Philanthropy

news

Vol:5, No: 62 Summer 2014, ISSN 1175-9151

The magazine of Philanthropy New Zealand

WIN-

WIN

Why doing good for bu good is sines s

THE JOY OF GIVING

Allan English’s journey from success to significance.

SOCIAL IMPACT BONDS 101 What are they and how do they work?

HIDDEN COSTS

Why grantmakers aren’t always as generous as they think.

From the Chief Executive

In this issue… 3-4 News & Events

The latest news from Philanthropy New Zealand.

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The business of giving



Tena koutou to you all Happy New Year – and welcome to the summer issue of Philanthropy News. We’ve got an exciting year lined up, with 25 Philanthropy New Zealand events now confirmed or being planned, including tours by three international speakers. They’re part of our new, expanded membership package which will provide members with more networking events, more professional development, and more opportunities to learn about best practice both here and overseas. You can check out our calendar of events on page 5. We’re also looking forward to working with some of you on exciting and innovative initiatives such as the pilot of social impact bonds featured on page 12, and on our new programme to encourage business giving. We will kick this off with the launch of our new Business Giving Network in Auckland on March 3. The network will help showcase good business philanthropy in action and provide support to corporate members keen to improve their business giving. Promoting business giving is one of the five strategic priorities we developed last year to help guide our work until 2015 and help us achieve our vision – A thoughtfully generous Aotearoa/New Zealand. The benefits of business giving are well documented. For businesses it helps build staff engagement and satisfaction, and higher productivity; it also helps build brand and customer loyalty. But the “soft” advantages of business giving are just as important. It helps build strong, resilient and well-educated communities. As you know, building strong resilient communities requires collaboration; by working together we can achieve more than by working alone. These are not exactly new concepts in the philanthropic sector – we’ve been talking about collaboration and collective impact for years – but it’s pleasing to see how frequently they are now being used in mainstream discussions about achieving social change. It’s a good sign for all of us. I am looking forward to working with all of you to enable an even more collaborative philanthropic sector in the year ahead, and one that continues to create positive social change in Aotearoa/New Zealand.

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Philanthropy New Zealand has embarked on a programme to help promote more – and more effective – business giving.

Preparing for the future Taking part in a programme for future leaders is already paying off for Adrienne Thurston of the Hugh Green Foundation.

The joy of giving For Australian businessman and philanthropist Allan English, giving is a joyous experience.

Lessons from Canada Visiting speaker Faye Wightman will share her experiences of community foundations when she tours New Zealand in April.

Social impact bonds 101 As the government embarks on a pilot to test social impact bonds we look at what they are and how they work.

Counting the community benefit of grantmaking The amount of time grantees spend applying for, administering and reporting on grants can reduce the net community value of grants by more than half.

The articles in Philanthropy News do not necessarily reflect the views of Philanthropy New Zealand.

Liz Gibbs

This magazine is printed on sustainably-sourced paper.

Cover Image: bunkhouse graphic design ltd

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Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

News & Events

Welcome to our new board member We’re pleased to welcome our newest board member, Sandra Kai Fong of Rotorua. Sandra was elected to the board at our annual general meeting in Wellington on December 5. Sandra is currently serving her second term as a trustee of the Rotorua Energy Charitable Trust. She also served eight Sandra Kai Fong years as a Rotorua trustee on BayTrust, from 2002 to 2010. She was Chair of the Investments Committee for most of that period and also chaired the organising committee when BayTrust hosted the 2004 Community Trusts annual conference at Taupo. Sandra spent 26 years as a lawyer, specialising in civil and commercial litigation. She was a partner in the law firm McKechnie Quirke and Lewis for 22 years. In 2010, she stopped practising as a lawyer and set up an e-business selling merino fabric around the world. She has also been involved in several business initiatives to promote economic growth in Rotorua and the Bay of Plenty, and was the regional Business Club Co-ordinator for NZ2011 during the Rugby World Cup. She is currently director of the SICS Sports Health and Lifestyle Expo being held at the 50th Rotorua Marathon in May 2014. The new Philanthropy New Zealand board has eight members. They are: Kate Frykberg (chair), Kim McWilliams (deputy chair), Candis Craven, Annette Culpan, Jonny Gritt, Sandra Kai Fong, Rongo Kirkwood, and Jennifer Walsh.

Farewell to a board stalwart Our longest serving board member Jennifer Gill stepped down from the board at our AGM held on December 5. Jennifer, who is CEO of the ASB Community Trust, has been at the heart of Philanthropy New Zealand since it was first established in 1990. She has been on the board for 20 of the last 23 years – most Jennifer Gill recently as deputy chair. Luckily we won’t be losing Jennifer’s expertise as she has agreed to act as a strategic advisor for Philanthropy New Zealand. We were also sad to say goodbye to another board member, Mary Dillon. Mary is the former chair of BayTrust and was a Tauranga City Councillor for 21 years. We’ll miss her wisdom and her in-depth knowledge of the philanthropic and local government sectors.

Enjoying the sweet taste of success

Young social entrepreneurs from left: Elim Lin (finance director), Holly Lewis (marketing director), Zoe Zhu (CEO), Kayla Essex (graphic designer), Mackenzie Austin and Abigial Dromgool (productions directors).

