in AskRight which states “If you seriously want to improve the fundraising in your arts organisation buy this book, and as an old prayer had it “read, mark, learn and inwardly digest it.” Think about giving it to your CEO and board members. Think twice about giving it to donors beyond your board.”

While perhaps better titled: “Fundraising at the Australian Ballet“, Fundraising in the Arts is a timely and rare reflection on philanthropy in the Australian cultural sector.

Let me know your thoughts, and whether you would apply its wisdom to your own organisation.


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The Funding Network

Devon from Digital Storytelling livescribing the Funding Network's Melbourne event Photo: Alan Weedon (

Devon Bunce from Digital Storytellers livescribing the Funding Network’s Melbourne event      Photo: Alan Weedon (

The Funding Network was established in Melbourne just over a year ago, based on a model from the United Kingdom.  It’s a new model of live crowdfunding where donors come together to hear about charitable projects and then make pledges to support them.

In late October the Reichstein Foundation teamed up with the Funding Network to provide matched funds of up to $15,000 each to three organisations – the Flemington & Kensington Community Legal Centre, the Alliance for Gambling Reform,  and the Human Rights Law Centre.

Initially I had thought that the idea of charitable organisations gladiatorially challenging for funding through a fast pitching process was pressure that those organisations don’t really need, but the Funding Network provides coaching and training so that mission, message, values and the project to be supported are conveyed in six or seven minutes, with the same amount of time for questions.  Organisations which are invited to pitch are usually small – with turnover of less than $1,000,000 and the vetting process is quite intense.

John Spierings and Jill Reichstein describe the Funding Network as a more democratic way of giving, and their work at the Reichstein Foundation as being about “emancipation rather than amelioration” and supporting challenging projects which take us out of our comfort zone by empowering those advocating for reasoned sensible change.

Daniel Haile-Michael and Tamar Hopkins from the Flemington & Kensington Community Legal Centre presented their case for a program supporting workshops for young people to engage in civil society as a response to racial profiling in policing.  Daniel was one of the lead applicants in a Federal Court Race discrimination case that resulted in commitments by Victoria Police to change its practices in how it polices within diverse communities.

Tom Mohr and Allison Keogh spoke about how they plan to take the documentary Ka-Ching: Pokie Nation to communities around the country to mobilise and lobby support for changes to legislation about pokie machines.  Allison spoke poignantly about her experience with a family member addicted to the machines and of the 395,000 people who go home every night with empty wallets after playing the pokies.  While much discussion about problem gambling focuses on treatment, the Alliance for Gambling Reform will be looking at prevention and addressing both government’s need for the tax revenue from the machines, and the $11 billion industry which profits from them.

Ben Schokman from the Human Rights Law Centre discussed the proposed closure of indigenous communities in the Kimberley by the West Australian government, noting that the Human Rights Law Centre has been invited to work with some of those communities to develop engagement and empowerment, demonstrate accountability and work together for collective action.  They are proposing to employ a staff member for 2 days per week to work with a coalition of organisations to address the proposed closures.

All of the presentations were moving, articulate and persuasive, and I thought that the best of the evening was over.

However, when the presenters were asked to leave the auditorium, the atmosphere changed dramatically.  The MC for the evening, Patrick Lindsay AM, certainly knew how to handle a crowd.

Each organisation had a champion who said why they had nominated them for support – and made their own pledge to get the ball rolling.  A screen on the whiteboard in the centre of the room then tallied up the pledges in real time – noting the matching contribution from the Reichstein Foundation.  Usually each Funding Network event seeks to raise $10,000 for each group presenting, but the bar had been raised on this occasion to $15,000 (which was to be matched by Reichstein).  It was kind of like being at an auction where people can bid any figure (not needing to increase each bid).   A few bids from off-site – official proxies, if you will, came in whenever there seemed to be a slight lag – noting that another $500 would be contributed if the audience would match it (very good strategy from the Australian Communities Foundation here from their donors).

