The economics of altruism

Posted: 27 June 2011 | Author: | Filed under: Australia, culture of giving, philanthropic sector, Philanthropists | Tags: , , , , , | 3 Comments »

I like trying to understand what it is that motivates people to give.  On a personal level, I find it deeply satisfying to hear stories from philanthropists like David Hardie, who shared his journey to becoming a philanthropist on this blog over last two weeks. With so much pessimism about, stories like David’s provide a little dose of inspiration. But can we ever truly understand what it is that motivates some to give and others to accumulate wealth?  Is it as simple as some people having an altruistic spirit and others being, well… greedy? We could look to philosophy, psychology (as Claire Rimmer did in her blog last week),  sociology even anthropology for the answers, but it’s actually economists who appear to have done the most work in this space.

Economists believe humans act rationally with our actions influenced by incentives. This point is important and at a surface level feeds the assumption that most people are, at their core, simply out for themselves. But what a crappy thought!  After reading David Hardie’s blogs I find this really hard to believe.

Economists have developed a series of ‘games’ to experiment with what exactly drives a person to act altruistically.  Using the Dictator Game initially, economists found results that seemed to indicate that people were hardwired for altruistic behaviour. If you’re not familiar with the Dictator Game, here’s the breakdown of the experiment to assess people’s altruistic behaviours:

  • volunteer 1, let’s call her Jane, is given $10 and is told that she can divide the money with volunteer number 2, let’s call her Barb, in any way she likes.
  • Jane is also told that Barb has no idea that she has been given the money or the option of dividing it. The anonymity bit is important because it means that Jane is neither rewarded or punished for her actions (it also means that the ‘emotional’ pulls, evident when we give money to disaster relief or charities we are connected with, are removed)

Regardless of where the experiment was conducted, in the USA or Mongolia, the ‘dictator’ Jane tended to hand over about 20% of her money to the unknowing Barb. Wow! Giving away 20% of your money without any potential of reward seems to indicate that people act without any consideration of personal incentives. But, of course, the optimism around this amazing altruistic spirit didn’t last long. Enter John List.

John List, a Professor of Economics at the University of Chicago, is the person who really stepped up altruism experimentation. List devised a form of the Dictator Game that once again provided Jane with some cash, this time $20, and gave her three options whereby she could either:

  • keep all of the $20
  • give away any percentage to Barb or
  • take $1 from money that had been provided to Barb.

If you have 10 mins to spare it’s definitely worth checking out this RSA animation based on the List experiment by ‘Freakonomics’ and ‘Superfreakonomics’ co-authors, Economist Steven Livett and the Wall Street Journal’s Stephen Dubner. Alterntively, if you’d like to read the excerpt of the chapter from Superfreakonomics on which it is based you can check it out via The New York Times.

What List found was that in his version of the game only 35% of the people in the Jane role gave any money to Barb, 45% didn’t share at all and remaining 20% took the $1! As List played with the experiment and increased the amount Jane could take from Barb he saw a drop in the number of people who gave any money at all.  In fact when given the option of taking all of Barb’s $20, 60% of Janes took every cent.

List did run another important experiment whereby volunteer Janes and Barbs needed to earn their cash, usually through filling out a long survey.  Once again Jane was given the option of taking Barb’s hard earned cash but this time only 28% (a big drop from 60% in the original experiment) took the money and ran. Apparently it does matter how the person came into having the money (windfall v earned altruism experiments are fascinating and for another blog).

These experiments have since taken on a life of their own.  The percentage of money Jane gives to Barb changes drastically if Jane is told that Barb is aware of the choice she has.  Equally and definitely the topic for another blog, is that if Jane is actually a John the giving percentages change again (gender is a factor in how and why we give).

There are so many external factors in how we give and the amount we give that List and other economists came to a bit of startling conclusion.  We are not hardwired for altruism.  In fact, many economists concluded that when we give we are simply responding to incentives.  Perhaps its to feel good, or less bad.  Perhaps it’s because of social expectation (which might explain the recent media around high net worth individuals not giving enough), even to fit in or gain access to a social group (The Giving Pledge perhaps…) or in some instances to impress someone. For many, it’s simply the tax breaks they get.

