Government Philanthropy Rule Changes Questioned
Tuesday, 1st March 2016 at 11:27 am
A new directive from the Victorian Government has the potential to significantly impact endowment fundraising by charities that are also state government agencies, according to a Melbourne fundraising consultant.
Lauren Vertigan from AskRIGHT, a national fundraising consultancy and research organisation, said that philanthropists “should be outraged” by the new directive.
The directive enacts the government’s Treasury and Investment Policy by which “public sector agencies are required to undertake all borrowings, investments and financial arrangements with TCV (Treasury Corporation of Victoria) or VFMC (Victorian Funds Management Corporation)”.
Vertigan said the policy’s potential impact could not be underestimated.
“Philanthropists care about how their donations are invested and managed, and, in my experience, they want to ensure their donated funds stay far away from government hands,” Vertigan said.
“While public sector agencies can apply to the Treasurer for an exemption, their application must have the support of their department’s minister. Even if exemption is achieved, until this time it is understood the direction is mandatory.
“If entities that fundraise are unable to achieve exemption, their ongoing endowment fundraising efforts will be seriously challenged. Their current endowment donors – many who have given on the premise of a different investment – are likely to be confused, frustrated and angry.
“So too may be trustees of existing endowment funds, as the directive may conflict with their trustee obligations.”
Vertigan said it was understood that many organisations were currently in “serious discussions” with their governing bodies and state government departments about the new policy.
“Australians usually like to see immediate impact for their philanthropy. It is a big decision to contribute to an institution’s endowment, rather than get immediate impact,” she said.
“Enforcement of this policy has the potential to change behaviour for major donations and bequests.
“It is still early days – let’s hope that the relevant ministers’ wake up to the dire ramifications this change of investment policy could have on some of our state’s most exciting and important institutions.”
The Victorian Department of Treasury and Finance said the objectives of the policy were “to ensure that treasury risks are effectively identified, assessed, monitored and managed by public sector agencies, and that the strategies adopted by public sector agencies are consistent with the overall objectives of the government”.
Read Lauren Vertigan’s full reaction on the AskRIGHT blog.