This group of year 6 students from Willow Park School in Auckland showed they had what it takes when it comes to social entrepreneurship. They won a Dragon’s Den-style competition at the school after successfully pitching their idea for a personalised cake company called Sweet Smiles that would donate some of its profits to the Auckland City Mission. Their proposal impressed a high-powered judging panel that included Auckland philanthropist Roseanne Meo and Just Water founder Tony Falkenstein. The girls were among 90 students who took part in the competition in December. It was the final activity in a wider study on entrepreneurship – including social entrepreneurship. Among those who helped the year 6 students get to grips with the subject was Philanthropy New Zealand board member Kim McWilliams. She came to talk to them about giving and philanthropy, and also about how it is possible to do business while doing good. “Until Kim came they didn’t quite get it,” says teacher Emma Winder. “When you’re 10 it’s hard to think outside your own world.” The students obviously took Kim’s message to heart; about half the business ideas they come up with during the competition involved doing good in some way. “Some of the products were designed to help the planet, lots were designed to be sustainably produced and quite a few decided to give a portion of their profit to charity,” says Emma. All four finalists had a charitable component, including the winning group who impressed the judges with how carefully they had thought through their proposal and how well organised they were. “They had very impressive research and budgets as well as a strong marketing plan. The cake they gave us was delicious too (but not a bribe at all),” said one judge.

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News & Events

Fascinating insights from Sir Mark Solomon Philanthropy New Zealand board members got a fascinating insight into the work of Te Runanga o Ngai Tahu and the Ngai Tahu Charitable Trust at a special presentation by Te Runanga chair Sir Mark Solomon in December. Sir Mark told the board that while the main focus of Sir Mark Solomon Te Runanga is to promote the well-being of Ngai Tahu, it also works collaboratively with other iwi to share knowledge and experience. “Generosity pays back huge dividends,” he said. A lot of Te Runanga’s work focuses on education, including He Toki ki te Rika, a Maori trades training project being run in partnership with CPIT and Hawkins Construction. It was set up after the Christchurch earthquake to train Maori for roles in the Canterbury rebuild. Sir Mark told the board that since the course began 108 participants have found work and another 150 have gone on to further education. Just 25 have dropped out. He said that doing the course has helped participants become more confident, and also helped them appreciate the importance of “getting on the waka” to further their careers. “We trying to emphasise to our young people that learning is a lifelong journey and that we’ll be behind them on that journey.” Sir Mark also talked about the work of the Ngai Tahu Fund, which was set up in 2007 to build cultural knowledge and leadership. Since then it has given out more than $6 million worth of grants. The Fund is a member of Philanthropy New Zealand and its programme leader Jennifer Walsh is a member of the Philanthropy New Zealand board. The links between the two organisations deepened even further at the end of last year when Philanthropy New Zealand board chair Kate Fykberg was appointed as an independent member of the Ngai Tahu Fund committee.

In memorium We were very sad to hear of the death of our newly appointed kaumatua, Matua (Uncle) Sam Jackson in November. Matua Sam gave a moving welcome to guests at a Philanthropy New Zealand event featuring Liz Weaver in Wellington in September. He spoke about his lifelong commitment to community organisations and to the welfare of children in particular. Our thoughts are with his wife, Whaea June, and with his whanau. We are very grateful to Whaea June for agreeing to take on Matua Sam’s role as Philanthropy New Zealand’s kaumatua once she feels able to. Me to aroha tino nui atu.

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Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

Community membership We have recently launched a new membership category for not-for-profit organisations that deliver services into the community and have an interest in grantmaking. Philanthropy New Zealand Community members will have the chance to meet some of New Zealand’s leading grantmakers, and get an insight into how and why they make their funding decisions. They’ll also get discounted entry to two events for Community members a year, covering subjects such as governance, finance, capacity building and best practice in grantmaking, and the chance to attend selected Philanthropy New Zealand events at a discounted fee.

To find out more about becoming a Philanthropy New Zealand Community member, go to our website: http://www.giving.org.nz/node/8786

Website makeover If you’ve checked out our website recently you’ll see it looks a little bit different – including now being responsive on both tablets and mobile phones. A big thanks to our team of hardworking volunteers, Naomi Guyer, Florent Delannoy and William Demchick, for all Charity-IT volunteers from left: Naomi Guyer, the work they did Florent Delannoy and William Demchick. to help bring the website into the 21st century. They were part of a group of 25 IT professionals who volunteered their time in the inaugural weekend “Hackathon” organised by Wellington-based organisation Charity-IT in early December. Philanthropy New Zealand was one of four lucky not-forprofit organisations that benefitted from the attention of this group of generous-hearted techies. Naomi, Florent and William went well beyond the call of duty as they spent the weekend hunched over their laptops, tweaking our website to make it look – and perform – better. You can check out the result of all their hard work on www.giving.org.nz

Charity-IT is now organising its second Hackathon, which will be held in Wellington from April 11 to 13 (the weekend before Easter). If you’re a not-for-profit organisation with a small IT problem that could be solved during a single weekend, contact: Charity-IT on [email protected]

News & Events

Spotlight on poverty

PNZ member discounts

As CEO of London’s largest independent charity dealing with poverty and inequality in the British capital, Bharat Mehta knows a thing or two about what works – and what doesn’t. Philanthropy New Zealand members will have a chance to hear from Bharat, CEO of the Trust for London, when he appears as Bharat Mehta guest speaker at the launch of the Auckland Funders’ Network on Tuesday March 11. He is also speaking at an event in Wellington on Monday March 17. The Trust for London allocates grants of around £7 million every year, and as an independent funder is not afraid to support sometimes unpopular causes such as forced labour, prostitution, irregular migration, faith-based child abuse and female genital mutilation. The Trust is actively involved with the Living Wage Campaign in London, and also publishes an annual London Poverty Profile. The most recent profile, published in October last year, found that 28% of Londoners are living in poverty – 7% percent higher than the rest of Britain. Of those, many are in work but are still struggling because of high housing costs, low pay and limited career progression. “Work on its own is not a solution to London’s poverty because of the growing number of low-paid jobs,” Bharat said when the report was released. “The majority of working-age adults and children in poverty are now in families that work. London’s economy may be doing better than the rest of the country but that obscures the fact it has the highest poverty rate.” Bharat is the keynote speaker at the Combined Community Trusts Conference being held in New Plymouth on March 13 and 14.

