Carry on giving

Julie White, head of Macquarie Group Foundation. Photo / Mark Mitchell

The late Sir James Fletcher had a reputation for sneaking off the odd cheque to good causes that had been turned down by the Fletcher Foundation's board. If he were still alive, no doubt he'd still be doing it, especially in the current economic environment. And the foundation lives on, a smaller version of the fund it was when Fletcher Challenge was at its height.

The Todd Foundation, meanwhile, is in a healthy state despite the financial climate, says chairman John Todd. Its investments, conservatively husbanded, have done reasonably well despite the markets, he says, and members of the Todd family have been making their own private contributions for specified projects so the funding pool remains deep.

While these trusts, set up by some of our best-known corporate names, are firmly established in the business of giving, for the embryonic corporate philanthropists of today, with less stable funding, the recession is proving a challenge.

Is it right to keep pouring money into charitable projects when you are contemplating redundancies? And will turning your back on community initiatives dent your newly carved out reputation for corporate social responsibility?

Attitudes towards philanthropy took centre stage last week as Prime Minister John Key used the Philanthropy New Zealand conference in Wellington to urge New Zealand companies and individuals to take a more enlightened attitude towards giving. He voiced the hope that New Zealand philanthropists become more like those in the United States and be more public about their good works.

"If we are to promote a culture of generosity and giving in New Zealand, we need to celebrate volunteering in all its forms and make it something that people do out of habit," he said.

"Recognising their service doesn't just acknowledge them or the work they have done, it helps build a culture of service and volunteering throughout our communities. It helps to inspire others to make their own contribution."

And as companies cut back on donations in the downturn, New Zealanders need to know that their time and expertise could be worth as much as their money and sponsorship, said Key.

His pronouncements were generally well received by the New Zealand and Australian philanthropists attending the conference.

John Todd says: "I thought he was very positive. I thought he had a good grasp of the way philanthropy [should work] in New Zealand and in general personal giving." Todd liked his tax suggestions and that Key understood how valuable personal time could be for not-for-profit organisations.

"I was impressed that he had a personal approach to it; he didn't grandstand."

A philanthropy veteran, Todd is looking for innovative ways to take philanthropy forward. One way is through partnership funding. The Todd Foundation has invested in its first major joint venture with the Tindall Foundation by supporting the Hikurangi Foundation, which is investing in research on climate change and promoting sustainability. Each partner is giving $250,000 annually for three years.

"The process has been easy, collegial and innovative," says Todd. "We give because we want to help, particularly children. They are our future and must be protected ... It's never been more important."

THE message to all philanthropists at the conference was to stay involved with their community groups, which needed help more than ever. While it was acknowledged that funding might be tight, this was no reason to stop providing practical help, said industry leaders.

The outgoing chairwoman of Philanthropy New Zealand, Jennifer Gill, this week voiced the hope that charities would benefit from any move towards a nine-day fortnight - on the 10th day, employees could spend time helping their favourite not-for-profit.

"The argument is that it's the responsibility of corporates to support their communities financially but also in a practical sense. Increasingly, corporate volunteering is part of their strategy and I would expect that to continue," she says. "It is about getting active engagement of staff."

Gill says corporate philanthropy is still very young in New Zealand. She hopes changes in the tax deductibility of donations - which apply from the 2008-09 tax year - will increase corporates' incentive to give.

The change removed the old limit on the amount of donations that businesses can deduct.

There is an argument for corporates to be more public about their activities if it helps the cause, says Gill. Project Crimson, for example, a project to save the pohutukawa which was publicly backed by Westpac under former CEO Ann Sherry, raised awareness that the native tree was in need of help. "It was a win-win," says Gill.

But secrecy is part of the New Zealand way of giving, she says. For the past 20 years she has run a philanthropic trust for an anonymous donor who has allocated $200,000 to $250,000 a year to charity projects without seeking any recognition.

One thing that could change the New Zealand approach, Gill hopes, is payroll giving. The scheme, which applies from April 1, will allow employees of participating companies to have donations deducted from their pay and sent to a charity of their choice. The employee making the donation will get a tax credit each payday, rather than having to wait until the end of the year and produce receipts for their donations.

Gill's hope is that payroll giving will encourage people to talk about it in the workplace, leading to a culture that encourages volunteering.

At the moment, the two main corporate funds in New Zealand - as opposed to charitable trusts and family-based funds - are the AMP Foundation and the Vodafone NZ Foundation, with funds of about $500,000 and $1 million respectively. Vodafone told the conference there was no intention at this point to cut the foundation's activities.

At Vodafone, the philanthropic focus has been on youth development and youth health, where the company sees a high need, says Vodafone Foundation manager Annette Culpan. It aims particularly at the needs of South Auckland.

The foundation runs two youth-targeted schemes: the World of Difference programme - which pays the salary and expenses of people working with youth - and the grant-making programme, which donates to a variety of organisations.

At another corporate philanthropist, the AMP Foundation, sponsorship manager Kim McWilliams says there is no change in her fund's ability to give. "We are maintaining our commitment and have even increased some as well as giving to the bushfires," she says.

