Australia’s Philanthropy: Coming of Age as a Business

Genevieve Timmons, Philanthropic Executive at Portland House Foundation, examines the key features of contemporary philanthropy that are the hallmarks of growth and maturity in Australia today.

OPINION: In the last 25 years philanthropic grantmaking has emerged as a relatively new industry, both in Australia and across the world. Giving is not a new concept, and in fact goes back as far as recorded history can take us. But it is only in the last three decades that an overhaul of the traditions of philanthropy has transformed giving, moving on from often random acts of generosity, guided by hunches and good intentions, to more thoughtful and deliberate strategies for giving money for social progress and benefit.

Early pioneers in Australia established a membership organisation in the late 1980s, the Australian Association of Philanthropy (AAP), now known as Philanthropy Australia. AAP joined just a handful of membership organisations across the world, including the Council On Foundations in the USA (established 1949), the Canadian Centre for Philanthropy (mid 980s) the European Foundation Centre (1989), the Association of Charitable Foundations UK (1989), and Philanthropy New Zealand (1990). From this small group of leading organisations, there are now thousands of membership organisations globally with a focus on developing the quality and breadth of philanthropic giving.

With the leadership of Philanthropy Australia and their international peers came the first collective sense of philanthropy as a public, structured activity, a notable turning point. Thoughtful, planned giving has become widely recognised as the remit of philanthropy, along with an increase in the numbers of people involved as donors, staff or trustees of foundations and trusts, allied professionals, and also as grantseekers and fundraisers. Momentum has also been added by an array of new giving structures, services and organisations to facilitate giving, new legislation and approaches to marketing. Most important, in the last 25 years there has been a substantial increase in the amount of money being given as investment in social progress.

There are several key features of contemporary philanthropy that are hallmarks of our growth and maturity today, and that present rich challenges and opportunities to accelerate our progress in the time ahead:

Strengthening our claim as a profession
There are numerous milestones which mark the growth and maturity of philanthropy, coming from a mysterious and small base to where it is today. The current scale and complexity of activity is a radical transformation from 25 years ago. Clearly our sector has taken shape, but are we ready to be called a profession? And what is required to qualify? In recent discussions with Wendy Scaife, from the QUT Centre for Philanthropy, she raised the point that there are requirements for any field of endeavour to qualify as a profession. To be called a profession, there is an expectation of service and standards that can be predicted, requiring agreement on what these standards are and assurance that regardless of who the individuals may be, there is confidence in practice and service.

While we all have different and contrasting approaches as grantmakers – and long may these differences live – there is now more consistency in expectations of each other, we talk about ‘we’. It is a cause to celebrate that there is so much we have in common, explicit features and frameworks of core business, accepted practice in the philanthropy sector.

We have specialist courses and training, for example at QUT Australian Centre for Philanthropy and Nonprofit Studies, and the Asia-Pacific Centre for Social Investment and Philanthropy at Swinburne.

We have formal and informal exchange, and professional development opportunities – conferences, plus workshops and seminars, visiting scholars and practitioners, facilitating and debate on issues of importance to us all. I cannot emphasise enough the value of colleagues’ generosity in sharing questions, gems and ideas that have been useful, and the challenges we wrestle with. If there is any one ingredient that will equip and strengthen our sector, and ensure grantmaking reaches its greatest potential in the future, I believe it is this commitment to exchange.

We have deliberate peer networks with specialist focus on how and why we give, exchanging information and transferring knowledge. The wide collection of affinity groups and special focus organisations such as the Women Donors Network, Changemakers, Woor Dungin, Jewish Funders Network and Australian Environmental Grantmakers Network – no doubt there are more. Community foundations such as the Inner North Community Foundation and the Australian Communities Foundation also make a deliberate contribution to this work.

We have more clarity than ever guiding operations and governance, with job descriptions and staff titles, explicit governance roles and responsibilities, tax legislation….. We have databases and tracking systems, grantmaking cycles, websites and, grant agreements and annual reports, all of which may differ but are easily recognised across the sector as common practice.

We have been present at the table with governments over many years, again through Philanthropy Australia, ensuring a voice to government for inquiries and legislation and preparing submissions to ensure changes are responsive to our sector.

There is a growing interest in funding partnerships and collaborations, between grantmakers and across sectors with government and business. The recent launch of the Victorian state government Guiding Principles for Collaboration between Government and Philanthropy is the most recent example of this.

Understanding our place in a civil society
Understanding the place of philanthropic grantmakers in the context of a civil society is another hallmark of our sectoral maturity. Clarity on where we fit in wider society is essential for effective engagement with governments and corporations, and to understand the collective funding and policy impact for not for profit work. It is also essential when defining relationships with the not for profit sector, and individual grantee partnerships.

Hopefully most of the mystery around the term philanthropy has been dispelled and we have moved on from a time when philanthropists could be mistaken for stamp collectors or flirts – as observed by John Prendergast (Community Trust of Southland, NZ) when noting the term sits in the dictionary between philanderer and philatelist.

A civil society is made up of three pillars – the non-profit or community sector, the government sector and the commercial sector. All three of these sectors generate money in support of not for profit work, and in each case the application of this money is influenced by the different policies, culture and accountabilities of each. There are important distinctions in the purpose of giving as a result.