Now the idea that you give because you get something out of it might not appeal to most.  But think about it carefully, list the reasons in your own mind as to why you give, if you give at all. Ultimately, incentives might form a reason as to why or whether we give at all, and frankly, that’s fine with me. Whether it’s for the tax breaks or that warm fuzzy feeling you get in your stomach, I just want to see more people give.

Giving is sexy!

Posted: 23 June 2011 | Author: | Filed under: culture of giving | Tags: , , | 12 Comments »

Following all the chat among 3egg and co recently about the lack of giving in Australia and the offering of thoughts on what might be done to encourage it, I have something to throw into the mix!

What would you say if I said giving is sexy? Would it appeal to you? Would it make you grimace? It made me snigger – philanthro-geek that I am – but it did get me thinking. It’s definitely not the sort of language that is normally used around philanthropy but a UK report written for the Philanthropy Review in April 2011 suggests that this small but significant change in how we frame giving could be the key which unlocks all those “hidden” AU philanthropic $$ that we keep talking about.

The study, The Aha: Why donors give, why non-donors don’t and what to do about it, written by Carol Fiennes (CEO of UK Climate Change Charity, Global Cool Foundation) suggests that the reason some people don’t give is because they simply aren’t motivated to: that the way that giving is generally talked about only appeals to a certain group within the population.

The study draws on the outcomes of research carried out by the UK company, Cultural Dynamics, Strategy & Marketing, to determine what drives people to do what they do. CDSM surveyed more than 8,000 people with over 1,000 questions and, with the data gathered, was able to identify a series of fundamental psychological needs that we as people are trying to satisfy – the needs which drive our behaviours and the vision of the person we want to become – and segment them. They called this the ‘Values Modes’ segmentation.

The segmentation identifies that there are three types of people:

  • Sustenance Driven (SD)
  • Outer Directed (OD) and
  • Inner Directed (ID)

In a nutshell:

  • SDs are socially conservative – they’re wary of change, keep to the rules and want to be directed by authority. Their key need is to feel safe and secure;
  • ODs are driven by needing the esteem of others and want to be seen to succeed. They are a higher energy, fun-seeking group and are instinctive rather than analytical; and
  • IDs are always questioning and looking for ethical and intellectual stimulation. They don’t find change worrying and see global issues as their issues. They’re more analytical than instinctive.

The ‘Values Modes’ segmentation’s been used successfully for over 30 years in over 30 countries – for purposes which range from selling soft drinks to determining voting behaviours – and has predicted Value Modes with over 97% accuracy. For more info on CDSM’s work, click this link to their website. CDSM

If you hadn’t guessed already, us Philanthro-niks (Fiennes’ word for us philanthropeeps and my favourite to date!) are defined as Inner Directed people. I did the survey and despite giving answers that I was sure would lead to me bucking the trend and being an OD, surprise surprise, I was categorised as an ID.  If you’d like to do the short survey and find out which of the segmentations you are, click here: Value Modes Survey

Apparently much of the thinking in The Aha draws on Fiennes’ work at Global Cool, which is a charity that aims to get more people to adopt a lower-carbon lifestyle. Global Cool was looking into how to “sell” green lifestyles to people and realised that the way that they’d been doing it had resulting in them preaching to the converted: with campaigns developed by IDs which only appealed to IDs. They realised that their challenge was to make low-carbon living attractive to the OD and SDs of the world who they knew, generally speaking, were less interested in the issue. So they developed a series of campaigns to get people to make green lifestyle choices based on the things that motivate them. For example, one campaign works to entice people to turn down the heat in their homes by “turning up the style” instead – wearing beautiful, fashionable woolly jumpers to combat the cold with the added benefit of keeping their skin from drying out! Through the campaigns they seem to be capturing the broader imagination.  Brilliant!

I have to be honest when I first read the report, I found myself curling my lip and rolling my eyes at the suggestions it makes to encourage broader giving (maybe that‘s because I‘m an ID….and a bit of a curmudgeon?!). It all sounded kind of patronising….“make giving fun & social“, “make giving easy“, “avoid people feeling that giving is a loss“, instead of promoting giving at music festivals or in a serious newspaper, do it at a yacht club or a glitzy event with business leaders. Essentially, diamond encrust the carrot that’s dangled and make the promise of a feature story in Grazia magazine (for the ODs at least). But with a track record as strong as the segmentation’s in terms of determining motivations and behaviours, I did a 360 and started to think it’d be well worth trying it. If this is all it might take to increase and broaden giving, why not?!

