September 2015 IMPACT PHILANTHROPY AND NFP INSIGHTS Big hart fosters community engagement and transformation through the arts, and has received one of eight 2015 IMPACT Philanthropy Partnership grants. WELCOME TO THE NEW LOOK IMPACT- YOUR SOURCE OF PHILANTHROPY AND NOT-FOR-PROFIT (NFP) INSIGHTS. At Perpetual, we are passionate about philanthropy that has a genuine, lasting community impact. IMPACT is designed to share best practice from all corners of the industry, told from the perspective of NFPs and philanthropists. It aims to provide some thought-provoking ideas that will both stimulate and motivate a passion for impact philanthropy. Our commitment to supporting organisations to make a lasting difference is at the heart of Perpetual s new IMPACT Philanthropy Partnership initiative, which provides grants of up to $1 million to charitable organisations. These grants, distributed on behalf of our clients, aim to support highachieving organisations to deliver long-lasting impact in their work. You can read more about this initiative and the inaugural recipients in this issue. I hope you enjoy reading IMPACT. Geoff Lloyd Chairman, Perpetual Foundation CEO and Managing Director Perpetual Limited NEW IMPACT PHILANTHROPY PARTNERSHIP INITIATIVE IS TRANSFORMING GRANT-MAKING IN AUSTRALIA. Perpetual s inaugural IMPACT Philanthropy Partnership grants provide rare support for capacity-building projects based on a track record of excellence. A diverse range of projects and organisations are represented among eight IMPACT Philanthropy Partners, which have each received a grant of up to $1 million for a project of their choice, to be used over one to five years. The Partners have been singled out from a group of high-achieving organisations invited by Perpetual to apply for this industry-first initiative. To qualify, organisations had to have excelled across the criteria of Governance, Leadership, Capability and Outcomes over a three-year period, as assessed through Perpetual s annual IMPACT Philanthropy Application Process. WHY PARTNERSHIPS? We wanted to design a process that recognised consistently highperforming organisations regardless of their size and invite them to apply for resources for anything they needed in order to have an impact, explains Caitriona Fay, National Manager of Philanthropy and Non-Profit Services at Perpetual. The only caveat placed on the applications is that funding could not be retrospective. Totalling $6.2 million, the 2015 grants were distributed by Perpetual, as trustee, on behalf of our clients, many of whom entrusted Perpetual as their sole trustee. We take the trusteeship role incredibly seriously and appreciate the responsibility we ve been given, especially by those clients no longer alive to witness the impact of their philanthropy, says Caitriona. Part of our crucial role is to ensure those funds are used for maximum community benefit and we believe that for many organisations the IMPACT Philanthropy Partnerships (Partnerships) will help to achieve this. CLIENTS KEEN TO CO-FUND CAPACITY PROJECTS Many of Perpetual s living and active philanthropic clients are also excited about the Partnerships as they present an opportunity to fund in a different and collaborative manner. Co-funding represented nearly $1 million of the grant pool, which is an indication of the strong appetite to improve philanthropy and achieve greater impact. The inaugural IMPACT Philanthropy Partners operate across a broad spectrum of community areas, from human rights law to medical research. Regardless of the sector they came from, many of the organisations invited to apply had the same kind of needs, with technology infrastructure and broader organisation capacity support at the top of the list. Continued over 1
It s pretty clear there s not a lot of resources out in the non-profit sector to enable organisations to do what they need to do not only better, but more efficiently. Philanthropic funds that can be used to support technology upgrades and security, fundraising and even legal costs associated with mergers, can be difficult to find. Thankfully we ve got a really great client base who understands why those funds are really important and we ve recognised this through the Partnership grants, says Caitriona. DATA MANAGEMENT THE KEY TO SUSTAINABILITY AND EFFECTIVENESS: THE SMITH FAMILY The commitment to taking whatever funding approach is necessary in order to produce impactful outcomes is at the heart of the IMPACT Philanthropy Partnerships initiative. The Smith Family, for example, has received close to $1 million to advance its Enterprise Information Platform project. This platform will transform its data management and reporting, providing a single, centralised overview of the organisation. The rich data that will emerge over time will enhance the organisation s analysis of its program outcomes in the community, so programs can be more efficiently adjusted to improve student outcomes. It will also enhance donor engagement and revenue generation. The Smith Family currently supports the education of 34,000 disadvantaged children and young people through longterm financial sponsorships, and another 70,000 students through targeted learning programs. To be able to significantly increase our reach, it is critical that we have the right data management systems in place, explains Dr Lisa O Brien, CEO of The Smith Family. The Enterprise Information Platform project will help inform our primary research, increasing our knowledge of effective interventions. In the long-term, it will also enable us to leverage additional government, private and philanthropic funding to further expand our reach into disadvantaged communities and schools across Australia, she says. Lisa is pleased to see capacity-building grants being embraced in Australia, which is catching up to a trend that has been growing in the US and UK for a number of years. These types