Salary Survey 2019
MEDIA, JOBS & RESOURCES for the COMMON GOOD
NEWS  |  Finance

The ‘hidden gem’ of philanthropy


Tuesday, 19th March 2019 at 8:44 am
Wendy Williams
Sub-funds are being hailed as “Australia’s best kept secret”, in light of a new snapshot providing the first data on sub-funds in Australia.


Tuesday, 19th March 2019
at 8:44 am
Wendy Williams


0 Comments


FREE SOCIAL
SECTOR NEWS

 Print
The ‘hidden gem’ of philanthropy
Tuesday, 19th March 2019 at 8:44 am

Sub-funds are being hailed as “Australia’s best kept secret”, in light of a new snapshot providing the first data on sub-funds in Australia.

Until now, there has been no data available about the size of the sub-fund sector in Australia.

In a bid to address this gap, Krystian Seibert of the Centre for Social Impact at Swinburne University of Technology conducted a survey of sub-funds – a form of “giving account” which sits within a larger public foundation.

The findings, based on responses from 18 providers which between them manage nearly all the sub-funds in Australia, showed there are at least 1,995 sub-funds in Australia, holding assets of just over $1 billion.

Seibert told Pro Bono News there were diverse ways that people could structure their giving, and establishing a sub-fund was a convenient option.

“But until now we’ve not known how many there are in Australia, nor how much assets they hold and how much they grant out,” Seibert said.

“The findings will add to the growing body of data we have on philanthropy in Australia, and I hope to build on the survey when I next undertake it in 2020 and possibly include a donor perspective with insights about why they chose to establish sub-funds.”

Donations into sub-funds in 2017-18 amounted to just under $123.5 million, with the snapshot indicating “quite a strong flow of donations into sub-funds”.

Compared with private ancillary funds (PAFs) there are more sub-funds in Australia, however, based on the most recent data from 2015-16, PAFs hold considerably more assets ($8.3 billion) and also distribute more through grants ($457 million).

John McLeod from JBWere’s Philanthropic Services told Pro Bono News sub-funds were a “hidden gem” that had fallen under the radar.

“Sub-funds have been around a lot longer [than PAFs], but there really hasn’t been a good enough spread of the information and knowledge about them to have it in people’s minds that it’s an opportunity for us to do our philanthropy in a way that perhaps suits our circumstances better,” McLeod said.

“We only have to look to the States to see the huge size they are over there… and that, as yet, we just don’t have that to that extent here.”

In the United States, donor-advised funds (DAF) grew by one third in 2017, surpassing $100 billion for the first time.

McLeod said one of the reasons sub-funds were not more popular in Australia was a “marketing issue”.

“In the States, sub-funds and community foundations have been around for a long while but it wasn’t really until the early 90s that one of the main financial institutions over there got into that… and really promoted it. They did a very professional, widespread, ‘let’s spend money promoting this concept’, and that benefited everyone,” he said.

“It really does come down to marketing, it’s not that we need to change any of the laws or anything like that, they are there, they work. We just need to tell the broader population that it exists.”

He said peer example was an important way to get the message out.

“That’s how PAFs are going to get to 30,000. It’s the 1,700 that are there, talking about it to their peers and then they’ll say ‘that makes sense’. Same with sub-funds, it’s people who have got them talking about them more, it’s the sub-fund organisations, so the community foundations, organising even more presentations, getting it into the press and normalising it,” he said.

According to the snapshot, given the benefits of sub-funds, Australia could see strong growth in their popularity over time – especially if they are promoted more widely.

Maree Sidey, CEO of Australian Communities Foundation, agreed and said the market for sub-funds was growing in Australia, with ACF bringing on 30 to 40 new sub-funds every year.

But echoing McLeod’s sentiment, she said it was still not “exploding” as it had in the US, due in part to a lack of awareness around what a DAF does.

She said sub-funds were “Australia’s best kept secret”.

“We need to ask the question about why more people aren’t told about it at the decision-making point. And how we are going to remedy that is a challenge to the sector,” Sidey told Pro Bono News.

“Most people now who want to be philanthropic and want to do structured giving are aware of the benefits of a PAF. But they don’t know that there is an alternative.

“So the biggest challenge in Australia is just getting out information about the fact that there’s two options. And to encourage people like professional advisers to have a better conversation with their clients about the pros and cons of a PAF versus a DAF.”

According to the snapshot, sub-funds have a number of advantages over PAFs, including being easier and faster to establish, and having the donor not needing to concern themselves with holding board meetings and making sure regulatory requirements are met. They also don’t need to focus on managing the investment of assets, which is taken care of by the provider.

“They are particularly attractive to donors who want to focus first and foremost on giving,” the snapshot said.

Sidey said it was “horses for courses”, but she highlighted a concern around buyer’s regret, if people were not given a choice of options.

“So we meet a lot of people who established PAFs and wish that they hadn’t because of the time it takes and the compliance burden to manage your own PAF, and I think what I call ‘PAF-fatigue’ is going to become a growing thing in Australia where people either want to transfer their PAF to a donor advised fund or they just want to close it down because of the administrative burden,” she said.

“I think if there was a more sophisticated conversation at the point of establishment where people were run through the benefits of either a PAF or a DAF, people would make wiser choices.”

Sidey said it was important advisors did not distinguish between the two vehicles based solely on the amount of funds.

“What we don’t want [advisors] to say is that if you’ve got funds over a certain size then open a private foundation and if you’ve got funds under a certain size open a donor-advised fund, because that’s completely the wrong way to approach it,” she said.

“What we would prefer them to say to people is what do you want to do with [your] giving, what are you interested in, what do you want to be in control of and what don’t you want to be in control of.”

A second CSI Swinburne Sub-fund Survey is set to be conducted in the second half of 2020.

The snapshot is available here.


Wendy Williams  |  Editor  |  @WendyAnWilliams

Wendy Williams is a journalist specialising in the not-for-profit sector and broader social economy. She has been the editor of Pro Bono News since 2018.


Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?

Get in touch at news@probonoaustralia.com.au

Get more stories like this

FREE SOCIAL
SECTOR NEWS

Write a Reply or Comment

Your email address will not be published. Required fields are marked *



YOU MAY ALSO LIKE

What philanthropy wants: A more giving Australia

Sarah Wickham

Tuesday, 16th April 2019 at 8:05 am

Chinese giving grows to $33 billion

Luke Michael

Friday, 12th April 2019 at 3:33 pm

Dear baby boomers: Australian philanthropy needs your help

Krystian Seibert

Friday, 5th April 2019 at 3:58 pm

Philanthropy's rainbow problem

Caitriona Fay

Tuesday, 26th March 2019 at 8:54 am

POPULAR

‘They don't see eye-to-eye’: Leadership turmoil engulfs the ACNC

Luke Michael

Tuesday, 16th April 2019 at 8:24 am

Disability groups call for conflicting commissioners to step down

Maggie Coggan

Monday, 8th April 2019 at 4:47 pm

NFPs struggling to measure their impact

Luke Michael

Thursday, 11th April 2019 at 4:33 pm

People with severe mental illness left behind in NDIS transition

Luke Michael

Tuesday, 16th April 2019 at 4:25 pm

Espresso Martinis and Impact
pba inverse logo
Subscribe Twitter Facebook

Get the social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!