One thing that stood out when I read the report, which worried me a bit given all the negative press here just now around giving, is that rather than talking about the lack of giving we should instead celebrate giving: to normalise the notion of doing this rather than exacerbate the trend to not give. It makes sense, I think. Talking about a wealth of giving creates the feeling that there is a scale of investment which makes problems tackle-able, rather than making them feel too big and too hard to deal with, creating a desire to sweep them under the carpet.

So…the question is….what do you think?  Should giving be ”sexy”?!

So…I guess I’m one of those philanthropist wankers. (Part 4)

Posted: 22 June 2011 | Author: | Filed under: Australia, culture of giving, Uncategorized | 3 Comments »

In part four of this special four part series, David Hardie looks ahead and thinks about what needs doing to take his philanthropy to the next stage.  You can and should check out parts one, two and three of David’s wonderfully honest story about his philanthropic journey.

A set of values is a good start but as I’ve been reading through the Annual Reports and websites of various Foundations I have noted that the vision and mission thing features prominently. Now I suspect it’s a result of sitting through a few too many strategic planning sessions in the government sector, but I’ve traditionally been a bit of a cynic when it comes to visions. So I initially decided that what would work for me was capturing how the Foundation would work – the things that would help define our approach to grantmaking. This may have been a ‘vision avoidance strategy’ but it kind of worked! I again just started writing down some words and phrases that are important to me, some of which are certainly borrowed from others and some that come from my own observations. Now I first wrote these down a few weeks back but reading them through again as I write this has made me realise that I’m still pretty happy with them. So here they are:

  • Open, honest communication in all its relationships
  • Listening with an open heart
  • Fun and laughter
  • Supporting good people with good ideas
  • Trust and mutual respect
  • Collaborating with and learning from others
  • Acknowledging and alleviating the power imbalance in the grantmaking relationship
  • Enabling grantees and communities to steer the work.

Now like a set of values, this is just a bunch of words and until they get tested by the complex realities of the grantmaking relationship, a bunch of words (albeit nice words!) is all they will be.

So that was where I got to over a few days and I was pretty happy with it. But when I revisited it after a break and after a bit more reading of some of my philanthropy journals, I did realise that there was something missing and that the ‘v and m thing’ did need to make an appearance.  So I sat back down and I eventually came up with this Slingsby Foundation vision and mission:

Our Vision:  A just and caring society that embraces difference.

Our Mission: To fund initiatives of the not for profit sector that strengthen the lives of those who are marginalised or experiencing disadvantage. We support organisations and projects that build on people’s strengths and help equip them with the capabilities to overcome disadvantage and lead happy, fulfilling lives.

And you know – I finally got to see what these things can do – they help set out what I’m aiming for and how I might go about helping to achieve this. I think they also will help the organisations and people that the Foundation will eventually support to get some insights into the type of Foundation that we want to be and why we might want to support them.

So that’s where I’m up to in June 2011. A little over ten years since my grandad passed away and approaching the year that will represent the 100th anniversary of his birth. And much to his surprise (and I suspect wry amusement), I’m finally interested in the share market. The Foundation has recently made its initial investments and I’m actually really enjoying the process of tracking them and learning about the vagaries of such things. Week one was looking great, week two not so great!

Of course it’s all about purpose and for me, the purpose of sound financial investment and wealth generation is related back to that vision and mission of the Foundation. And yes, a wider purpose of celebrating the life of someone (my grandad LindenLittle) whose hard work and commitment to excellence enables others to share the benefits of a life well led.

David Hardie recently worked as a Program Manager and Intern at the Myer Foundation and Sidney Myer Fund. He is the Founder of the Slingsby Foundation and strongly believes that those Australians who are financially well-off should grow Australian philanthropy and help build the social fabric of the nation that has provided their wealth. 

So…I guess I’m one of those philanthropist wankers. (Part 3)

Posted: 21 June 2011 | Author: | Filed under: Australia, culture of giving, Uncategorized | Leave a comment »

In part three of this special four part series, David Hardie looks at challenges faced when you want to take your philanthropy to that ‘next level’. You can learn more about David’s journey into philanthropy in parts one and two of his story.  The final instalment will be posted tomorrow, so make sure you pop back to check it out!