Each project was presented in turn – and the enthusiasm did not lag at all – in fact the final project in the end raised the most funds, seeing a total of $124,000 raised.  The Funding Network retains 10% towards their administration costs, which might sound steep, but considering the technology utilised – live streaming of the event, live scribing, real-time monitoring of the pledges, and a galvanising and enthusiastic (volunteer) MC, it was a very professional and enjoyable fundraising event.  Actually, it was really good fun.

What do you think about live crowdfunding of this sort? and what is your experience of giving in public?

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Pivotal People Pivotal Journeys – a study on CEOS and fundraising

Creative Commons Ripples of Colour by Scott Cresswell licensed by Creative Commons 2.0

A research team at ACPNS, Dr Wendy Scaife, Marie Crittal and Katie McDonald has released a new working paper, Pivotal People Pivotal Journeys.  This follows on from Who’s Asking for What? released in 2013 which explored the role played by CEOs and board members in supporting and advancing fundraising and development.

The new study attempts to answer the question “How might a change in the CEO’s fundraising knowledge improve fundraising activity and outcomes for their organisation?”.

The report is made up of great anecdotal quotes from 12 CEOs of charitable organisations who participated in a overseas study tour last year.  The CEOS formed a peer support network to grow and enhance fundraising within their organisations and have been followed by the researchers through a two year longitudinal study involving several focus groups, participant observation and interviews.  The researchers have been able to draw some interesting conclusions from their observations.

The key purpose of the study was:

 To equip organisations to fast-track growth in their fundraising levels and increase their long-term fundraising potential
 To focus attention on the critical role of a fundraising-savvy CEO in organisational sustainability
 To influence board thinking and knowledge about resourcing fundraising and building an internal culture of philanthropy
 To work with these organisations in specified longitudinal research to generate research findings that will inform and assist the sector more broadly.

The 29 pages of findings identify the benefits of a “community of practice”, critical success factors, short term outcomes and reflections on progress.

You can read the report here: Further results will be published in a working paper in the first half of 2016.

Well worth having a look at to see that the challenges not for profits face are common across the sector, regardless of size of organisation and number of staff available for fundraising and development.

What suits you best for learning and upgrading skills for fundraising and philanthropy in your organisation?

disclosure: Sharon is currently a student at ACPNS, studying fundraising development techniques with Dr Wendy Scaife.

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A good donor event – Strategic Philanthropy at the Jewish Museum of Australia

Shamal DassI attended a donor event at the Jewish Museum of Australia which was exemplary in getting the attention of potential donors, providing useful information about philanthropy, telling personal stories and introducing a not for profit organisation to new audiences.

Shamal Dass, Head of Philanthropic Services at JBWere, was invited  to speak about different philanthropic vehicles and strategic philanthropy.  Shamal is of the view that while direct gifts can be strategic, usually they are merely transactional. He discussed the differences between Private Ancillary Funds, setting up a charitable fund or sub-fund within a community foundation, a testamentary trust or private charitable trust and how these can be more effective ways of “engaged philanthropy”.  Shamal suggested six steps for donors to achieve engaged philanthropy,:

  1. Clarify your own mission – what do you as a donor want to achieve?
  2. Get people involved – if you want to have a private ancillary fund, involve children in decision making, determining interest areas and goal setting (this is a good way for parents to learn what matters to their children)
  3. Understand the organisation(s) you want to fund
  4. Engage with the organisation(s) – ask them what they need
  5. Fund capacity (often not popular but usually what is most needed)
  6. Work with and learn from other donors.

By understanding your own values, you can work out better how you want your generosity and philanthropy to have impact.

Shamal also noted that the top 10 not for profit organisations in Australia are still the same ones as fifteen years ago (nb I didn’t get what the criteria for being in the top ten are) but that none of the issues they are addressing seem to be disappearing or diminishing.

His view is that by funding capacity you can gain the greatest leverage from your contribution.