We have recently negotiated a great range of discounts for our members on more than 30 products and services. These range from accommodation and travel to international publications, office supplies and building supplies. Some of these discounts are available using a webcard that can be downloaded to any smart phone. Others can be accessed without a smart phone. If you would like to sign up for the discounts webcard, please contact Yvonne Trask: [email protected]

For more information about the Philanthropy New Zealand events featuring Bharat Mehta visit our website: www.giving.org.nz Many thanks to the TSB Community Trust, the JR McKenzie Trust, Auckland Council and the Wellington City Council for their support for these events.

Grantmaking survey In December last year we published the results of the firstever national survey on grantmaking practices in New Zealand. Grantmaking in New Zealand: Giving That Works is a collaboration between Philanthropy New Zealand and Dr Richard Greatbanks of the Otago Business School at the University of Otago. The survey is based on a similar survey carried out every few years by US organisation Grantmakers for Effective Organisations (GEO). A total of 40 New Zealand grantmaking organisations completed the full survey; Dr Greatbanks carried out in-depth interviews with 12 of them. You can download a copy of the report from our website, www.giving.org.nz

Calendar of events 4 March

Building Great Partnerships, Auckland

5 March

From Success to Significance Allan English, Rotorua

6 March

Wellington Funders’ Network Allan English

11 March

Launch of Auckland Funders’ Network Bharat Mehta

17 March

Social Justice and Change Bharat Mheta, Wellington

4 April

Faye Wightman on tour Rotorua

10 April

Faye Wightman on tour Dunedin

4 June

Wellington Funders’ Network

11 June (TBC)

Auckland Funders’ Network

18 June

Canterbury Recovery Funders’ Network

3 September

Wellington Funders’ Network

10 September Auckland Funders’ Network September Governance and Investment workshop (Date TBC) Wellington 8 October

Canterbury Recovery Funders’ Network

3 December

Auckland Funders’ Network

10 December Wellington Funders’ Network

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Business giving

The business of giving Philanthropy New Zealand has embarked on a programme to help promote more – and more effective – business giving. Why should businesses give, and what’s the best way of doing it?

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ccording to research carried out for Philanthropy New Zealand in 2011, about 6% of all philanthropic funding in New Zealand comes from business. That compares favourably with figures from the United States, where business giving accounts for 5% of all philanthropic funding. However, more recent research suggests that the level of business giving in New Zealand is falling. According to Business and Consumer Behaviour, a report published by the Sustainable Business Council in May last year, the percentage of New Zealand-owned organisations that contribute to charities and community organisations has fallen from 51% to 41% since 2011. In the cases of overseas-owned companies the drop has been even bigger – from 68 % to 48%. Philanthropy New Zealand (PNZ) has recently embarked on a programme to help reverse that trend and to increase the amount of philanthropic funding that comes from business. Last year we set up a new philanthropic advisory service for businesses wanting help with their philanthropic giving. So far we’ve provided consultancy services to two large corporates to help them clarify why – and how – they will develop their community investment programmes. On March 3 we’re launching the PNZ Business Giving Network at an event in Auckland to help showcase good business philanthropy in action and provide support to corporate members keen to improve their business giving. PNZ’s chief executive Liz Gibbs says the value of business giving is well documented. From a business point of view it helps build staff engagement, which in turn leads to greater staff satisfaction and higher productivity. It also helps build brand and customer loyalty. “We know that consumers think more highly of companies that support charities or worthy causes,” she says. But the ‘soft’ advantages of business giving are just as important. “Supporting community organisations helps New Zealand build strong resilient and well-educated communities – and that’s good for business.” However, finding the ‘sweet spot’ between giving that works for a business and also builds stronger communities doesn’t happen by accident. Whether you’re a large national or multinational company with thousands of staff, or a small local business with just a few employees, the secret to running a successful business giving programme is still the same. “You need to make really smart, strategic investments that fulfil your business needs as well as the needs of the community you work in,” says Liz. “That means being clear about what you want to support, and why. It’s also important to have strong leadership, so that you get buy-in from everyone.”

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Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

Sources of giving 6% 58%

36%

Trusts Individuals Business

Giving New Zealand: Philanthropic Funding 2011

“Supporting community organisations helps New Zealand build strong resilient and well-educated communities – and that’s good for business.” Too often, she says, businesses adopt what she calls a ‘spray and pray’ approach, giving small amounts to a large number of organisations without any thought about what they want to achieve from their giving. Large corporates are just as guilty of this unplanned approach as small and medium enterprises. “Often with big companies you find that different parts of the business are engaged in a wide range of charitable activities. The total value of their giving programme may actually be quite large, but they’re not executing it in a joined up way. That means they’re not getting maximum benefit from their giving programme, and neither are the organisations they support.” She says that businesses can take a number of basic steps to make their giving more strategic – and more effective.