Stepping into the world of philanthropy, gradually feeling comfortable with my place in it and then establishing a private ancillary fund has led to the next big question. What do I do with it?

I’ve recently sat down and started to think about what this opportunity provides, what I’d like to achieve, who I want involved and what success and failure might look like. It’s been an interesting exercise and one that I’ve struggled with. Part of me wants to leap straight to developing really specific grantmaking priorities and program areas and just get on with it. I know that I want to support refugees and asylum seekers and to help tackle homophobia and that these are some of the issues that resonate with me. But I’ve also realised that while I might be ready to get on with it, there are others who I want to bring with me and that perhaps the most important thing in the initial few years is actually providing the space for their learning to take place. There’s also the reality of having very limited grantmaking capacity in the first few years!

I want this to be fun and for me, fun involves having my family and friends alongside me. So I’ve decided that a defining theme of the initial years of the Foundation will be its commitment to learning – for family and friends to gain experience in grantmaking practice and to learn about related issues. I want these learnings to shape the development of our longer term grantmaking strategies and processes. I want to make sure that I bring others with me and that it’s not just about my issues and my priority areas.

Nonetheless, I also really want to get some things down on paper now. I’ve always been a bit more of an implementer than a strategist but over the last year I’ve had the opportunity to listen, capture some learnings and really see the importance of having a strategy to guide your grantmaking. A key part of my learning and my own personal development in recent years has been taking the time to write stuff down – it’s amazing the power that the written word has when you really take the time to capture what’s going on. Over the last year there have been a few things that people have said that have resonated with me and that I didn’t want to lose. Stuff like this:

You need to find the people and the organisations you want to work with – not just the project or the issue

You should be risk welcoming

Never forget about the power dynamic between philanthropy and those that need the funding

Your decision making will often be subjective- accept this but keep analysing why you make the decisions you do

Most philanthropists try and do too many things

Don’t be scared to be eccentric and to support what others won’t – collaboration is fine but sometimes you just need to go it alone

Remember to keep asking the ‘so what?’ question

Guidelines and strategies are really important – and it’s also great to ignore them occasionally

It’s about heart and head – and heart is allowed to win.     

When I sat down with a blank piece of paper in front of me entitled Grantmaking Strategy these were some of the things that I started to think about.

I also started to think about the words that I wanted to be associated with the Slingsby Foundation and those words came to me very quickly – words like inclusion and diversity and justice and strength and compassion. I also knew that it would be a Foundation about people and that I wanted it to be values driven. So I started with this set of values:

Inclusion – Diversity – Strength – Compassion

I see these as the core or the heart of the Foundation and I’ve explicitly stated that they are to guide all Foundation activities. How will that play out in practice? No idea. But I certainly have learnt that when something doesn’t fit with a set of values you soon recognise that.

David Hardie recently worked as a Program Manager and Intern at the Myer Foundation and Sidney Myer Fund. He is the Founder of the Slingsby Foundation and strongly believes that those Australians who are financially well-off should grow Australian philanthropy and help build the social fabric of the nation that has provided their wealth. 

Too much or not enough?

Posted: 20 June 2011 | Author: | Filed under: grantmaker/grantee relationship, NFP, philanthropic sector, Transparency, Uncategorized | 1 Comment »

A couple of weeks ago I blogged about the funder-grantee relationship.  Working in philanthropy, the issues of power imbalance, the burden of responsibility and questions around ‘how much support is too much’ come up daily.  And when I talk about support I’m not talking about financial support, but about helping organisations to apply for grants.  About encouraging and supporting them to ensure they’ve got the best shot at getting the dollars.

Obviously the question of how I allocate my time is a daily proposition, and so I read with keen interest (and rising frustration) a recent blog from Deep Social Impact.  In the blog entitled Three strikes and then what? Joanne Duhl talks about the dilemma of how we know when we’re asking too much of our potential grant recipients.  In Joanne’s blog, she tells the story of an organisation that underwent significant changes, including the appointment of a new director.  The funder decided it was essential to meet the new director before renewing the organisation’s grant.  Fair enough, I reckon.  In my view it’s essential to meet the director to ensure commitment to the project, organisational stability and so on – it’s just good due diligence.  After a few failed attempts at arranging a meeting, and no  demonstration of commitment from the grantee organisation, the funder decided to pull the pin.

