Investors’ small, idle shareholdings can create a nice cashflow to the community sector, writes Simon Mumme.
Freecycle, a worldwide consortium of 4593 online groups, connects people on the verge of throwing out all kinds of functional “stuff ” to others looking for the same items. The non-profit organisation’s rapid growth since its 2003 inception proves that one person’s trash can become another’s perfectly good steal.
A similar principle underpins ShareGift, a nonprofit providing investors with the opportunity to cash in small shareholdings, free of brokerage fees, and donate the sums to a nominated charity. Initially developed in the UK by Claire MacKintosh, a former listed and private markets fund manager, the mechanism has been adapted to markets in the US, New Zealand, and now Australia.
ShareGift Australia estimates that up to $80 million in idle, uneconomic shares lie within domestic investors’ portfolios. These parcels usually have a market value lower than $500 and are often not realised since brokerage fees would take out much of the profit.
But with corporate cooperation, ShareGift can sell many of these shares and donate all proceeds to the community sector. Stephen Mills, chief executive of the non-profit, says the full value of a $200 parcel of shares in National Australia Bank (NAB), a company participating in the venture, can be passed to the non-profit sector, while the shareholder receives a $93 tax deduction.
“ShareGift is really the only way of enabling investors to recognise the value of these uneconomic shares – and they get free brokerage and can nominate a charity,” Mills says.
“The only inhibitor to selling these shares and donating the cash is the cost of brokerage, and ShareGift eliminates that.”
The Australian ShareGift operation has been driven by Chistopher Thorn, head of philanthropic services at Goldman Sachs JBWere (GSJBW). After hearing MacKintosh speak about the UK operation some years ago, he approached the Australian Stock Exchange (ASX) with a proposal to set up a domestic mechanism. Mills, then general manager of corporate relations at the bourse, soon became involved.
Roughly two years later, in June 2007 and with Mills as CEO and Thorn as chairman, ShareGift Australia ran a pilot. GSJBW provided free brokerage, and NAB was the first corporate participant, notifying shareholders of the opportunity to donate. Approximately 20,000 investors took it up, donating $11,500. Since then, Macquarie Private Wealth has signed on as another facilitating broker and the ASX as a second participating company. By July 2008, ShareGift had made three quarterly distributions, totalling $30,000.
To use the mechanism, investors in participating companies fill out a form instructing ShareGift to sell the stocks. The non-profit then passes the proceeds to charities and writes tax-deduction receipts for shareholders. At present, the nonprofit is partially funded by the GSJBW and NAB foundations.
Thorn says ShareGift generates a “win-winwin” outcome for shareholders, participating companies and the community. For companies, the program can reduce the costs of communication as the number of minor shareholders decreases, and can help them become more aligned with corporate social responsibility programs. For shareholders, it presents an easy avenue for donating to charity. To date, 22 charities, including Oxfam Australia, World Vision Australia, The Smith Family and the Australian Cancer Research Foundation, have received funding from ShareGift.
The largest donation from the July 2008 distribution – $11,500 – was directed to the United Nations Children’s Fund (UNICEF). Earlier this year, UNICEF ran a campaign telling its supporters how to nominate it as a recipient of ShareGift money. This is one of three ways that ShareGift is spreading its message, Mills says. The other man methods are: generating media coverage; and recruiting more participating companies, which can then include a letter introducing ShareGift and a donation form within regular mail-outs to minor shareholders, such as notices of annual general meetings.
While expanding the program is ShareGift’s immediate aim, the non-profit also aspires to develop a dividend donation program.
“There are a few dividend donation schemes in existence, but none have quite the model that we would like. They have a very specific set of eligible charities,” Mills says.
While the ANZ dividend donation program supports the bank’s 30 community partners, and the Investing in Hope and Dividends Defeating Diseases programs support specific hospital fundraising organisations, ShareGift wants to provide donors with some sway over who receives the money.
“We want to maximise the opportunity for shareholders to recommend charities of their choice,” Mills says.
“Many donors don’t nominate charities, but we support the charities that are recommended to us by the donors. Some shareholders already have relationships with charities.”