AMP has six New Zealand partners that it supports most, including Habitat for Humanity and the Federation of Family Budgeting Services. The foundation was set up in 2000 and believes in making long-term commitments.

"We choose the investments around a strategic focus, community involvement and capacity building, matching our values with the social messages of these groups," says McWilliams.

As well as the tax changes already introduced, the Government also hopes to include provisions allowing individuals and businesses to claim rebates for giving goods and services to charities. Those changes are to be included in tax legislation to be introduced after the Budget.

AMP already gives its staff paid time off to assist at a favourite charity and also gives legal, financial and strategic advice to its not-for-profit partners. And each year, 250 staff build two houses in association with Habitat for Humanity. Staff engagement is a key element of the foundation, says McWilliams.

At seven and nine years old, the Vodafone and AMP foundations are youngsters compared with their Australian counterparts.

Australia has around 30 corporate foundations, thanks largely to an attractive investment environment.

The prescribed private fund (PPF), as defined by law, is one to which businesses, families and individuals can make tax-deductible donations. The structure was established in 2001 and by 2008 there were 768 government-approved PPFs.

The President of Philanthropy Australia, Bruce Bonyhady, says these funds now total $1.3 billion and they distributed $160 million of grants last year.

Bonyhady approved of Key's speech. "He wants to build a culture of philanthropy - it's terrific to get a PM who is interested in building social capital and a more cohesive community.

"I think this is a time of great opportunity," says Bonyhady. "My anticipation is that philanthropy will emerge better than before. But you need to make sure that the organisations that are getting the support have the capacity to deliver."

Julie White, head of the Macquarie Group Foundation, the philanthropic arm of the Macquarie investment bank, says the whole notion of corporate funding has changed dramatically in Australia in the past 20 years.

The Macquarie Group Foundation - known as the Hill Samuel Charitable Trust when it was set up in 1971 - is one of the oldest and largest in Australia.

"It's very much more embedded in the culture of business," says White, whose chairman, David Clarke, set up the foundation in its Hill Samuel days.

His long-term commitment is key to the future of the foundation. A senior Macquarie board director told her recently: "The day we close the foundation is the day we close the doors of Macquarie Bank."

In the 12 months to the end of last March, Macquarie and its staff gave almost A$23 million ($28 million) to 800 community organisations. The foundation itself gave A$17.5 million and the other A$5.2 million was directly from staff. "It's holistic. It's not just about the company, it's about our people. It drives everything we do," says White.

Will Macquarie be lowering its sights this year? "It's business as usual for the foundation because we have such a large portfolio of commitments going forward. That's our priority. Income is down, but at the same time we recognise that we have ongoing commitments and we will meet all of them. We'll be supporting the staff in activities but not doing anything new."

Her allocation of funding comes through every month as a percentage of the staff profit pool or bonuses.

"It's certainly forecast there will be a profit; it will be reduced, but still a considerable profit," says White.

Macquarie also does payroll giving, with staff donating a minimum of A$20 a month out of pre-tax salary.

"Being A-type personalities, people prefer a more active role," says White, and some carry out ambitious fundraising projects for their chosen charities.

In those cases the foundation matches what is raised by staff, whether it's $5000 or $100,000. "It's very empowering to staff," says White. "Staff are strongly encouraged to go outside the workplace and engage."

Corporate philanthropy can be used in many ways, she says. For example, when the bank goes into a new country, the foundation can often be a pathway into that nation - introducing the bank through a community initiative.

"We lead the way through philanthropy," says White.

On the other side of the fence, Marion Webster, the founding Executive Director of Philanthropy Australia and current chairwoman of the Melbourne Community Foundation, has had to be creative to win the buy-in of corporate Australia.

Webster, who is also a board member of the Manukau Community Foundation, has some tips for New Zealand corporates looking for a successful philanthropic programme.

"What is integral is where the company matches the funds - staff have not bought into this where there is not significant buy-in by management.

"I think there's a lot of rhetoric around corporate social responsibility. I suspect it's those companies that don't get [it] embedded at the core, that it's these companies who will use that rhetoric," she says.

"Given these difficult times, there will be more cutting back," Webster predicts.

It's been hard work establishing corporate giving, engaging with corporations and finding initiatives that appeal, she says.

Many companies start out with no understanding of how to bring about social change, and there has been no understanding about the need for long-term commitment to the process.

"After 10 years we are just starting to get traction with corporations, building a level of trust. It's been a long, hard slog for not-for-profit organisations."

Cutting their cloth

How are challenging investment conditions likely to affect funders' ability to make grants?

51 per cent expect budgets to decrease in the short term.

43 per cent expect budgets to remain the same.

6 per cent expect their budget to increase.

What strategies are NZ philanthropic funders adopting?

47 per cent say their grant-making levels will stay the same.

47 per cent may make fewer grants.

33 per cent say they may make the same number of grants but expect them to be of lower value.

31 per cent say they may need to change their grant-making guidelines in future.

20 per cent are re-examining their granting guidelines. For example, a number have already decided not to fund capital works.

4 per cent may stop making grants.

Source: Philanthropy NZ survey of non-government funders, February 2009