Our responsibilities are grounded in the unique and creative capacity of philanthropic giving to provide funds which go beyond the concerns of government, free from accountabilities to a political constituency and votes of taxpayers; also free from the constraints of commercial business, having to raise profits and account to shareholders. This is a distinct point of leverage, a strategic place in a civil society to improve the wellbeing of humanity and the community.

There are examples of where this strategic positioning has been quantified eg in the USA in the 1980s, there were government decisions being made to shift responsibility for public housing and homelessness into the Independent sector, to be funded by the churches, welfare organisations and philanthropic sector.

Statistics show that philanthropic grants make up a relatively small percentage of income to the not for profit sector. In 2006-07, Not for Profit groups in Australia received $76.6 billion in income, with 33% of that from government grants, 30.5% income from services, and 9%, or $7.2 billion, through donations, fundraising and sponsorship. An estimated 5000 foundations in Australia are giving between half a billion and one billion dollars per annum. The philanthropic dollar may be only one in a hundred, but the influence as grantmakers is not about the scale of the dollars, so much as the way in which social investment is approached. Philanthropy can and does do more than serve as an additional source of money to be tapped, another drop in the funding bucket.

Harnessing the best of corporate thinking through philanthropy continues to be one of the great opportunities for growth and strategic giving. The trend towards ‘giving while living’ has sharpened the strategic positioning for philanthropy, bringing forward a group of intelligent and capable philanthropists from the corporate world, both in Australia and across the world. Philanthropy is rightly seen as the sixth form of investment, and giving matched with business acumen and drive can have powerful results. Peter Scanlon and the work of the Scanlon Foundation on social cohesion is just one outstanding example among many.

Another example is in the aftermath of the Black Saturday bushfires north of Melbourne in 2009. Portland House Foundation, along with Twiggy Forrest and others, moved quickly to support people in Flowerdale – listening to local people who had fought and survived the fires and wanted to get started rebuilding their community. By responding to their urgent, immediate appeal to establish their own temporary village, the Flowerdale community was able to get started and lead the rebuilding of their community. While this support was ahead of government, who carried the major responsibility for the disaster response strategy, it ensured that the community could eventually tie in with government resources as the disaster recovery was rolled out, and the Flowerdale community was hailed as one of the shining examples of resilience in rebuilding.

The optimal positioning for philanthropy is to be recognised for thoughtful and informed approaches, openness to discussion and development of ideas, and willingness to carry risk in the hope of finding solutions for some of societies’ most intractable problems. Also to be known for a capability to build rich and productive relationships with grantees, peers in the sector, government, corporations – and be capable of nimble, decisive funding partnerships. What this takes and how it works is still in the mix, another challenge continuing into the future.

Optimising the value of grantee relationships
Healthy, efficient relationships with grantees are another critical hallmark of contemporary philanthropy, where trust, mutual commitment to outcomes, and shared learning are the basis for the transaction. Philanthropic giving can only ever be as effective as the people who manage and spend the money, and how grantmakers engage with grantseekers can make or break intended outcomes. The way in which relationships are established inevitably depends on available resources, time and expertise of the grantmaker.

Research was undertaken as part of my Fellowship at Johns Hopkins International Fellows in Philanthropy Program in 1999, where a set of stereotypes of funding partnerships were identified, illustrating various levels of engagement, confidence and trust :

· Poacher & gamekeeper
· Patron and supplicant
· Social venture capitalist and social entrepreneur
· Hand in hand
· Hand in glove
· Noses in, hands behind back
· Autoteller

How relevant are these stereotypes 12 years later, either to grantmakers or to grantseekers?

Refinement of the funding relationship and advancing the quality of the relationship can be guided by this checklist of questions to grantmakers :

· Application process
Are grantmaker processes draining valuable time and resources of not for profits, chasing funding that costs them too much or that they won’t receive? What is the average percentage of applications received that are funded, and the percentage that are rejected? Can the process of applying for grants be made more lean and efficient for grantseekers?
· Communication
Are there opportunities for open communication and mutual learning while the grant is being spent? Is there an appropriate level of trust and confidence in the grant recipient as the manager of funds? Does the funding relationship build on the skill and acumen of non-profit organisations?
· Reporting and mutual learning
Can reporting on outcomes, managing problems and making mid-course corrections all be done in a timely and efficient way? How are lessons captured and built into future funding decisions?
Are funding cycles long enough for effective relationships to be built, and useful outcomes to be
delivered?

These are just a few of the questions that have led grantmakers to streamline and develop new approaches to the funding relationship. As executive with the Portland House Foundation, and also as a board member with the Inner North Community Foundation, it has been possible to strengthen the grantee relationship in a number of ways without requiring excessive demands on time and resources. In fact it is to the relief of all involved that there are now established ways of exchanging information and monitoring progress that are nimble and time efficient for both the grantmaker and the grant recipient.