1. Decide the area where you want to focus your support You can’t support everything, so it’s important to identify where you want to focus your support. It makes sense for this to be something that aligns with your business; if your customers are mostly young, for example, then a logical area to focus on is activities that benefit young people. Don’t make this decision on your own. Talk to your staff – and to your customers – to find out what matters to them. Narrowing your focus makes it easier to say no to those organisations that fall outside your criteria. It also makes

Business giving life easier for the many community organisations looking for support. If they know you only support youth-focused activities and they’re running a programme for the elderly then they know there’s no point in approaching you.

2. Nominate the organisations you will support Once you’ve decided where you want to focus your giving it can be useful to identify the organisations working in that area that you would like to support. You may decide to support only one organisation, or you may choose several. Again, it’s important to consult your staff to find out what matters to them. If it’s an organisation they really care about they’ll be more engaged with what you’re doing. Morrisons supermarket chain in Britain, for example, allows its 135,000 staff to choose the company’s main charity partner by voting for it from a shortlist of selected charities. For the last three years its main charity partner has been Save the Children UK. Morrisons’ staff have raised more than £6 million for the charity from a wide range of activities during that time – including wearing garish festive-themed jumpers for Save the Children’s annual Christmas Jumper Day.

3. Lead from the top Good leadership lies at the heart of a successful business giving programme. You can’t expect your staff to dress up in silly jumpers to raise money for your chosen charity if you’re not prepared to do it yourself. That means making it clear that your giving programme matters to you, and embedding that within the organisation by linking the success of the programme to performance management measures throughout the organisation.

To find out more about business giving, visit the Thoughtful Giving website: www.giving.org.nz/thoughtfulgiving To find out about Philanthropy New Zealand’s philanthropic advisory services contact Liz Gibbs, [email protected]

Local focus works for Kirks

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fter 150 years of trading Wellington department store Kirkcaldie & Stains is an integral part of the city’s fabric – and that is reflected in the way it carries out its charitable activities. Each year the store supports a major, locally based charity that serves a wide cross-section of the city’s population. Among the charities the store supports are the Wellington Hospitals & Health Foundation (the official fund raiser for Wellington Children’s Hospital), Wellington Free Ambulance and Wellington City Mission. “We believe that if you make your living from the local community then you should be prepared to put something back into the community,” says managing director John Milford. The store also donates 50 cents from every bra it sells to an organisation called Sweet Louise which supports women with secondary breast cancer It’s a clearly focused giving strategy that was developed about seven years ago following consultation with the store’s management team, board of directors, staff and customers. “The feedback we got was that while there are a lot of good things that are happening at a national and an international level, we are based in Wellington and we should give back to the Wellington community,” says Mr Milford. Most years the store raises $30,000 to $40,000 for its chosen charity. Some of the money comes from staff activities such as regular cake stalls – “They’re a bit of an institution – they’re done by floor and they’re a great way of giving the teams a sense of purpose.” The rest comes from a range of activities such as in-store events, strategically placed donation boxes, and Christmas giftwrapping. It’s important, says Milford, not to be too ambitious: “You can’t go back to the well too many times. You’ve got to recognise what a comfortable level for ongoing support is.”

“We believe that if you make your living from the local community then you should be prepared to put something back into the community.” John Milford with Hopsi, the mascot for one of Kirkcaldie & Stains’ official charities, the Wellington Hospitals & Health Foundation.

And he says having a tight focus – and sticking to it – makes it easier to turn down the many requests for support the store gets from other charities. “It’s never easy to say no, but it does make it easier if you can say we have a strategy for what we do that is supported by the customers, the staff, the management team and the directors.” See Doing good makes Vodafone staff feel good on page 8.

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Business giving

Antony Welton, chair of the Vodafone New Zealand Foundation.

Doing good makes Vodafone staff feel good

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odafone New Zealand staff more than rose to the occasion when they were asked to raise money and volunteer their time to support the work of the company’s charitable arm, the Vodafone New Zealand Foundation, in October last year. They ran cake stalls, cooked bacon and egg breakfasts, held auctions, played cow-pat bingo and threw pies at their bosses. Altogether they raised over $400,000 to support the work of last year’s Vodafone World of Difference recipients, with the winning team from the Wholesale Business Development team raising $126,500 for the Auckland-based InZone Project. As well as raising money for the project, under which Maori and Pacifica boys with leadership potential board at an Epsom hostel that puts them ‘in zone’ to attend Auckland Grammar School, the team also provided mentoring and career advice to the boys. According to Antony Welton, chair of the Vodafone New Zealand Foundation, the activity was an excellent example of how a corporate giving programme can help build staff engagement. Antony – whose own contribution involved auctioning off the opportunity to shave his head for the impressive sum of $1000 – says staff are proud of the work the Foundation does. “Everyone who gets involved with the Foundation says it’s one of the reasons they want to work for Vodafone,” he says. Established in 2002, the Foundation focuses on projects that improve the health and well-being of young New Zealanders. It has three main funding strands: a grantmaking programme, an annual fellowship for people working in the youth health and development sector, and the flagship World of Difference programme which provides financial and professional support to between six and 10 people working with a youth charity every year. Antony, who also works as director of HR for Vodafone New Zealand, says the youth focus resonates well with the business as a whole. “On a philosophical level it makes sense because a healthy New Zealand means healthy customers – and that means a healthy business for us.” He says that running a corporate giving programme also makes sense from an HR perspective.