In reading the story and the list of excuses of the grantee organisation, I sensed Joanne’s frustration.  And I recalled a number of similar experiences I’ve had, again, with frustration.  But reflecting on the lessons learned from CEP’s findings on relationships between Foundation staff and grantees, maybe I need to be a little more lenient.  I get to choose how to allocate my time in my day, so I have to accept that grant seekers get to make that exact same choice.  Returning a call from a funder might not be at the top of their list of priorities.

My question, and Joanne’s question is, how far do you go?  At what point does coaxing a potential grantee become harassment?  We might think that those who don’t have capacity to return our calls (because they’re putting out fires and are just too stretched to take on the extra work of a grant proposal) need our money the most.  But really, if we’re not running the organisation, who are we to decide?

I guess this makes the point again that relationships are so important in the funder/grantee relationship. If we know the organisations and sectors we support well enough, we have a better chance of understanding what sorts of pressures they are under.  And then I guess it’s just a case by case basis.  And maybe sometimes persistence is worthwhile, and other times it’s better to dedicate your time to another worthy organisation.

So…I guess I’m one of those philanthropist wankers. (Part 2)

Posted: 17 June 2011 | Author: | Filed under: Australia, culture of giving, Uncategorized | 1 Comment »

In part two of this special four part series, David Hardie takes us on his initial journey into philanthropy and explains how important personal connections are when starting to give. If you haven’t already, you should check out part one of David’s story, which gives you the low down on how he came to be a philanthropist.

The personal connection I formed with the Founder of the Sydney Community Foundation led me to make the decision to establish a sub-fund as part of the Foundation. This model appealed to me – it enabled me to have input into the areas the sub-fund might support but meant that I did not need to concern myself with the grantmaking and investment logistics – but knew that these were being well managed. That felt right and so in 2005 my sub-fund (named after my nephew Jack) was established and I started to allocate my annual proceeds from the family investment company into the sub-fund. The initial project that was supported through the sub-fund was one that had a deep personal connection for me. It was a project to support grandparents raising their grandchildren- being administered by the NSW Council on the Ageing. The connection was that this reflected my personal story as I had been raised by my grandparents from the age of seven. When I heard about the project it was a no-brainer that this would be my first sub-fund project!

The community foundation model has worked well for me – governance and investment decisions are sound and I’ve been able to have a level of input that has been appropriate for me at the time. I’ve also been able to diversify the areas I support. An area of growing interest for me over many years has been the challenges facing refugees and asylum seekers. I volunteered for a few years providing hands-on settlement support to newly arrived refugee families and also worked as a program coordinator for a project supporting refugee kids in schools (part of a massive career change but that’s another story!). Increasingly I have also despaired at the quality of political and public discourse on this issue. The most recent organisation supported by my SCF sub-fund has been the NSW Asylum Seekers Centre – a small organisation doing excellent work with very limited resources.

So my engagement in formal philanthropy has progressed in a slow but considered and increasingly structured manner over the last ten years. Alongside this I’ve also supported a couple of other initiatives – again they have a personal connection – and that does seem to be the consistent theme that drives my personal giving. The first was setting up an annual scholarship to fund a place for an individual from the not for profit sector to undertake the Sydney Leadership Program. That was a pivotal experience for me and one that I wanted others to share.  Secondly, I’ve provided three years of support to fund an annual student bursary (in the name of my niece Tara) in the recently established School for Social Entrepreneurs Australia. This came about because I was working alongside two amazing women who were involved in the initial establishment of SSE Australia back in 2008. I wanted to support their work and also wanted to help support the initial set-up of a program with huge potential.

That brings me to the here and now and the recent set up of a private ancillary fund. How did I get to this stage? Well, again it took a personal experience to show me the way. In 2010 I took up a role working at The Myer Foundation. When applying for this role it had become abundantly clear that I really wanted this experience (you know that rare moment when you can just feel that something is the right thing for you to be doing). Fortunately I got the job and apart from learning a lot about good grantmaking I also learnt about other formal forms of philanthropy such as private ancillary funds. Quite quickly I decided that this was the next step for me to take and so the Slingsby Foundation was founded in 2010. The name comes from the name of my grandad’s company – after all it only exists because of him. It’s a very small PAF at the moment but it will continue to grow during the remainder of my lifetime.

