Varied pathways to shared giving goal

23/05/2016 - 13:25

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SPECIAL REPORT: Activ Foundation and the Royal Flying Doctor Service are Western Australia’s two largest not-for-profit charities, yet they have very different approaches to philanthropy and fundraising.

Varied pathways to shared  giving goal
SELECTIVE: Danielle Newport says Activ Foundation has chosen to focus on its core business. Photo: Attlia Csaszar

Activ Foundation and the Royal Flying Doctor Service are Western Australia’s two largest not-for-profit charities, yet they have very different approaches to philanthropy and fundraising.

Activ, which had total income last year of $95.1 million, focuses on its core business, including its substantial commercial operations.

In contrast, RFDS, with total income last year of $85.8 million, has a very active fundraising program that is crucial to its future. (See page 22 for an updated BNiQ listing of WA’s largest charities.)

Each has good reasons for responding in varied ways to what is widely acknowledged as tough times for the NFP sector.

Charities and arts organisations in WA are being squeezed on all sides, as state and federal governments, corporates and private philanthropists endeavour to cap spending.

Trends in philanthropy and corporate giving have followed the economy.

The current squeeze followed a buoyant period when giving was on the rise, helped by the vigorous promotion of local group Giving West and the establishment of multiple family foundations, giving circles and other initiatives.

Giving West has been very quiet over the past year, in part because of the activities of other groups such as Philanthropy Australia, Social Ventures Australia (see New fund supports Aboriginal business) and Creative Partnerships Australia (see Family foundations back niche publisher).

Chairman John Poynton told Business News he saw potential for duplication with other groups, but has concluded there is still a role for Giving West.

“We’ve got a good brand, we will probably be on a reduced scale, but we do plan to be more active,” he said.

Mr Poynton also hit on one of the key issues facing the NFP sector, saying he continued to be frustrated by its inefficiency.

“At some point you need to be brutally honest,” he said.

“They need to make their dollars go further. That doesn’t just mean mergers, but you can have shared services and shared infrastructure.”

MercyCare chief executive Chris Hall agrees there are opportunities to streamline and strip out inefficiencies.

“We need to have more conversations within the sector about whether the number of not for profits needs to be consolidated,” Mr Hall said.

“And by consolidation, I do not simply mean mergers and acquisitions, where big organisations consume smaller ones.

“I’m talking for example about NFPs coming together under one umbrella; sharing resources, decreasing overheads, and redirecting funding and resources to front line services.”

(See businessnews.com.au/article/Conversation-needed-on-consolidation for Chris Hall’s full essay on NFP reform.)

Anglicare WA chief executive Ian Carter told Business News there was significant interest in both formal mergers and alliances.

“We’re involved in major discussions,” Mr Carter said.

He said a good example from last year was the creation of a new delivery model for financial counselling services in Perth, which involved Anglicare and UnitingCare West jointly leading a consortium with eight other organisations.

Mr Poynton believes there is a role for Lotterywest, as the sector’s gatekeeper, to push harder for change.

“They’re not on the front foot,” he said.

“They need to bang heads together and make these organisations more efficient.

“It’s very valid for them to do that.”

Lotterywest chief executive Paul Andrew disagreed.

“It is not our mandate to enforce change within the not-for-profit sector,” Mr Andrew said.

“It is our experience that to be successful and sustained, change must be owned by organisations and the sector.”

He said Lotterywest already had grant programs to help NFP groups evaluate collaboration opportunities and review their business models and capacity.

Social Ventures Australia’s WA director Jenna Palumbo said many groups accepted the need for change in the current tough market.

“There is a genuine appetite to think about doing things differently,” she said.

“People are looking for more efficient and effective ways of operating.”

Ms Palumbo said this included an increased focus on capacity building in the charity sector.

“There is recognition that lots of not for profits are thinly resourced,” she said.

Many charities are tackling this by tapping into the skills and expertise of local corporates seeking to engage their staff in philanthropic activities.

This was substantiated by Giving West’s latest Corporate Giving Index, which was completed last December.

It found that cash donations still accounted for more than half of all giving by WA companies, but volunteering and pro bono support (33.4 per cent) and in-kind contributions (12.4 per cent) were significant.

Data deficit

Philanthopy Australia chief executive Sarah Davies said one of the challenges was getting good data about the size and activities in the sector.

“We have the ATO figures for individuals claiming tax deductions for charitable giving, but getting figures on structured giving is more problematic,” she said.