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Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

Boys from the InZone Project at a charity auction organised by Vodafone’s Business Development team to raise money for the project.

“Everyone who gets involved with the Foundation says it’s one of the reasons they want to work for Vodafone.”

Vodafone staff cook bacon and eggs (above) and help out with gardening (below) to raise money for World of Difference recipients.

“We know that more engaged employees are more productive, and we know that engagement levels are linked to feeling proud of the company they work for. That pride comes from how satisfied they are with the organisation and how happy they are working there – and one of the key drivers of happiness is doing good and helping others.”

Professional development

Preparing for the future A new partnership between Philanthropy New Zealand and the Sustainable Business Council provided the opportunity for one of our members to take part in the Council’s Future Leaders’ Programme.

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eing sponsored to take part in the Future Leaders’ Programme run by the Sustainable Business Council is already paying off for Adrienne Thurston, who is the foundation manager at the Hugh Green Foundation in Auckland. After spending six months with 24 other future leaders focusing on the challenges of youth unemployment and how to combat it, Adrienne feels much better prepared for her role on the steering group of the Papakura Youth Connections project. Papakura is one of 10 areas in Auckland involved in Youth Connections, a project initiated by the Auckland Council to help the estimated 34,000 young Aucklanders not currently in education, employment or training. The Hugh Green Foundation is one of the organisations funding the project. “Thanks to the Future Leaders’ Programme I know a lot more about the issues facing unemployed youth, so I feel more confident about sitting on the steering group,” says Adrienne. “Without it I don’t think I would have had the knowledge or the expertise to contribute very much.” She’s also made some useful contacts that she hopes will help her pursue a more personal project – finding ways of helping single parents transition into work. “Some of the people I met on the programme are keen to explore ways the companies they work for could help bring single parents into the workforce,” she says. “I hope to work with them on that. It’s something I am very interested in – I’m a single mother myself, and I know how hard it can be.” Adrienne was nominated by Philanthropy New Zealand chief executive Liz Gibbs to take part in the Future Leaders’ Programme as part of a new partnership between the two organisations. The programme was set up in 2011 to provide professional development for talented future leaders working for the Sustainable Business Council’s member companies. They include many of New Zealand largest companies, such as Fonterra, Fletcher Building, The Warehouse and Air New Zealand. Last year the Council’s corporate members sponsored two future leaders from the not-for-profit sector to take part, one of whom was Adrienne. Each year the programme focuses on a different issue. Working in small groups, the participants get together every few weeks over six months to focus on one particular aspect of the problem. Last year’s issue was youth unemployment. Adrienne’s group focused on innovation in this area, looking at what’s being done to successfully tackle youth unemployment both here and overseas. They were particularly impressed by the

Adrienne Thurston at the Hugh Green Foundation. Photo: Sally Webster

“It can be quite isolating working in grantmaking and it was good to be reminded there are other ways of looking at things.” work of former Otorohanga mayor Dale Williams, whose innovative scheme connecting young people, local businesses and local schools has seen youth unemployment in the town drop to zero. “Dale came and talked to us and he had such an effect on other people in the group, they just loved him – he’s so real.” She says her group identified several key elements common to successful programmes. These include having a job at end of the programme, as well as providing support and mentoring during and after it. “There absolutely has to be a job, and there also has to be someone in a ‘camp mother’ role who can smooth over any issues with either the employee or the employer after they have started their job.” For Adrienne participating in the Future Leaders’ Programme was a stimulating experience. At times she found herself challenging the views of the other participants. “I think it was really valuable to have some NGO opinions in the room – it did challenge some of the others to look at things a bit differently at times.” She also enjoyed having her own views challenged. “It was fascinating to have so many different perspectives. It can be quite isolating working in grantmaking, and it was good to be reminded that there are other ways of looking at issues.”

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International speaker

The joy of giving Our members will be able to hear the story of Australian philanthropist Allan English’s journey from ‘success to significance’ when he tours New Zealand in March. We caught up with him before he left Australia.

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or Queensland businessman-turned-philanthropist Allan English the term “engaged philanthropy” is more than just an industry buzzword. English, who set up the English Family Foundation in 2010, takes a hands-on approach to philanthropy that means he is personally involved in finding, engaging with and in some cases mentoring many of the foundation’s charity partners – often organisations from what he calls “unsexy” sectors such as mental illness, end-of-life care and refugee services. “I don’t do puppy dogs and kids’ charities,” says the founder and chair of Silver Chef, a publicly listed company that funds equipment for hospitality start-ups in Australia and New Zealand. “If I’m interested in a sector then I carry out research by asking people to tell me who they think the most talented individual in that sector is who is currently underfunded. I get second and third opinions about who we should fund, to help identify and foster talent.” English believes that philanthropy should have an element of risk in it: “You should be prepared to fund things that have the potential to get up and going.” For him, it’s about identifying and supporting the future leaders of the sector and helping produce successful outcomes that are driven by talented leadership. “As an engaged philanthropist I like to be involved in mentoring, in helping young leaders with fabulous potential rise to the next stage of their growth and development, as well as helping to ignite an organisation’s potential.” He’s not afraid to fund activities that other grantmakers won’t, such as business plans and leadership training. And his hands-on approach means he’s free to fund projects he has a personal connection with. For example, he recently provided funding to publish 3000 copies of a book on eating disorders written by the Queensland-based Eating Disorders Association after someone he was close to found the organisation’s services very helpful. That doesn’t mean he’s an easy touch. He has a clear bottom line when it comes to deciding what to fund: “I have a philosophy of depth and span. I look at the degree of transformation that can happen for an individual or a family or a community – the depth of the transformation – and also at

