“Emerging philanthropists” target the roots of social problems, writes Simon Mumme.
Some call it the golden age of philanthropy. It was heralded by the donations of super-rich ‘billanthropists’, Bill Gates and Warren Buffet, who committed a combined $US61 billion to The Bill & Melinda Gates Foundation in 2006. In Australia, giving has been nowhere near as grand, but a progressive form of philanthropy, known as strategic or transformational giving, has taken root among a small proportion of high-net worth people.
Moving on from responsive cheque-writing and posthumous bequests, and often involving specialised trust vehicles and guidance, it marks the dawn of a new era of philanthropy.
Its proponents are the so-called emerging philanthropists, who target specific social problems and seek close involvement with projects aiming to fix them. Unlike earlier philanthropists, who provided funding and let charities carry out their work privately, the new philanthropists demand more transparency from charities and greater control over how their money is used in return for their benevolence.
We all give to the community sector – some of us from a sense of responsibility or religious belief, through social fundraisers or by participating in staff giving or volunteering programs.
Kristi Mansfield, founder of Greenstone Group, an Australian philanthropy advisory firm, says the traditional, responsive forms of giving usually address the effects of deep-rooted social problems. While there is need for this mainstream, crisis-healing philanthropy, the disciplined, transformational form of giving targets the causes of social and environmental problems. It is also the more difficult form of giving, requiring sustained effort and more money.
Donors wanting to help engender this kind of meaningful social change want to see their money deployed effectively, but usually require help to craft a gifting strategy and to find appropriate projects to support.
Enter financial planners. A number of practices catering for high-net-worth individuals now offer services to new philanthropists, providing tax-effective vehicles enabling them to give strategically and sustainably. Prescribed Private Funds (PPFs), for example, are charitable tax-deductible foundations that allow trustees to control which organisations receive distributions, but require approximately $400,000 as an initial sum to be practical. Other, less expensive options include donations to community foundations and charitable gift funds.
But, once a donor has established a giving structure, how do they decide which charities should receive their money from among the thousands operating in Australia?
Some philanthropic service providers conduct annual funding rounds, in which non-profits make applications for funding. Some donors venture into this complex world on their own, donating to big non-profit foundations that support multiple projects, or choosing separate charities independently. Some consult specialist philanthropy advisers in their aspirations to help engender meaningful social change.
Greenstone Group has written a Social Investment Guide, the first of its kind in the country, which provides a starting point for emerging philanthropists and businesses ready to donate money strategically. It lists 23 selected projects that cover seven social areas, and conducts due diligence and evaluations of the featured ventures.
Mansfield says the group began working with financial planning practice Stewart Partners about six months ago to help guide the firm’s clients towards suitable social projects.
“Financial planners ask us to work with their clients when they are ready to really define how their social investments will come into being,” Mansfield says.
“They have an idea of the areas they’re interested in but don’t know if their money is making any difference at all, or if certain organisations are the right ones to give money to.”
Money, however, is not always enough. Some donors seek a “presence” in the projects they help fund, and put their professional skills to work or volunteer to provide additional support, Mansfield says.
But the starting point for most new philanthropists is committing to a structured giving program. To date, Stewart Partners has established nine PPFs for clients since legislation validating the vehicles was passed in 2001.
Rick Walker, business manager at the practice, said establishing a giving program often formalises clients’ philanthropic habits: some come from a history of intermittent giving, but with a clear strategy in place, they know that they must donate money each year, and can plan accordingly.
“If they don’t have a PPF but give away money each year, they generally jump at it,” Walker says.
Since the vehicles are designed to distribute only the earnings of the invested capital into perpetuity, it is more likely that they can provide funding to projects during periods of economic turmoil, when chequebook philanthropy usually subsides.
But if they do not have a history of regular giving, it becomes both a wise and benevolent way of managing a big tax event, such as the sale of a property or business, or putting to work in the community that portion of their wealth above and beyond what they need for themselves.
