Turning Home Sales into Philanthropy
10 August 2016 at 9:01 am
A for-purpose real estate agency is giving mum-and-dad home sellers the opportunity to become philanthropists, writes Ellie Cooper in this month’s Executive Insight.
Businesswoman Belinda Bentley questioned why most people wait until the end of their careers to engage in philanthropy instead of finding a way to support causes early on.
She left her job in property transactions and developments to start Radley Property, along with fellow director Michael Radovnikovic, an agency that turns every sale into a donation through the “20 per cent pledge”.
In this month’s Executive Insight feature she talks about her change in mindset, how she modelled a sustainable, for-purpose business, and the importance of helping everyday Australians give back.
Why did you start up Radley Property?
We started our journey of developing Radley Property about two years ago, we got involved with Philanthropy Australia’s New Generation of Giving program. I was working my corporate job and questioning giving back. Some of my mentors were already philanthropists but they were in their 60s and 70s and I thought, “Well why can’t you give back now, while you’re in the middle of your career, why can’t you start giving back now?”
So we got involved with Philanthropy Australia’s program and I started to give back, in terms of my time and my talent, to arts organisations and property and Not for Profits. I work with a community housing provider, I give back my time and my understanding of property and development generally.
That then evolved to a point where, I was working in a corporate job in transactions, I was questioning why the real estate industry did not have many social enterprises and how I could use the knowledge and the networks that I had in the industry to build a business that could have a social change. Over that two year period I had become familiar with various different people who were doing social enterprises and I thought well why couldn’t you build a property business that has a social purpose.
And from there I left my job, so that was 12 months ago, and started to slowly build the model, which has evolved in that initially only the business was going to give back, but then I thought it was very important that we engaged with our clients to provide a platform where they had the opportunity to give back. That’s why there’s a split with our pledge – 10 per cent is the business investing into the two Not for Profits that we have chosen [Room to Read and the Australian Indigenous Education Foundation], and the client then deciding where they would like to donate to.
We want people to start thinking about engaging with philanthropy and thinking about the causes that they care about. And we think a lot of the time people don’t have that opportunity [because of] constraints, so if we provide this platform, which is a simple platform for selling property with us and doesn’t affect their bottom line, then maybe they can think about the causes that they care about, having the conversations with the various Not for Profits. Then maybe, in turn, they might then assist in the future… with their time and their talent, and also potentially financially as well. That’s the main driver or motivating factor – to provide people with a platform to be able to give back simply by selling property with us.
How does the business model and pledge work?
It pretty much is a normal real estate transaction. We charge a commission that obviously has to be competitive with the market, and the pledge simply works by we pledge 20 per cent of our commission, and… we speak to the clients about which charity they would like to donate their portion to.
Before the settlement happens we give to the two that we’ve chosen. So the money’s held in trust on exchange, and then we give to our two Not for Profit organisations and then we make a [tax deductible] donation on behalf of the client in their name for the charity or organisation they’ve chosen to support.
So it’s quite a simple model, we are able to do this because we have chosen not to have a shopfront. Traditionally in real estate you’ll have a retail shopfront, and we think that technology allows us not to have such a large overhead, so that we can give back the 20 per cent.
Technology has really changed how real estate operates and how it’s evolved over time, and so you don’t really need to rely on a shopfront anymore when you’ve got apps and online platforms that sell real estate and contact via email etc.
How did you set up the business?
We went about setting it up by taking some time to do due diligence with the organisations that we, as a business, wanted to support. We had a few organisations in mind and in various sectors, and we did some due diligence on them, spoke to some of them. It’s funny… you feel like you understand a particular organisation, but you actually feel a bit differently when you’ve dug a bit deeper or spoken to someone.
And so the due diligence period probably took about six to eight months, but prior to that period I actually just gave my time first to various organisations and helped them out in terms of strategy and realised the biggest issue is funding… and I realised when I looked back in my own industry I thought how can my own industry help with the funding.
It’s taken a long time to build that model and think about not just from the perspective of being a business owner – and we want the business model to reflect our social values – but also how do we engage the clients in the act of giving back through selling property.
The model has evolved and changed over time, and we’ve only now just been comfortable to launch it, but it has taken some time… I guess to be comfortable with the commitment that we are pledging, to make sure that it’s sustainable long term. So, for example, it couldn’t be 80 per cent of our commission because we needed to have a sustainable businesses so it wasn’t only viable for six months. To give you some context, we started at 50 per cent when we were modelling… and putting the thought process together, and realised that’s not really sustainable. So we decided that 20 per cent was, and we’ve very much a big believer in business can be sustainable but can you can be profit-for-purpose as well. It’s been a bit of a process but we’re here.
Who are your target clients?
Being mobile we’re quite flexible with the sectors, but our initial purpose or drive for the business was to engage the retail, mums and dads, everyday people, with the opportunity to give back. In the next 12 months we’ll be targeting that retail market… who might not normally have that opportunity at such [high] levels of money, and to think about the causes.
More broadly, obviously the larger the transaction or the greater the volume of transaction, the more impact we can make. We’re a company that’s driven by impact and we would love to work with commercial landowners or developers with off-the-plan sales because the impact is greater.
But at the same time our purpose was to allow everyday people to engage in philanthropy and to realise that philanthropy is not just for high-net worths, you can give back by engaging with social businesses. That in turn could start a conversation with a Not for Profit, and then you realise, “I have talent or I can give you some of my time as well,” but I think until you have that conversation starter… some people don’t realise they actually could be of greater assistance to some Not for Profit organisations.
Do you think your business model will be successful?
We’re very simple as a model, and really our drive is just to keep it simple and give back through selling with us. I’m not the type of person to overcomplicate it.
We’ve got on a big journey of questioning quality of life for ourselves as business and career people. This has been a big journey to get here, but we really had to step out of the darkness to actually say, “Right, we’re going to launch this product,” and it’s up to the market now to tell us how it’s received.
It’s a little bit daunting. Fingers crossed [it goes well]. I just looked at the stats… the median dwelling price in Sydney is $775,000. An agent will charge 2 per cent commission. And just rough numbers based on that, our commitment, just in one one transaction, based on that 20 per cent pledge, we’re giving… Not for Profit organisations $3,100. The more and more you do, the more people can start to give back on a very simple platform.