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Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

“What an extraordinary privilege to be in this space and to meet the people who are working in the sector.” how many times that transformation can be replicated, which is the span of it.” English’s path from businessman to philanthropist – what he describes as his journey from success to significance – began more than a decade ago when he become involved in a microfinancing project being run in East Timor by an organisation called Opportunity International. At that point he was losing interest in his work with Silver Chef, and he had handed most of the day-to-day running of the business over to his management team. All that changed when he received a letter from Opportunity International saying the microfinancing project was on track to lift 40,000 people out of poverty. It was a eureka moment that sent English back into the boardroom, determined to boost Silver Chef’s profitability so he could use the proceeds to help make a real difference in the world. Over the next six years the company grew by more than 600% and listed on the Australian Stock Exchange. In 2010 English stepped down as a CEO of Silver Chef to concentrate on philanthropy, transferring 50% of his shareholding into the English Family Foundation. During its first year the foundation gave out AUD$360,000 worth of grants; this year it’s expected to give out $1.8million. About 50 per cent of that will go to alleviating global poverty; the remainder will support work in Australia, with a particular focus on South-East Queensland. English hopes other wealthy individuals will follow his example and get involved in philanthropy. He can certainly recommend it. “It’s a joyous way of living – an absolutely joyous way of living,” he says. “What an extraordinary privilege to be in this space and to meet the people who are working in the sector – interesting, wonderful, talented people.”

For details about Allan English’s tour see page 11.

International speaker

Lessons from Canada T

he Community Foundations of New Zealand are kindly letting Philanthropy New Zealand borrow Faye Wightman – keynote speaker at their annual workshop being held in Wellington in April – for a couple of days. That means Philanthropy New Zealand members will get a chance to hear Faye, who is one of Canada’s philanthropic leaders, speak at events being held in Rotorua on Friday, April 4 and in Dunedin on Thursday, April 10. Faye has had a long and successful career in fundraising and philanthropy, most recently as CEO of Canada’s largest community foundation, the Vancouver Foundation. During her eight years as CEO Faye helped increase the profile and role of the foundation, which has assets of more than CAD$814 million and has distributed more than CAD$917 million since it was first set up in 1943.

“People need to realise what a great feeling it is to give while they are here, so they can see the impact and the benefits of their generosity.” The foundation’s current priorities include tackling youth homelessness in Vancouver, encouraging activities that promote a sense of neighbourhood, and helping Vancouver reach its goal of becoming the greenest city in the world by 2020. Faye is passionate about the importance of philanthropy, and particularly about the opportunities that organisations such as community foundations provide for ordinary people to get involved in philanthropy. “Charitable giving is no longer the exclusive domain of the wealthy,” she says. “Anyone can make a difference with the resources they have. The old adage ‘you can’t take it with you’ rings true. People need to realise what a great feeling it is to give while they are here, so they can see the impact and the benefits of their generosity.” Community foundations are one of the world’s fastest growing forms of philanthropy. They are committed to improving communities in a specific geographic region. They do this by pooling the charitable gifts of donors to create permanent endowment funds, and using the income from these funds to make grants that support a wide range of community needs. Community foundations are a relatively new concept in New Zealand and there are now 12 community foundations throughout the country, with the newest being the Momentum Foundation set up in the Waikato at the end of 2013. About 40 community foundation staff and trustees and staff are expected to attend the two-day Community Foundations of New Zealand workshop being held in Wellington on April 7 and 8.

Faye Wightman, former CEO of Canada’s largest community foundation, the Vancouver Foundation. Photo: Claudette Carracedo

Faye Wightman is speaking at Philanthropy New Zealand events in Rotorua on April 4 and in Dunedin on April 10. For more information, visit our website www.giving.org.nz or contact our Events Manager Yvonne Trask: [email protected] Many thanks to Russell Investments, Acorn Foundation, Rotorua Energy Charitable Trust and Otago Community Charitable Trust for their support for these events.

Allan English will be talking at events in Auckland on Tuesday March 4, Rotorua on Wednesday March 5, and Wellington on Thursday March 6. For more information check our website www.giving.org.nz or contact our Events Manager Yvonne Trask: [email protected] Many thanks to the Tindall Foundation and all our members who are supporting Allan’s tour.

11

Emerging practice

Social impact bonds 101 New Zealand is in the process of setting up a pilot to test the appetite of social service providers and investors – including existing and would-be philanthropists – for social impact bonds. What are they and how do they work?