Some call it the golden age of philanthropy. It was heralded by the donations of super-rich ‘billanthropists’, Bill Gates and Warren Buffet, who committed a combined $US61 billion to The Bill & Melinda Gates Foundation in 2006. In Australia, giving has been nowhere near as grand, but a progressive form of philanthropy, known as strategic or transformational giving, has taken root among a small proportion of high-net worth people.
Moving on from responsive cheque-writing and posthumous bequests, and often involving specialised trust vehicles and guidance, it marks the dawn of a new era of philanthropy.
Its proponents are the so-called emerging philanthropists, who target specific social problems and seek close involvement with projects aiming to fix them. Unlike earlier philanthropists, who provided funding and let charities carry out their work privately, the new philanthropists demand more transparency from charities and greater control over how their money is used in return for their benevolence.
We all give to the community sector – some of us from a sense of responsibility or religious belief, through social fundraisers or by participating in staff giving or volunteering programs.
Kristi Mansfield, founder of Greenstone Group, an Australian philanthropy advisory firm, says the traditional, responsive forms of giving usually address the effects of deep-rooted social problems. While there is need for this mainstream, crisis-healing philanthropy, the disciplined, transformational form of giving targets the causes of social and environmental problems. It is also the more difficult form of giving, requiring sustained effort and more money.
Donors wanting to help engender this kind of meaningful social change want to see their money deployed effectively, but usually require help to craft a gifting strategy and to find appropriate projects to support.
Enter financial planners. A number of practices catering for high-net-worth individuals now offer services to new philanthropists, providing tax-effective vehicles enabling them to give strategically and sustainably. Prescribed Private Funds (PPFs), for example, are charitable tax-deductible foundations that allow trustees to control which organisations receive distributions, but require approximately $400,000 as an initial sum to be practical. Other, less expensive options include donations to community foundations and charitable gift funds.
But, once a donor has established a giving structure, how do they decide which charities should receive their money from among the thousands operating in Australia?
Some philanthropic service providers conduct annual funding rounds, in which non-profits make applications for funding. Some donors venture into this complex world on their own, donating to big non-profit foundations that support multiple projects, or choosing separate charities independently. Some consult specialist philanthropy advisers in their aspirations to help engender meaningful social change.
Greenstone Group has written a Social Investment Guide, the first of its kind in the country, which provides a starting point for emerging philanthropists and businesses ready to donate money strategically. It lists 23 selected projects that cover seven social areas, and conducts due diligence and evaluations of the featured ventures.
Mansfield says the group began working with financial planning practice Stewart Partners about six months ago to help guide the firm’s clients towards suitable social projects.
“Financial planners ask us to work with their clients when they are ready to really define how their social investments will come into being,” Mansfield says.
“They have an idea of the areas they’re interested in but don’t know if their money is making any difference at all, or if certain organisations are the right ones to give money to.”
Money, however, is not always enough. Some donors seek a “presence” in the projects they help fund, and put their professional skills to work or volunteer to provide additional support, Mansfield says.
But the starting point for most new philanthropists is committing to a structured giving program. To date, Stewart Partners has established nine PPFs for clients since legislation validating the vehicles was passed in 2001.
Rick Walker, business manager at the practice, said establishing a giving program often formalises clients’ philanthropic habits: some come from a history of intermittent giving, but with a clear strategy in place, they know that they must donate money each year, and can plan accordingly.
“If they don’t have a PPF but give away money each year, they generally jump at it,” Walker says.
Since the vehicles are designed to distribute only the earnings of the invested capital into perpetuity, it is more likely that they can provide funding to projects during periods of economic turmoil, when chequebook philanthropy usually subsides.
But if they do not have a history of regular giving, it becomes both a wise and benevolent way of managing a big tax event, such as the sale of a property or business, or putting to work in the community that portion of their wealth above and beyond what they need for themselves.