He also discussed impact and measurement, whether social change is achieved, and whether the social change can be attributed to funders inputs.  A key question or perhaps challenge is who should be measuring impact – the not for profit organisations or their funders.  And if as a funder you want to know what the impact is – are you willing to pay for its measurement?

In May JBWere published Impact and Measurement which poses two key questions around measurement: 1) what should an organisation measure? Activity, Outputs, Outcomes, Impact? and 2) Recognising the costs of measurement and who should pay.  The paper argues that as the push for measurement often comes from funders, then funders should take on the responsibility for allocating greater resources and to refocus attention on their own performance and impact while reducing demands on nonprofit organisations to prove their impacts.

Shamal concluded his presentation by referring back to a diagram from JBWere’s Giving Trends document Australian Giving Trends: Stuck on the Plateau by John McLeod which notes that in 2013 nonprofit organisations received $107 billion in income in Australia through government grants, donations, sponsorships and earned income.  His key question is – what has that $107 billion in income achieved?

charles justinThe second speaker at the event was Charles Justin, a former board member and Chair of the Jewish Museum, and the founder of the soon to be opened Justin Art House Melbourne.

Charles spoke about his personal philanthropic journey from his experience as a volunteer and donor with the Jewish Museum, his decision with his wife to set up a private ancillary fund to support both Jewish and non-Jewish causes addressing disadvantage and how they seek to align themselves with the organisations they support through their value proposition.

Charles’ main motivation was to be giving effectively within their lifetime, and not necessarily the tax advantages of a private foundation.  He also reflected on the act of giving as elevating, noting that the endorphins one receives through this can be the same as when having sex (much to the dismay of his wife who shouted from the back of the room for him to stop right there). Have a look here at an article about pathological giving and which parts of the brain light up when practising generosity.

natalie rathnerThe final speaker of the evening was Natalie Rathner from Australian Jewish Funders who talked about nurturing the culture of giving in the Jewish community and how Australian Jewish Funders works with donors and funders to realise their philanthropic vision (terminology I particularly like having been thinking a lot lately about philanthropy being about enabling donors to act on their values thank you Kay Sprinkel-Grace).

Natalie discussed how the Australian Jewish Funders are working at looking at impact investing, venture philanthropy, developing giving circles (aiming for 100 circles) and partnering with overseas organisations.

The evening was hosted by Rebecca Forgasz, Director of the Jewish Museum, and ended with an enjoyable tour of the exhibitions.

How does your organisation get donors and potential supporters together?  Do you combine different interests and speakers? What works best for you?

Sharon attended this event s a guest of NAB Private Wealth, corporate sponsors of the Jewish Museum.

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Not-for-Profit Financial Literacy Survey

nfp financial literacyGrant Thornton and Probono Australia have launched their Not-for-Profit Financial Literacy Survey Results, in a document entitled: Not for Profits: Are you Ready for the Future?

The survey looked at directors’ and managers’ perceptions of whether not-for-profit boards are financially literate to deal with current situations and future change.

Simon Hancox from Grant Thornton is the author of the survey which was sent out through the Pro Bono mailing list of 45,000 and received 1065 responses.  Most of this post is a summary of Simon’s recent presentation of the results of the survey.

The key question that the survey wanted to address was “how does a board provide financial leadership through times of change and what is the perceived level of financial literacy in not for profit boards”.  The survey included just under 30 questions, and 84% of the respondents were from charitable organisations.

Grant Thornton wanted to analyse whether there were differences between the views of management vs boards, smaller and larger organisations, paid vs unpaid boards and whether the method of director appointments made a difference to perceptions of financial literacy.  Overall they found that there were not significant differences.

What they found was that management and board generally agreed and that 59% of respondents felt that the standard of financial literacy was adequate to meet current needs, but that only 40% felt that their boards had the right level of financial literacy to meet future needs.  The third key finding was that director education could play a role in bridging this gap, and that there is a challenge to improve the financial literacy of boards.