of strategic investments that focus on not-for-profit organisational sustainability and effectiveness are still relatively rare here, despite being critical to building a robust non-government sector. I am thankful for the recognition of how important this support is for The Smith Family to facilitate our growth strategy and ultimately help us to help more disadvantaged young people to succeed at school. ENTERPRISE MODEL TO WEATHER THE ARTS FUNDING DROUGHT: BIG HART Tasmania-based Big hart was also acknowledged for its strong track record and future vision for community engagement and transformation through the arts. In the past, Big hart s success has been achieved through piecemeal projectbased funding, susceptible to the whims and changing priorities of governments. The recent cuts to Federal funding for the arts sector has again highlighted the real danger to not-for-profits, including established players like Big hart with a history of delivering high-impact work. Supporting more disadvantaged young people to succeed in school is the ultimate outcome for the IMPACT Philanthropy Partnership grant received by The Smith Family. Project-by-project funding puts you on a perpetual treadmill, causing burnout in workers and the loss of corporate knowledge, explains Scott Rankin, Creative Director and Executive Producer of Big hart. To continue to deliver impact in the current political context and future-proof our organisation, we must diversify our funding sources by introducing a selffunded or social enterprise stream, he says. To this end, Big hart has developed SK8 a multimedia theatre work based on movement rather than language. The proposed production, which will also integrate the theatrics of skateboarding, has great commercial potential across global markets. Perpetual s IMPACT Philanthropy Partnership grant will support the organisation through the process of commercialising the SK8 concept; the core of a capacity-building strategy which will move Big hart towards financial sustainability. It has become almost impossible to attract funding to innovative, capacity-building projects like SK8, despite our 25 years of credibility. In an increasingly risk-averse environment, funding mediocrity to mediate risk has become the norm, laments Scott. The IMPACT Philanthropy Partnership grants are an exception to this norm. There is a real trust-value in the way this funding is being distributed and we are really excited by that, he says. The IMPACT Philanthropy Partnership grants are one stream of the IMPACT Philanthropy Application Program, which has distributed over $24 million this year with the aim of creating longlasting community impact. The total pool of philanthropic funds distributed by Perpetual clients in the last financial year comes to over $85 million. 2
LOOKING TO THE FUTURE, RESPECTING THE PAST: WHAT IS THE ROLE OF FINANCIAL GOVERNANCE? From a grass-roots organisation to a key health services delivery agency, True Relationships & Reproductive Health (True) demonstrates where and how conversations around legacy and financial governance cross paths. As the services demanded from the health sector have evolved over the past 40 years, so too have the challenges. True s commitment to delivering to mission in the face of these challenges has seen it transform itself to achieve financial sustainability. Recently reborn as True Relationships & Reproductive Health, Family Planning Queensland started out in 1972 as a pioneer in addressing women s reproductive health needs. The organisation is now a diversified health services delivery agency upon which the government relies extensively. True was chosen for the rebrand as it better reflects the organisation s commitment to accurate, evidencebased practice in varied areas, such as community gynaecology, child safety, disability education and sexual violence counselling. In a field with many myths, our commitment to truth and our straightforward, non-judgemental approach were viewed by staff and clients as integral facets of our identity, explains Alice Evans, Chief Executive Officer of True. That s why we settled on the name. The addition of Relationships & Reproductive Health then makes a more explicit reference to our work in relationships education and the growth of our clinic services, she says. Despite the fact that True is an established community health provider, charged with the administration of government services, it remains exposed to political forces in terms of funding support. Setting up the next chapter in the organisation s journey also involved thinking seriously about how True could secure its financial future, which would help it to deliver to mission in perpetuity. One of our long-term objectives was to have a positive financial plan to help underpin our social purpose, so it was natural to reassess our portfolio and goals in this light. Divestment from real estate formed a key part of True s financial risk management strategy, developed in consultation with Perpetual. We had a disproportionate amount of our net worth tied up in an illiquid and single asset base with significant mortgages, explains Alice. Further, the property did not meet our service delivery requirements. Essentially it was prudent to have a more balanced portfolio. A major windfall event, such as a building sale, is often at the heart of a not-for-profit s strategy to balance out its investment portfolio and future-proof the organisation. In True s case, it enabled the establishment of an endowment fund, or future fund as Alice calls it. The development of a framework for its financial decision-making processes became a crucial tool for the True board to assist in its deliberations. At a board level, these financial governance conversations were designed to establish practices and formal structures, which would ensure that True s investment approach was transparent and suited to purpose. The