Freecycle, a worldwide consortium of 4593 online groups, connects people on the verge of throwing out all kinds of functional “stuff ” to others looking for the same items. The non-profit organisation’s rapid growth since its 2003 inception proves that one person’s trash can become another’s perfectly good steal.
A similar principle underpins ShareGift, a nonprofit providing investors with the opportunity to cash in small shareholdings, free of brokerage fees, and donate the sums to a nominated charity. Initially developed in the UK by Claire MacKintosh, a former listed and private markets fund manager, the mechanism has been adapted to markets in the US, New Zealand, and now Australia.
ShareGift Australia estimates that up to $80 million in idle, uneconomic shares lie within domestic investors’ portfolios. These parcels usually have a market value lower than $500 and are often not realised since brokerage fees would take out much of the profit.
But with corporate cooperation, ShareGift can sell many of these shares and donate all proceeds to the community sector. Stephen Mills, chief executive of the non-profit, says the full value of a $200 parcel of shares in National Australia Bank (NAB), a company participating in the venture, can be passed to the non-profit sector, while the shareholder receives a $93 tax deduction.
“ShareGift is really the only way of enabling investors to recognise the value of these uneconomic shares – and they get free brokerage and can nominate a charity,” Mills says.
“The only inhibitor to selling these shares and donating the cash is the cost of brokerage, and ShareGift eliminates that.”
The Australian ShareGift operation has been driven by Chistopher Thorn, head of philanthropic services at Goldman Sachs JBWere (GSJBW). After hearing MacKintosh speak about the UK operation some years ago, he approached the Australian Stock Exchange (ASX) with a proposal to set up a domestic mechanism. Mills, then general manager of corporate relations at the bourse, soon became involved.
Roughly two years later, in June 2007 and with Mills as CEO and Thorn as chairman, ShareGift Australia ran a pilot. GSJBW provided free brokerage, and NAB was the first corporate participant, notifying shareholders of the opportunity to donate. Approximately 20,000 investors took it up, donating $11,500. Since then, Macquarie Private Wealth has signed on as another facilitating broker and the ASX as a second participating company. By July 2008, ShareGift had made three quarterly distributions, totalling $30,000.
To use the mechanism, investors in participating companies fill out a form instructing ShareGift to sell the stocks. The non-profit then passes the proceeds to charities and writes tax-deduction receipts for shareholders. At present, the nonprofit is partially funded by the GSJBW and NAB foundations.
Thorn says ShareGift generates a “win-winwin” outcome for shareholders, participating companies and the community. For companies, the program can reduce the costs of communication as the number of minor shareholders decreases, and can help them become more aligned with corporate social responsibility programs. For shareholders, it presents an easy avenue for donating to charity. To date, 22 charities, including Oxfam Australia, World Vision Australia, The Smith Family and the Australian Cancer Research Foundation, have received funding from ShareGift.
The largest donation from the July 2008 distribution – $11,500 – was directed to the United Nations Children’s Fund (UNICEF). Earlier this year, UNICEF ran a campaign telling its supporters how to nominate it as a recipient of ShareGift money. This is one of three ways that ShareGift is spreading its message, Mills says. The other man methods are: generating media coverage; and recruiting more participating companies, which can then include a letter introducing ShareGift and a donation form within regular mail-outs to minor shareholders, such as notices of annual general meetings.
While expanding the program is ShareGift’s immediate aim, the non-profit also aspires to develop a dividend donation program.
“There are a few dividend donation schemes in existence, but none have quite the model that we would like. They have a very specific set of eligible charities,” Mills says.
While the ANZ dividend donation program supports the bank’s 30 community partners, and the Investing in Hope and Dividends Defeating Diseases programs support specific hospital fundraising organisations, ShareGift wants to provide donors with some sway over who receives the money.
“We want to maximise the opportunity for shareholders to recommend charities of their choice,” Mills says.
“Many donors don’t nominate charities, but we support the charities that are recommended to us by the donors. Some shareholders already have relationships with charities.”