The survey examined eight characteristics or skills of financially literate boards – being:

1) prepared – board reads and understands financial information provided by management

2) informed – board understands nature of key income and expenditure items and factors which may affect them

3) balanced – board has a clear understanding of respective roles of board and management

4) strategic – board has clear understanding of how budget supports strategic plan and risks associated with it

5) critical – board critically evaluates financial performance of the organisation

6) reactive – board promptly reacts to changes in financial performance to mitigate any potential risks to the organisation

7) cost aware – board understands costs of providing services/programs

8) legally aware – board members understand the legal responsibilities and potential liabilities of acting as a director

The survey then compared the importance of these criteria to the perceived performance of the boards (see page 7 of the report).  The survey noted a stronger performance in all areas from larger organisations (which is to be expected) but not a huge amount of difference across the whole sector.  However, it is worth noting that no boards performed better than 4 out of 5, even where the criteria were considered more important.  The survey also found no difference in performance between paid and unpaid boards.

The survey also identified that 22% of director respondents said that they were entirely reliant upon a subgroup (such as a subcommittee) for financial expertise, and 22% of all respondents relied completely upon management.  This clearly leaves much room for improvement.

In looking at the future financial sustainability of not for profit organisations the survey found that all the characteristics were important and examined the ability of boards to understand revenue streams and effective methods of investment.

The survey also found that only 37% of organisations included financial literacy training in board induction.

The survey’s conclusions were that while there is a reasonable perceived level of financial literacy in not for profit boards to deal with current situations, there is a level of concern about the preparedness and ability of these boards to deal with future changes and challenges.  Organisations have a large responsibility to work with their directors to close this knowledge gap.

Following on from Simon’s presentation of the survey findings there was a panel discussion with Karen Mahlab AM, Murray Baird, Assistant Commissioner and General Counsel for the ACNC and Paul Wappett, Chair of Berry Street.

The level of discussion was good so I am going to record some of it here.

Q: “Why do boards fail and how can we protect ourselves from this?”

A: Paul – things come up which might be unexpected – for example Berry Street is dealing with the Royal Commission into Institutional Child Sexual Abuse, there are changes in government funding and policy, boards are volunteers who offer their time after hours and are often working for the not for profit organisation at night – often financial oversight is not the top priority when other strategic matters come up.

A: Simon – organisations need to understand the time constraints placed on their board members and boards need to balance those who are doing the heavy lifting and detailed analysis – eg finance sub-committees with developing the knowledge in all board members to ask the right questions

A: Murray – board failure relates to role – the board must constantly remember what purpose it is there for.  Murray noted that 72% of complaints to the ACNC related to the board being asleep at the wheel (and entertained us with car and driving analogies for the rest of the morning).  However, once the board’s role is clear it needs to have in place processes which enable accounts to be available and for there to be time for them to be examined, addressed and interrogated.

A: Karen – it is concerning that the survey showed that 22% are reliant on others.  The Board Chair needs to understand the balance sheet.

Q: “Do boards need a compulsory level of training?”

A: Karen – that would deter many volunteers from participating on boards – what is needed is better board induction rather than just handing over a huge governance folder.  Boards need to be future focussed and perhaps the finance person needs to step up more within boards, particularly with the introduction of the NDIS and changes in access to revenue such as impact investing.

A: Murray – you need proportionality – some boards have extensive inductions, but some boards might not be operating at a level which needs this.

A: Paul – it is important for the board to self-evaluate its own skills and the Chair needs to take an active role and change the board composition if necessary.

Q: “How important is it that management provides financial information to the board in a way that the board can understand it?”

A: Paul – the reports need to have good commentary, visuals and graphics

A: Karen – numbers don’t speak to the mission of the organisation – what the finances need to show is how do numbers reflect what the organisation does.

A: Murray – boards should be able to ask any questions to allow information to come out and should not be afraid to ask.  While full understanding is not required, you still need to know when to ask a question (back to the car analogy – when you look under the hood you might not understand your car’s computer system – but you need to know whether it is plugged in or not).  Not every board member needs to have the same skill level.

