More NFPs Turn to Philanthropic Trusts for Funding
1 October 2015 at 12:38 pm
Grant and donation requests from individual charities and Not for Profits are flooding philanthropic trusts in a bid for alternative funding where government cutbacks have hit hard.
Equity Trustees, which distributed more than $70 million in the 2015 financial year on behalf of the charitable trusts and foundations, said philanthropists were being asked to fund gap-filling, second level funding more than ever before.
Equity Trustees manages more than 450 charitable trusts and has over $1.9 billion in charitable trust monies under management. Their annual distributions were boosted through the merger and subsequent integration of the ANZ Trustees business during 2015.
Equity Trustees General Manager of Philanthropy, Tabitha Lovett, told Pro Bono Australia News that while interest in philanthropy was expanding, grant recipients’ needs were also changing.
“Understandably, we are also seeing more grant and donation requests from the charity and Not for Profit sector looking for alternative funding where government cutbacks have resulted in reduced funding,” Lovett said.
Lovett said the Trust funds were receiving an increasing number of requests from start up projects that were successful where the government would normally pick up the ongoing funding.
She said Equity Trustees and other philanthropic trust managers are taking a multi-year view on their work, rather than making annual “one off” distributions.
“This is also a unique opportunity for philanthropists to look for system supports for ongoing funding,” she said.
“Trustees are more sympathetic to project investments with good outcomes and are concerned that these projects shouldn’t be left to flounder.”
Lovett said more individual welfare organisations were turning to philanthropists for added funding to keep staff in place and leases on building extended for ongoing projects.
In particular, she said individual disability service providers who were previously government funded are now seeking philanthropic funds to help them prepare for the introduction of the National Disability Insurance Scheme.
“Many NFPS are not ready to compete for service provision and a lot of them have applied for funding to help with the preparation and transition to the NDIS,” she said.
“Philanthropists are now trying to collate that experience into a program where they can fund this type of assistance on a wider scale rather than in a piecemeal fashion.”
Lovett said co-partnering and funding an organisation like Justice Connect to provide resources for transitioning organisations was one way to assist NFPs more broadly.
In the last financial year 44 per cent of the total distribution, $31 million, made by charitable trusts and managed by Equity Trusts went to hospitals and medical research, and much of this was by way of an annual grant as part of an ongoing program.
“Researchers need to have confidence that funds will be available, not just for one year but for the anticipated life of a research project,” Lovett said.
“Where the terms of the foundation allow, and after due diligence and risk assessment, we endeavour to provide this longer term support.”
She said another approach that has evolved in recent years is for charitable foundations to provide seed grants or no-interest loans to enable an organisation to set up a community social enterprise program that will become self-funding.
“This approach also involves another innovation, working with other philanthropic and government organisations to provide sufficient capital and manage risk for such programs,” she said.
Lovett said the category that received the largest distribution from the charitable trusts managed by Equity Trustees, at over $31 million, was health and medical research.
Community welfare projects were the second largest at $16.6 million and education grants at $10.5 million followed, with the area of aging increasing to over $1.2 million.
“The challenge for philanthropists is that while their funding dollars can never compete with government funding they are now being asked to fill the gaps,” Lovett said.
Another major Australian trustee company, Perpetual, has more than 1,100 charitable trusts and endowments worth $2.1 billion under management and offers a once-a-year funding round which opens on October 27, 2015. In the last financial year Perpetual distributed $83 million in grants.
Perpetual’s National Manager of Philanthropy, Caitriona Fay, told Pro Bono Australia News the number of calls and questions they received from the organisations working in international aid were notable, due to significant cuts from the Federal Government’s aid budget.
“We are noticing and we are hearing that a lot of international organisations are essentially preparing for the impact of the reduction in that field,” Fay said.
“That’s where we are particularly feeling the heat. And it’s a sector obviously where every resource is incredibly precious in the developing world.
“So we are certainly looking to that sector and trying to understand and inform our philanthropists around what the reduction in the Australian aid budget is going to mean for a lot of delivery agencies working particularly in Africa and a number on the Pacific region.”
Perpetual said that the issue of long term funding was a rethink for the philanthropic sector as a whole .
“If we genuinely want to have impact in areas that are truly wicked problems then we need to have the stomach to commit for the longer term,” Fay said.
“We also need to consider whether or not a project by project approach to funding, that is either the Government’s approach or the foundation approach to funding, is problematic Are we better off considering investing in the core of an organisation to actually make organisations more effective and efficient as opposed to running rulers across individual projects and forcing Not for Profits through multiple hoops?”
Fay said their approach with clients has been to find quality organisations and back them into making great calls about where their resources are required.
“It’s another lens the philanthropic sector needs to apply to our approach to giving as well as the lens that we apply to assessing organisations who are looking for funds,” she said.
Earlier in 2015 Perpetual announced its inaugural IMPACT Philanthropy Partnership program, in which eight Not for Profit organisations received a total of $6.2 million.
Perpetual said each organisation would receive a grant of up to $1 million, funded by its philanthropy clients, to be used over one to five years.
The IMPACT Philanthropy Partnership grants fund varied programs focused on legal counselling, medical research, youth education and agricultural advancement, as well as technology-enabled community health and rehabilitation services.