issue of being suited to purpose was a vital one, emphasises Alice, as True s decision not to generate an immediate income stream set us apart from many other NFPs. The question of who to work with to assist with the framework development and investment management was an important first consideration. Working with a trusted adviser like Perpetual, which has experience within the social sector and management of growth funds, can help boards bring together their fiduciary and mission-related responsibilities. We worked with Perpetual to develop an investment policy based on a broad growth portfolio, tells Alice. The decision to reinvest all income from the fund was based on a long-term outlook and may enable investment in social programs, as well as allowing us to weather economic shock over the next 15 20 years. We intend to add to the initial capital through further fundraising in the coming years, she says. Clearly, the role of sound financial governance in protecting the future of NFPs and ensuring they are delivering to mission is immense; and building financial governance capacity is increasingly being embraced as a fundamental project across sectors. We re having many conversations with organisations, from schools to medical research centres, around the question of financial governance, says Scott Hawker, National Manager Not-for- Profit Endowments at Perpetual. These conversations tend to arise when NFPs are faced with different options for example, whether to retain or divest a real estate asset. This willingness to seek guidance is generally a sign of maturity in the organisation, Scott says. The benefits of rigorous financial governance to donor relationships are also coming to light, according to Scott. Continued over 3
By formalising the decision-making processes around financial management, organisations are not only securing their ability to deliver to mission into the future, but also clearly communicating to donors that their philanthropic funds are in safe and strategic hands. With so many stakeholders, frameworks and checks and balances to negotiate, it may be difficult for an organisation to envisage how the appropriate governance of their investment mandate is carried out and monitored day-today. A sound investment policy is again essential, emphasises Alice. True s fund management policy provides for overall day-to-day decisions to be made by our expert fund management partner within pre-approved criteria and limits, she explains. Re-investment decisions and changes to the portfolio mix require board approval. Likewise, the board and executive team will monitor regular reporting. True s experience clearly demonstrates how a well-managed windfall event or property divestment, framed within a strategic financial decision-making process, can help future-proof an organisation and allow it to focus on delivering to mission. THE INNER WORKINGS OF A FOUNDATION ADVISORY COMMITTEE Advisory committees can play an important role in how foundations make key decisions. Here we take a look at the Teen Spirit Charitable Foundation, and how its diverse advisory committee helps inform its funding decisions. One of the programs the Teen Spirit Charitable Foundation supports is ReachOut.com, which makes anonymous mental health help available anytime, anywhere. For young people, this often means via a mobile device or tablet. ReachOut Ambassador Andrew Morley recently spoke with students in Dubbo, where around 30% of visitors access ReachOut from a mobile device. Advisory committees can play an important role in how foundations make key decisions. For some the advisory committee provides subject matter expertise and focus; for others it s a means of introducing alternative voices or the next generation of family into the decision-making process. For the Teen Spirit Charitable Foundation (Teen Spirit), the advisory committee provides all of those aspects by combining multiple generations of family with personal experiences and philanthropic focus. Grant-making is central to the core purpose of any foundation, and so careful counsel from a diligent advisory committee can play an important role in ensuring funds are used efficiently and in line with a foundation s core proposition. An advisory committee can bring a range of advantages to any foundation, including fostering greater collaboration. A broad and diverse collection of minds is invaluable in guiding important decisions. It can also allow for specialist input, to support educated investment and funding choices. The Teen Spirit Charitable Foundation, founded in 2002 by Brian Wilson and Wendy Edwards, is a strong example of how an advisory committee can enhance a foundation s funding process. Alex Wilson, daughter of Brian and Wendy, has been involved in the Foundation from the very beginning following her own struggles as a young teenager. My parents identified a real gap in terms of early intervention programs for young people when they struggled to find a program to support me as a young teenager. And so they set out to see how they could support the growth of early prevention programs for young people, she tells. Since then, Teen Spirit, which has been working with Perpetual since its inception in 2002, has gone on to fund a wide range of different organisations and programs, all aimed at supporting young people to gain confidence and knowledge to deal with challenges such as drug use, abuse and mental illness. In that time, the Foundation has contributed close to $2 million in grants. Continued over 4