Murray also suggested that external advisers can be useful as while you may have a lawyer on your board, their area of expertise might not necessarily cover what you need to know.  The board needs to be sponsored by the Chair to ask seemingly dumb questions.

A: Paul – cautioning against over-reliance on external advisers and to be sure to ask open ended questions – so if they have not addressed something specifically there is space for them to bring things up eg – Is there anything else we need to be aware of?

Q: “What about risk aversion?”

A: Murray – yes there are changes – for example the NDIS will call on not for profits to raise capital and this will be a huge challenge as traditionally reserves have been held in conservative bank accounts (eg at a low interest rate of 1%) – so how can organisations deal with the need to raise more revenue or invest more seriously.

A: Karen – there is a need for more entrepreneurial skills.  The NDIS is asking organisations to act on a business basis – while there has been a rise in social enterprises, 50% of small businesses fail in the first five years – so what does this mean for new social enterprises?  With impact investing and taking on debt – these are different skills for boards who are used to dealing only with service delivery.

A: Paul – the risk/reward ratio needs to be considered – taking on debt adds to level of complexity

A: Simon – changes in consumer directed funding models and the implications of this.

Q: “Is the not-for-profit business model broken – and if so, how do we fix it?”

A: Murray – NO – the model is just taking off.  No- for-profit boards are no less capable than commercial boards.  Not-for-profit organisations need to make a social impact.

A: Karen – NO – not-for-profit organisations are an expression of need in our community.  The model is not broken but it needs to change – absolutely.  The way government works with not-for-profit organisations is broken and we need to work out how to do things differently.

A: Murray – the ACNC is registering 100 new charitable organisations a week so there are clearly still needs and a will to engage with them.

Q: “What about dashboard reporting and pie charts and should the finances be placed earlier in board meetings” (NB the author particularly liked this question especially knowing how much work goes into changing reporting formats)

A: Paul – yes the placement of items in the agenda is important

A: Simon – dashboards and charts need to be tied to the strategic reasons for doing them

A: Karen – finance is not all about financial reports – it is about investment in the organisation and creativity

A: Murray – don’t leave strategy till 10pm at night.

(In response to a question about the number of new charitable organisations registered by the ACNC, Murray was asked how many charitable organisations are being removed from the register) – the ACNC is currently clearing out 5,500 organisations (many of whom had been inactive for some time) and expects to get to a point of equilibrium where new organisations equal the numbers of those closing down and deregistered.

Q: “Finances are backward looking – how do we keep the board awake?”

A: – coffee, cheese and biscuits – don’t underestimate the importance of the physical environment and always relate finances back to the mission of the organisation to maintain engagement.

What are your thoughts on financial literacy in not-for-profit boards ? Could your board do with training, induction, formal courses?

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A Century of Community Foundations: Evolution and Adaptation – Mark Sidel

Mark Sidel College of Law

The Asia-Pacific Centre for Social Investment and Philanthropy hosted the 2015 Commencement Lecture with guest speaker Professor Mark Sidel, the Doyle-Bascom Professor of Law at the University of Wisconsin-Madison and consultant for China and Vietnam at the International Center for Not-For-Profit Law.

Professor Sidel gave a talk on adaptability and change in institutions, looking at the hundred year history of community foundations in the United States.  (Many of you will be aware that 2014 marked the centenary of community foundations, which evolved from an organisational model developed in Cleveland in 1914).

Professor Sidel’s thesis is that there are two stories of adaptation which have come out of the community foundations movement – that of those who have grown and prospered, and that of those who have not done quite so well.  He also articulated it as contrasting those who have grown, demonstrated social impact and embraced social innovation with those organisations who have struggled to grow, struggled to make an impact, and struggled to handle social innovation.