Social Ventures Australia and the AMP Foundation reached a similar conclusion in their recent report on key trends and best practice in philanthropy.

“The research undertaken for this report highlighted the lack of comprehensive and consistent information on the structure, activities and impact of many philanthropic entities,” their report said.

The data deficiency was illustrated by two recent surveys (admittedly over slightly different periods) into giving in WA.

The NAB Charitable Giving Index found the average donation by Western Australians was $320, below the national average of $348.

Yet Roy Morgan Research found the average donation by Western Australians was substantially higher, at $355, while the national average was much lower, at $302.

The Australian Charities and Not-for-profits Commission released its first Australian Charities Report last year, but to a degree it just highlighted the problem.

The report said there were about 54,000 charities registered with the ACNC but, of these, 16,000 had not completed an annual information statement and a further 10,000 did not prove financial data.

Ms Davies said the Giving Australia 2016 report, which is an initiative of the Prime Minister’s Community Business Partnerships, would help to fill the gaps.

“It is the largest-ever research effort into philanthropic behaviours to comprehensively map the level of giving in Australia as well as examine drivers and motivations for giving,” she said.

Activ focus

Against this backdrop, groups like Activ need to set their priorities.

As a major provider of disability services, Activ gets about three quarters of its revenue from the state and federal governments.

The balance mostly comes from its commercial activities, which employ more than 1,000 people.

Total income from fundraisers and donations was about $1.3 million, with most of that coming from its City to Surf fun run, sponsored by Chevron.

Newly appointed chief executive Danielle Newport said Activ decided some years ago to focus on its core activities.

“One of the challenges is that fundraising requires an investment and when you have competing priorities, you aren’t able to do everything,” she said.

“We made a decision to focus on our core business rather than fundraising.

“In terms of delivering quality services, that was a good choice.”

Ms Newport said Activ was keen to pursue other ways of partnering.

“Philanthropy is broader than just dollars,” she said.

“Organisations that donate paint, garden plants and garden equipment, partners who come out and volunteer; we are very keen on developing those relationships, quite deep genuine relationships.”

Flying high

The Royal Flying Doctor Service’s WA division aims high with its fundraising activities.

It typically raises about $8 million a year, to supplement its core government funding, and is also in the midst of a $50 million capital campaign.

Chief executive Grahame Marshall says that was a highly aspirational goal for the three-year campaign, which will be used to fund the purchase of new jets.

It has already raised $14 million, with most of that coming from Rio Tinto.

Its financial statements also disclose exactly how much it spends on fundraising – $1.9 million in the year to June 2015.

Mr Marshall said the cost of fundraising was one of many performance measures the RFDS was able to share with its partners.

Its board policy is that fundraising costs need to be below 20 per cent of income; last year they were about 15 per cent.

“People want to see the tangible outcomes of where their money is going,” Mr Marshall said.

“We’re at pains to do that, we’re as transparent as possible, particularly with the corporate sector.”

The RFDS has been ranked as the country’s most reputable charity for the fifth year running in research group AMR’s Charity Reputation Index.

It scored high across all measures, including services, innovation, workplace, citizenship, governance and cost management.

Mr Marshall said the RFDS was looking to broaden its reach.

“Our brand has always resonated with regional and remote areas. In the past few years, we’ve attempted to make more of a focus to the corporate community and the people in Perth,” he said.

In support of that goal, Mr Marshall quotes a couple of key statistics – each year the RFDS flies about 50 people from Rottnest to Perth, and about 1,000 people from the South West to Perth.

Measuring performance

A recurring theme across the NFP sector is a desire to improve performance measurement.

“The federal and state governments are looking more at outcomes, which is what philanthropists have always looked for,” Anglicare’s Mr Carter said.

Anglicare, which is one of the state’s largest charities with total revenue of $37 million, has become an advocate of results-based accountability.

It’s one of seven different methodologies, including social return on investment and social accounting, identified in a recent Centre for Social Impact study.

Mr Carter believes results-based accountability has been a big help to the organisation.

For instance, this approach helped Anglicare secure $5 million from BHP Billiton to support the operations of the Foyer Oxford youth homelessness program.

“When they saw what we were doing, they said they liked the look of it,” Mr Carter told Business News.

“When we showed them the outcome data, they were even more convinced.”

Mr Carter emphasised it was critical to have a focus on outcomes, to have robust measurement, and to have ‘reflective learning’, where people learned from the results and adapted their behaviour.

“It’s when you combine all of those that you get the best outcomes,” he said.

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