A CLOSE-KNIT TEAM All members of the Wilson family have been actively involved in running Teen Spirit. Alex now acts as co-trustee alongside her father, while both her mother and brother sit on the advisory committee. Teen Spirit s advisory committee also includes family friends and connections with diverse backgrounds, to ensure a strong and well-balanced advisory committee. It s important for us to have a committee that brings a good mix of business and not-for-profit expertise and a range of backgrounds, says Alex. The committee s members include a high school and a primary school teacher, who each contribute a strong connection and understanding of young people s issues, as well as members with business experience. Within the family, Alex brings a social work background, while her parents expertise lies in business and public relations. A COLLABORATIVE, LONG-TERM APPROACH Alex describes Teen Spirit s advisory committee as quite unique in its inclusive and hands-on approach to selecting organisations and programs to support as well as the additional support it offers other than through funding. While we can t fund all programs that come across the table, we often look at how we may be able to support them in other ways. Teen Spirit s collaborative approach to philanthropy includes meetings held twice a year, which all committee members diligently attend. All members also dedicate time to reviewing applications ahead of the annual May meeting, where funding decisions are made. In addition to acting as co-trustee and financial manager for the Teen Spirit Charitable Foundation, Perpetual also supports Teen Spirit throughout its grant-making decision process. Perpetual plays an important role in our grant-making process and at our meetings. They help us by assessing applications and compiling recommendations of those that meet our funding criteria, for us to consider ahead of our May meeting. We then divide the applications up evenly across the committee, so two of us review and present each program, Alex explains. A second meeting in November supports the committee to keep an open dialogue and monitor the outcomes of its funding decisions. In selecting programs to support, Teen Spirit favours investments that help organisations build new capabilities, expand the scale and reach of their programs, and develop long-term sustainability. We focus on selecting organisations that are committed to delivering a sustainable service. We don t want them to be dependent on us, but for our funding to support them to expand and grow, explains Alex. The Teen Spirit Charitable Foundation s advisory committee also places importance on an organisation s capacity to measure outcomes when they re making funding decisions. While it can be a challenge to decide just which causes to support, the committee usually reaches decisions through discussion, rather than a voting system. We tend to have a good sense for which programs could benefit from our funding or how we could help them grow, and I think that comes down to the close contact we keep with each other and the programs we support. Perpetual s Jane Richmond, who supports the foundation as its Senior Manager - Philanthropy and Non-Profit Services, describes their approach as very inclusive. Teen Spirit is a great example of an advisory committee that works well they respect each other, share responsibilities, understand their roles, and show a terrific passion for contributing to the community. Their active, hands-on approach to charity is a great example of how focused, sustainable philanthropy and sound investment management can have a real impact. A FOUNDATION WITH A FUTURE Succession planning is important for any foundation that wants to ensure it continues to contribute to the community in years to come. A great opportunity exists for foundations like Teen Spirit, which are able to bring younger family members into their operations to continue their legacy. Getting family members involved in philanthropy at an early stage can help foster everything from the sharing of values through to family inclusiveness and financial literacy, explains Jane. And Teen Spirit is testament to this. By stepping up as co-trustee alongside Dad, I ll be well placed to continue the legacy of my parents when they re no longer around, tells Alex. It s so important for everyone to develop a social conscience, and getting young people involved helps them to understand the power of philanthropy and share in your vision of what you want to achieve. 5
Q. ENGAGED CEOS INSTRUMENTAL IN DRIVING EFFECTIVE FUNDRAISING ACTIVITY A longitudinal study of Australian CEOs by Queensland University of Technology (QUT) has found that more engaged and informed chief executives can be instrumental in driving effective fundraising activity. We talk to Dr Wendy Scaife, Acting Director of QUT s Australian Centre for Philanthropy and Nonprofit Studies, about the role that CEOs play in achieving better fundraising outcomes. Raising funds is critical to success and longevity for any not-for-profit organisation. While the leg-work of fundraising is often the domain of fundraising staff, better engagement from CEOs and boards can be instrumental to achieving better outcomes. Research conducted by the Queensland University of Technology s Australian Centre for Philanthropy and Nonprofit Studies has reaffirmed the central role of CEOs in the effective raising of funds. Dr Wendy Scaife, who is leading the study, believes that leadership from CEOs, and better cooperation between CEOs, boards and fundraising staff, can really improve fundraising results. She shares with us some of the insights from her research efforts and extensive experience with not-for-profit organisations. How important is the role of a CEO in successful fundraising? CEOs can be exceptionally busy. They have so many responsibilities outside of fundraising and they don t always have a background in hands-on fundraising activity. However, their role is critical. They are the lynchpin for change in any organisation and can act as an important pivot point or conduit between boards and fundraising staff. They are conveniently placed to act as a voice for both boards and staff, and greater understanding of how effective fundraising works from the top of an