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or a concept that is still largely unproven – the first social impact bond was launched in September 2010 to reduce reoffending by short-term inmates at Britain’s Peterborough Prison – social impact bonds are proving to be popular with investors. Australia’s first social impact bond, launched last year to reduce the number of days children spend in foster care, was so oversubscribed it had to be closed off a month early, with one Australian businessman and philanthropist describing social impact bonds as a “revolution underway in the not-forprofit sector”. As with the Peterborough Prison project, a large number of the Australian investors were philanthropists and charitable funders. New Zealand is now embarking on a pilot project to test whether investors here – including some Philanthropy New Zealand members – are keen to get involved in this new form of private-public partnership which means they can make money from funding not-for-profit organisations to deliver specific social outcomes that provide better value for taxpayers. According to Philanthropy New Zealand chief executive Liz Gibbs, several members have already expressed interest in being involved in the pilot, which is still in its very early stages, with the government asking service providers to register their interest by the end of February. “Social impact bonds aren’t for everyone,” she says. “For some of our members it won’t work because they aren’t able to invest their capital – they can only make grants using the interest from their investments. But for others it is of interest and we have formed a working group of three or four funders who are interested in exploring the potential.” It’s not just existing philanthropic organisations that want to invest in social impact bonds. They are also starting to attract interest from high-net-worth individuals keen to get involved in social investment. “It’s another way of increasing philanthropic activity,” says Liz. “It certainly has the potential to attract new investors and encourage generosity – and PNZ welcomes that.”

This illustration shows how social impact bonds have worked overseas. The government is still deciding exactly how they will work here, and the process may be slightly different.

GOVERNMENT Decides on a problem

INTERMEDIARY Finds

NON-PROFIT SERVICE PROVIDER

INVESTORS Provides funds

Provides services

EVALUATOR

$

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Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

Liaises

Appraises success enabling release of funds

Emerging practice What are social impact bonds? Social impact bonds involve private investors providing funding to service providers to deliver specific social outcomes that have been decided on by the government. The main purpose of the bonds is to provide taxpayers with better, more efficient social services. If the project achieves the agreed results, the government pays the investors back on their investment – plus a return based on the cost savings that come from achieving better social outcomes. In the Peterborough Prison project, for example, investors have provided £5 million worth of funding to five charities to reduce reoffending rates by more than 7.5% by 2016. The return to the investors is linked to the cost savings that come from having fewer prisoners to house – the lower the reoffending rate the higher the return on the investment.

What sort of projects can be financed by social impact bonds? Projects overseas are addressing a range of social issues, such as reducing reoffending, increasing employment, improving outcomes for children in care, and improving the management of chronic health conditions. Whatever the project it must have clearly defined and measurable outcomes that will reduce government expenditure.

Why become an investor? For investors, social impact bonds are a way of helping to produce better social outcomes while getting a financial return. For philanthropic organisations the attractions of this are obvious – providing they get a return on their investment it’s a win-win situation. They are able to support projects that produce better social outcomes and also build their capital so they can continue to make a difference in the world.

Who manages the process?

“Social impact bonds are another way of increasing philanthropic activity. They certainly have the potential to attract new investors and encourage generosity – and Philanthropy New Zealand welcomes that.” – Liz Gibbs, Chief Executive, PNZ What’s in it for service providers? For service providers, the biggest advantage is that they get guaranteed funding upfront and for a specified period of time. That allows them to get on with the job of doing what they do best – delivering services. Having clearly defined outcomes also helps them to focus the work they do. The experience overseas suggests that the process of getting ‘investment ready’ can have unexpected spin-off benefits for service providers, because it helps them improve their financial and management processes.

Do social impact bonds work? Early results from the first social impact bond at Peterborough Prison are looking promising. Interim figures released by the British Ministry of Justice in October 2013 showed that reoffending by short-term inmates at the prison had fallen 12% since the project was launched, compared with an 11% increase in reoffending at other British prisons over the same period.

What problems are emerging?

The process is managed by what is called an intermediary, who is responsible for managing the relationships with the three other partners – the government, the investors and the service providers. The intermediary plays a pivotal role, helping to make sure the service providers meet their outcomes, so that the investors can get a return on their investment. So far, most intermediaries have come from a banking or financial consultancy background.

The main problem that is emerging with social impact bonds is that they are very complex to manage and assess. With so many parties involved it can be time-consuming and expensive to create the contracts, attract investors and liaise with the service providers. Assessing the outcomes is also proving to be difficult. As funders know, measuring success is a far from exact science and working out what factors have contributed to the success is even harder.

What’s in it for the government?

Where to next with the New Zealand pilot?

Social impact bonds are seen as a largely risk-free way for governments to drive better social outcomes and provide taxpayers with better value for money. With social impact bonds, all the financial risk is borne by the investors. If the project fails, the government does not lose any money. If it succeeds, the government saves money and is able to return those savings to the investors while providing taxpayers with better, more efficient social services.

Service providers have until February 28 to register their interest in being involved in the pilot. These will then be evaluated and it’s expected a shortlist of potential organisations will be drawn up by July. In the meantime, the government will call for registrations of interest from potential intermediaries.

13

Opinion

Counting the community benefit of grantmaking Apparently generous grants are often not so generous once you factor in the time grantees spend applying for, administering and reporting on them. Kate Frykberg looks at the hidden costs of grantmaking – and at ways of making the process more efficient.

A

s grantmakers we want to provide accessible funding, select grantees wisely and understand our impact. The way we usually go about this is through contestable funding and robust processes for selection, accountability and sometimes evaluation. That’s all well and good – except for the compliance costs these processes generate for the community organisations applying for the funds, whether or not their applications are successful. We know that every hour spent seeking and keeping grants is an hour not spent working with the community served, but we rarely give compliance costs the attention they deserve, despite the fact that, as Albert Ruesga and others point out, fundraising is a leading cause of burnout for CEs of community organisations. Once you do factor in these costs it becomes clear that we are often less generous than we think. A useful approach to working out the true cost of the funding process is by putting a value on the time spent applying for – and in the case of successful applicants, administering and reporting on – grants. For successful applicants, this allows us to measure: • net grant – the money received by a grantee minus the value of the time spent applying for and reporting on the grant • grant efficiency – net grant as a percentage of grant given. You can also use this same formula to calculate how efficient the process is for the community as a whole by including the costs for unsuccessful applicants. This allows us to measure: • net community funding –the money a funder gives to the community, minus both the value of the time to apply for funding by both successful and unsuccessful applicants, and the value of the time spent by successful applicants administering and reporting on the grant. • community funding efficiency – net community funding as a percentage of funding provided. As you can see from the hypothetical example in the box on page 15, the grantmaking process can be extremely inefficient. A situation where the total cost of applying for, administering and reporting on the grant is more than half the value of the grant is unfair, unreasonable and unnecessary. And sadly it is completely possible for particularly complex and competitive funding schemes to have negative grant efficiency.

