Conservative Boards See NFP Share Offer Fall Short
7 July 2015 at 12:20 pm
An historic share offer by one of Australia’s largest consortia of Not for Profits, Community 21 Ltd, has closed, raising just three-quarters of a million dollars – falling significantly short of the $4 million dollars originally outlined in the prospectus.
And Community 21 says conservative Not for Profit Boards are to blame, in a perfect storm of funding uncertainty.
The original Community 21 share offer aimed to raise up to $4 million in capital to develop new finance pipelines for social impact projects, strengthen the Not for Profit sector’s financial sustainability and reduce reliance on Government funding. At the close of the offer on July 1, Communty 21 reported the offer had raised $742,000.
“We’re glad we’ve raised this substantial sum in such a climate of uncertainty for Not for Profits. When you are a group of Not for Profits trying to match a bank it puts the pressure on,” Executive Director, Peter Quarmby said in announcing the result.
“We appreciate that there has to be a high level of due diligence and we didn’t go to the market with any other expectations that the offer would be looked at from the investment point of view and that it was in the best interests in the sector,” he told Pro Bono Australia News.
However Quamby said Community 21 had been hopeful that boards would have looked at this as a deeper investment in the sector itself.
“I guess we were hoping that collectively the sector would be taking some responsibility for its future.
“We know that the world is changing around us, we know that funding models are changing, we know that demand is increasing on the sector and that’s where (unless we) invest in ourselves and find new tools and new models to finance our future then I think we are going to find ourselves in a difficult place.”
Quamby said he wasn’t really surprised by the level of conservatism of some Not for Profit Boards but he was hoping that there would be a more of a shift where organisation would be standing up to invest more in their own future.
“I guess what we found was that there was a huge amount of interest but I think what we came up against was that almost like the perfect storm where there was such a high level of uncertainty in the sector," he said.
“With delays in funding rounds and not knowing which way Government was going to jump on certain things, and being in the midst of the employment services tender, it meant that basically boards were I think going into lockdown.
“The sad thing about that is we believe this was the very time that Boards should have been looking at, and organisations themselves should have been looking at, because of the uncertainty which is not going away, we need to be investing in ourselves.”
Quarmby said most of the capital raised will continue the Not for Profit sector’s longstanding 50:50 partnership with Bendigo Bank, and be injected into the crowdfunding and banking platform act. launched late last year by Community Sector Banking.
“After being launched as a world-first, the act. platform has been warmly received with more than half of its initial projects meeting (and in some cases exceeding) targets within the allotted time.”
He said $600,000 in the funds raised was matched dollar for dollar with Bendigo Bank for a total of $1.2 million.
“And I guess we are delighted that a number of new organisations have come on board or have lifted their heads above the parapet and said yes we need to do this and have given us the capital to proceed to the next stage.
“I would image our board will continue to capital raise into the future because there’s a great deal more that we have to do but hopefully with the success we have had so far albeit not as great as we first would have liked we can continue to build on that now.
“Its not good enough to expect that we leave this to Government or the private sector. We are too big with $75 billion dollars a year running through the sectors fingers and we are too big to say we don’t do that stuff…well we have to.
"We will look back and look at what worked and what elements didn’t work and refresh and go again."
Quamby said the share offer added 18 new leading Not for Profit shareholders to the fold, and three foundation shareholders increased their holding.
“In meantime we will be getting to know our new shareholders and working with Community Sector Banking on many exciting projects such as a social impact fund, act. and an affordable housing bond," he said.
“Some of our newest shareholders have been customers of Community Sector Banking for substantial periods of time and they were itching to get involved."
In April Community 21 announced shares had been issued to 21 Not for Profit investor organisations in the initial $4 million capital raising campaign.
That milestone meant the NFP consortium had hit the minimum subscription level required to move into its next phase of capital raising and issued shares to the Not for Profit investors including large charities such as the Benevolent Society, Australian Conservation Foundation, National Shelter and Jobs Australia.