organisation can really filter through to great outcomes. Fundraising staff turnover can be a significant issue in the not-for-profit sector and it can have a real impact on gifting. If CEOs are not in tune with their organisation and they have a passing parade of fundraising staff, that is really going to hinder the generation of the best outcomes possible. Q. How can CEOs improve their fundraising expertise? Our research has focused on a study tour as a potential tool for bringing change through education. We organised a tour to the Association of Fundraising Professionals Conference in San Antonio in 2014, as well as site visits to successful organisations. Prior to the tour, we asked our participating CEOs to set goals for change so we could best cater to their areas of interest. Typically, CEOs felt they would like to gain more knowledge around overall fundraising strategies, how to build deeper engagement with support staff, and the mechanisms of fundraising such as corporate partnerships and electronic fundraising. We found the study tour to be a powerful tool for learning. It provided the CEOs with some terrific insights into these key topics, as well as a real opportunity for thinking a time to reflect, away from the busy pressures of their usual day-to-day routines. Additionally, and perhaps even more interesting, was the value the CEOs gained out of the peer-to-peer interaction. They could share experiences and bounce around ideas with respected peers from a range of different organisations. A real community emerged and the CEOs wanted to continue to maintain contact following the tour. They have since established teleconference calls, where they are able to catch up every six weeks and continue exchanging ideas and experiences. 6
Q. Q. Q. What are some of the ways CEOs can improve fundraising outcomes? CEOs need to understand the opportunities and challenges of fundraising. It takes very particular skills to be an effective fundraiser, so it s important to invest in the right team and commit to supporting them. It s very costly to get new teams and donors. CEOs should think about building long-term relationships with fundraising staff and supporting them to stay so they can build effective networks with donors. CEOs can also help to improve fundraising outcomes by developing a deep understanding of the fundraising process and mechanisms through conferences and other ongoing learning. Certainly, what our study has found, is that peer-to-peer learning is enormously powerful, so collaborating with peers from other non-competitor fundraising organisations is something many chief executives should consider. How important is it for CEOs, boards and fundraising staff to work together? Each party needs to work to their strengths. Boards tend to hold a lot of the history and stories of an organisation as well as strong networks with donors. They often have the connections and the gee-wiz factor that can make people want to do more. It is important to ensure that these good connections are tapped into by both the CEO and the fundraising team. Organisations must have a clear understanding of the history of donors and their reasons for supporting. There are also small things boards can do, which can go a long way towards helping the fundraising outcomes of an organisation. For example, a hand-written or personalised letter from a board member to a donor is very powerful. Board members can also use their position to assist, such as through the donation of a boardroom space or other in-kind help. What are the three most important things boards should consider before investing in fundraising capability? Boards could consider how ready they are as an organisation to win additional funding. Do they have the constituency likely to become donors? Do they have a compelling cause and do they have a willingness to ask and engage people in that cause? You need to be able to engage supporters in the great work of the organisation, for people to be able to give. The board also needs to think about how they can assist in building relationships. You want to build a growing family of supporters. Boards should think about what they can do to support their CEO s understanding of fundraising, so they can lead the organisation to its potential. To read more about the research findings visit http://eprints.qut.edu.au/87409/ HOW WE CAN HELP PHILANTHROPISTS Advice and structures to help your philanthropy have maximum impact. NOT-FOR-PROFITS Strategies for optimising your financial investments and organisational sustainability. IMPACT FUNDING Information on applying for funding from the philanthropic trusts we manage. Perpetual s Philanthropic Services and advice are provided by Perpetual Trustee Company Limited (PTCo), ABN 42 000 001 007, AFSL 236643. This publication has been prepared by PTCo and contains information contributed by third parties. It contains general information only and is not intended to provide you with advice or take into account your objectives, financial situation or needs. The taxation information contained in this document is not taxation advice and should not be relied upon as such. You should consider whether the information is suitable for your circumstances and we recommend that you seek professional financial, tax and/or legal advice. The information is believed to be accurate at the time of compilation and is provided by PTCo in good faith. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Any reference to the Perpetual Group means Perpetual Limited ABN 86 000 431 827 and its subsidiaries. PTCo does not warrant the accuracy or completeness of any information included in this document which was contributed by a third party. PTCo accepts no liability for any loss or damage suffered as a result of reliance on this information. CONTACT US Phone 1800 501 227 Email philanthropy@perpetual.com.au www.perpetual.com.au/impactphilanthropy 7