Professor Sidel reminded us that community foundations were one of the first models to enable philanthropy to reach beyond the very wealthy, to enable more middle-class people to participate in community philanthropy.  While innovative for the time, there were also other models of adaptation in community foundation, such as the United Way and Community Chests.

A quick snapshot of the state of community foundations in the US at the moment:

approximately 765 community foundations in US

$64.9 billion in assets

$14.9 billion in grants every year.

Community Foundations make up 9% of the assets in foundations across the United States and represent 10% of United States giving.  They range in size and scope from the Silicon Valley Community Foundation which has assets of $4.7 billion – to those who have less than $100,000 in their corpus.  Professor Sidel noted frequently that it is difficult to speak about these organisations as one kind of institution given the range and difference within the field, even though they take the same legal form.

Community Foundations have grown significantly in the last 20 – 30 years, fuelled by the development of donor advised funds, however, this has meant that community foundations are now a vehicle for donor control (ie the donors can say where they wish their funds to be spent, and the community foundations have difficulty implementing their own social impact programs or addressing what they might consider to be greatest community need).  This makes it difficult for community foundations to provide innovative impactful solutions.

Other challenges faced by community foundations are how they can grow and interact effectively with their donors.  The distribution rules for community foundations (many of whom only distribute 5% each year makes it difficult for them to be innovative.

Donors have many more choices these days about where to put their money to make a difference, and competition for donors is fierce.  Professor Sidel predicts a continuing rise in community giving, but not necessarily through community foundations.  He quoted from Lester Saloman’s New Frontiers of Philanthropy: A Guide to the New Tools and Actors Reshaping Global Philanthropy and Social Investing and Social Investing and Leverage for Good: An Introduction to the New Frontiers of Philanthropy and Social Investment Oxford University Press (2014) which has a long list of of competitors for donor funds including social impact bonds, crowdsourcing, capital aggregators and secondary markets).

While community foundations were originally a creative adaptation for their times, they are now being threatened by new adaptation and models.  The very value proposition of community foundations (being place-based local vehicles for donors to give in their own community) is being challenged.

Some community foundations have maintained their traditional role – grantmaking in the local community, but there are three ways to move beyond this paradigm.  These include:

a) acting as a conduit for grantmaking for larger institutions (such as corporates)

b) collaborative and collective action

c) community convening and leadership.

Professor Sidel seemed to convey that unless a community foundation was moving towards community convening and leadership it was not necessarily enabling local philanthropy to move forward.  He spoke of the “innovation and impact inflection point” at which an organisation becomes a “leader”.

My understanding of his view was that unless and until community foundations can take on a greater leadership role, they will struggle to gain and maintain donors, given the wide range of innovative options now available to them.  He also mentioned that while community foundations were supposed to be about democratising philanthropy, on the whole, the community foundations remain largely for middle class and upper middle class donors, and do not represent the diversity of the communities they seek to support.  The need for financial survival has necessitated the prioritisation of raising funds against working within a representational context.

Professor Sidel noted a curious development for community foundations in their move towards self regulation through the US National Standards for Community Foundations. These work to bolster the legitimacy and accountability of the sector and are a response to the competitive environment.  He called it a “weapon in the struggle for donations and impact.”

Professor Sidel spoke briefly about community foundations outside the United States, which have developed from the 1950s and 60s with assistance from the Ford and CS Mott Foundations.  He compared the success of community foundations in the UK and Germany (48 and 348 respectively) with the lack of success in India.

Community Foundations have now also arrived in China, but it is too early to predict results, especially as Professor Sidel said, “while they are under intense scrutiny from Western foundations and scholars”.  He did not sound confident that the imposition of a western model on a culture which has thousands of years of history in philanthropy is necessarily going to work.

While Professor Sidel’s talk highlighted the early adaptability and innovation of community foundations, it seems that in some cases community foundations have lost their innovative edge.  The challenge now is to find a new road towards having impact and adapting to new eras and competitors.

What do you think about the history and the future for community foundations?  Will Australian community foundations suffer from the same competitive forces as those in the US?


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