Learning about and understanding our impact
Surely the questions any grantmaker would want to be able to answer is “Did we get the
results we intended from our funding?” “Did we add value to people’s lives and what did that look like?” “Are there ways we can improve on what we have been doing?” This challenge to know what impact grants have and to learn from what has been achieved is possibly the most significant, faced by both grantmakers and grant recipients. In order to arrive at answers, there must be :
· in-depth information available on grants given
· a logic and method for sorting and classifying this information
· analysis to understand outcomes and identify lessons learned.

Harking back to history again, in the late 1980s and early 1990s, there were early efforts to bring together information on what was being funded with philanthropic dollars in Australia, led by the Australian Association of Philanthropy with the Reichstein Foundation, the Stegley Foundation, the Myer Foundation, ANZ Trustees and the Helen Schutt Trust, (now the Helen MacPherson Smith Trust). As colleagues we gathered information on what had been achieved with funding, and produced the earliest annual reports, to promote funding outcomes to the wider public. This involved follow up with grant recipients, many of whom were delighted to be asked about their outcomes and achievements, and to know that their work would be noted and promoted by grantmakers for the first time. Since this early pioneering, annual reports from grantmakers have become accepted common practice, and the wave of new communication technologies has brought with it websites and electronic media, providing a rich and rewarding window on work done by Not for Profits with philanthropic support.

As this public information started to build, our early group of pioneers also discussed the possibility of developing a data set and common language among grantmakers, to describe individual and collective philanthropic granting in Australia and identify the funding trends. This would provide valuable information on the fields of interest, target groups to benefit, size of grants, geographic location and types of structure funded, and show priorities and gaps. These first efforts to codify giving were problematic, because technology was fairly undeveloped, the task was time intensive and possibly costly, and it was difficult to agree on a common coding and classification system that made sense and worked for everyone:

The challenge remains for the philanthropic sector to be able to aggregate comprehensive and consistent information about what is funded and for whom, and to speak collectively about funding trends, gaps and priorities. When this is achieved, it will also be a significant contribution to transparency of giving. The work of Glass Pockets, a website created by the Foundation Center in the USA, advocates greater transparency in philanthropy, and illustrates the value and some of the current thinking behind public information and accountability for grantmakers. http://glasspockets.org/about/

As the amount of public information on philanthropic activity has grown, so too has interest from researchers, policymakers and Not for Profits. This interest has sparked a call for grantmakers to move to the next frontier of understanding the impact of funding, through monitoring, assessment and evaluation. Grantmakers have responded in a variety of ways :
· Establishing internal data collection systems
· Contributing to collective efforts to gather and share information with peers
· Building in requirements that projects be evaluated as part of the funding agreement
· Funding grant recipients to undertake evaluation and monitoring, to clarify the outputs, outcomes and opportunities generated from their work
· Hosting opportunities for grantmakers and grantseekers to share information and lessons learned
· Contributing to formal research and dissemination of information
· Undertaking internal reviews and strategic analysis of grantmaking activity, and disseminating this information

The challenge for the future regarding learning is to remain curious and be willing to keep asking questions, to understand the tools and systems that can be applied, and work together to share and add value. The benefits accruing are that we remain agile and informed as organisations and as a sector, equipped to move with the economic and social changes that are part of our landscape and capitalising on the best use of every dollar invested.

Working with and being led by the next generation
The last of the hallmarks in philanthropy to note is the challenge to ‘lift as we climb’ with generations coming along behind, to ensure that creativity and leadership by younger people is valued and celebrated in philanthropy. Recruiting and involving young people is an obvious priority for many family foundations, and also boards and staff teams seeking to be representative; to build with new ideas and fresh perspectives; and to ensure smooth succession in governance and operations.

Barriers to younger people engaging with philanthropy can be juggling time across a myriad of activities such as study, travel, starting careers and earning a living, establishing personal relationships, sometimes parenting, and enjoying social networks. In addition to these ‘time of life’ issues, opportunities for involvement with philanthropy may not be relevant or attractive to younger people. There must be open doors for direct involvement of young people with grantmaking, appointment as board members and advisors, pursuing personal not for profit interests and linking these interests with funding. Most important is ensuring there is open space to bring in innovation and ‘new-style charitability’ a term used by a young social entrepreneur,
Will Dayble who runs a company called Squareweave in Melbourne.

Will is one of many in his generation who see giving as something everyone can do, with small amounts of money and judicious use of time. Will is investing serious time to develop web based applications which are the new understood method for innovations in giving, making everything around charity more efficient and cost effective. Crowd funding, promoting social enterprise and better targeted international giving are just three examples of new approaches to giving, engineered by young people determined to find ways to keep building a better world. All I can say is watch this space, listen to their new ideas, learn their language, and follow their lead as the next generation put their stamp on philanthropy. ….. the sky is the limit.

About the author: Also Senior Fellow 1999, Johns Hopkins International Fellows in Philanthropy, Board Member, George Hicks Foundation, (Melbourne), Deputy Chair, Inner North Community Foundation, (Melbourne), Grants Adviser, Merrin Grenet Foundation (Melbourne), Board member, Victorian Foundation for Survivors of Torture (Melbourne), Board member, Fellowship for Indigenous Leadership (Melbourne) and Fellow of Leadership Victoria (Melbourne)