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Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

“A situation where the total cost of applying for, administering and reporting on a grant is more than half the value of the grant is unfair, unreasonable and unnecessary.” Of course this is not the situation in every case. Nor is it confined to philanthropy – tendering and contract processes in government and the commercial world are similar and often worse. But however we look at it, the net impact of our funding, once compliance costs are taken into account, can be considerably less than the total amount given. Put a different way, some of our grant-making practices reduce the very impact we seek to make. And yet those original goals – accessibility, selecting wisely, understanding impact – remain both valid and important. Is there a win-win solution that provides the best of both worlds? If not, how do you balance these seemingly conflicting goals of robust, accessible grant processes and low compliance costs? While we don’t have any silver bullets, we have been thinking about this issue at Todd Foundation; here are some practical ideas to help streamline compliance costs and increase community benefit.

Opinion

Adding it up The scenario: You have $100,000 to give away in 10 grants of $10,000 each. Assumptions: Let’s choose round numbers – assume that 100 organisations apply, they spend an average of 10 hours each applying then another 10 hours reporting on the grant, and use an average hourly rate of $50 per hour. Net grant and grant efficiency for successful applicants: Grant The cost of applying (10 hours @$50/hour) The cost of reporting on grant (10 hours @$50/hour) Net grant

$10,000 – $500 – $500 $9000

Grant efficiency

90%

Net community funding and community funding efficiency for all applicants: Funding available (10 grants of 10k each) The cost of applying (10 hours @$50/hour, 100 applicants) The cost of reporting on grant (10 hours @$50/hour, 10 grantees) Net community funding Community funding efficiency

Be clear about what won’t get funded It is a waste of everyone’s time to receive applications that have little chance of success. It isn’t hard to have clear criteria and to be available for open and honest discussion about things on the margins. Doing this well will reduce the number of applications we receive, which may also require letting go of feeling secretly pleased to receive lots of them! But funding is not a popularity contest…

Combine responsive and proactive funding Funding which anyone can apply for (responsive funding) is open and inclusive but has high compliance costs. Funding which is invitation only (proactive funding) has lower compliance costs because of the much higher chance of success – but is limited by our understanding of who is out there doing great work. A combination of both seems a good middle ground.

Maximise multi-year funding You can’t change the world in a year. You can’t even employ someone to change the world in a year. Multi-year grants have significantly lower compliance costs and much better results.

Allow flexibility in how the grant is used When we buy shares in a business we don’t tell companies how to use the funds; why then are we often so prescriptive in how grants are used?

$100,000 – $50,000 – $5,000 $45,000 45%

Track how long the application and reporting processes take It’s easy to add a field to forms asking how many hours it took to apply, and from this we can calculate our funding efficiency using the formulas I’ve suggested.

Make grant reporting meaningful For grantees, accountability reporting is usually just another irritating compliance chore, and the end result is often unacknowledged, sometimes unread and rarely used as a learning tool. Many of us need to rethink our approach here.

W

e’ve been exploring these issues at Todd Foundation, and goodness knows we have a long way to go – but we’re making a start.

The changes we’ve introduced include: • reworking eligibility and selection criteria • providing 37% of our funding proactively, 48% for more than one year and 26% without any restrictions on how it is used • using both two-step and scalable application processes (which take an average of 2 hours for an initial application, 5 hours for new proposals from previously funded grantees and 8 hours for proposals from new applicants)

Use two-step and scalable application processes

• introducing roundtable reporting, where grantees report face-to-face in groups, rather than through a written report.

A two-step application process allows us to shortlist potential grantees on the basis of an initial, less time-consuming application. And having different kinds of applications depending on the scale of the grant makes sense too – it’s much better for everyone if processes are proportional to the amount on offer and the chance of success.

Our next step will be to formally put in place new metrics like grant efficiency and community benefit efficiency. It is a long journey and we’re still just starting out. But one thing seems clear – if we want our funding to have more impact, we should first look in the mirror and review our own practices.

Kate Frykberg is chair of the Philanthropy New Zealand Board and executive director of Todd Foundation. This article is adapted from her blog, “on Philanthropy and Community”: http://kate.frykberg.co.nz/

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Feature Interview

Philanthropy New Zealand Toputanga Tuku Aroha o Aotearoa

Philanthropy New Zealand is the hub of philanthropy in New Zealand. We provide thought leadership and practical help for everyone with an interest in giving to make the world a better place. Our members include private philanthropists; family, community and corporate foundations; and iwi and community trusts. We have recently added a new membership category, Community membership, for not-for-profit organisations that deliver services into the community and have an interest in grantmaking. JOIN NOW To become a Grantmaker or Community member or to find out more go to www.giving.org.nz

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