When I was signing the Trust Deed for the Foundation I did feel like it was the culmination of a journey that began with my grandad sitting me down with the financial section of the newspaper very patiently trying to share his knowledge with his disinterested grandson. It took almost 40 years from that time, but this Foundation will be a legacy of not just his work but also the very different work that I have undertaken during my life.  His and my skills are very different but this Foundation brings the best of both of us together. Now, it’s up to me to develop its strategy and I’ll share some of my early work in this area with you in parts three and four.

Before that, I should provide some final reflections on the key things that have helped me to finally embrace my inner philanthropist!

  • I’ve realised that there are lots of different ways you can take part and that all of them (personal donations, sub-funds, PAF’s etc) have an important role to play
  • Personal connections and relationships have been critical
  • My values have driven my actions
  • My level of interest, engagement and involvement has progressively increased as I’ve learnt about myself, my skills and developed my own confidence to participate in this field
  • I see this as my opportunity to lead good work in the world.

David Hardie recently worked as a Program Manager and Intern at the Myer Foundation and Sidney Myer Fund. He is the Founder of the Slingsby Foundation and strongly believes that those Australians who are financially well-off should grow Australian philanthropy and help build the social fabric of the nation that has provided their wealth. 

So…I guess I’m one of those philanthropist wankers. (Part 1)

Posted: 16 June 2011 | Author: | Filed under: Australia, culture of giving, Uncategorized | 4 Comments »

In part one of a special four part series, David Hardie explains how it is he came to be a philanthropist. You can follow part two of his journey tomorrow.

I’ve been an interested observer of the world of philanthropy for a few years now and in particular, the increasing efforts to encourage a greater sense of giving amongst wealthy Australians. I’ve nodded quietly to myself when reading the assessment that Australians just don’t like to go public about such things (the tall poppy syndrome and all that) and I’ve heartily laughed when noting a recent observation that many ordinary Australians equate the word philanthropist with wanker.

Although I suspect I’ll never fully embrace the philanthropist job title I also firmly believe in the importance of de-mystifying and challenging labels, especially through the power of personal stories.

So I thought why not use the Three Eggs musings to share some of my insights drawn from what has been a ten year, (umm, yep I’m going to use the dreaded ‘j’ word)…journey, to get me to my recent milestone of establishing a private ancillary fund. I’ll do it in four parts. The first two will provide some history on what has got me to this stage and in parts three and four I’ll share some thoughts on the strategy I’m putting in place for this PAF.

To deal with the obvious question first…where did the $ come from? The money is an inheritance from my beloved grandfather – an unassuming man who through sheer hard work and a great mind for smart investments managed to establish and build a small family investment company during his lifetime. We’re not talking massive wealth here – but it is more than I or my other family members need to lead the type of lives we want – again, pretty unassuming ones. I realised from a young age that one day there was a good chance that, as an ‘only grandchild’, I’d end up with responsibility for the company. To say that this didn’t particularly excite me was an understatement. Despite my grandad’s best efforts to get me engaged, I just could never get interested in this world. Money and finances have never been my thing, I’ve always liked words not numbers and I’ve never once (until very recently – but more on that in part four!) got a thrill from reading a balance sheet or shares portfolio, no matter how positive they might be. I also really liked my life and didn’t want the acquisition of wealth to change it. So the idea that one day I might be responsible for this seemed quite a burden. My grandad passed away in 2001 at the age of 88 and he was still overseeing his investment portfolio right till the end…proudly reflecting on what he had built ‘for his family’.

For quite awhile the family just let things continue on as they were (with the assistance of sound investment advisors). I just put all this to one side and continued on with my life as it was. I didn’t really consider that the wealth was mine and didn’t even want to think about it too much. So things stayed like that for a few years. With one exception. I established a memorial scholarship in my grandad’s name to provide an opportunity for a student from a disadvantaged background to undertake an undergraduate engineering degree. Having pursued a HR career and been responsible for a large public sector trainee and graduate recruitment program this was an area I knew something about. So I guess that this scholarship (which continues to this day) was my first act of traditional philanthropy.

Then, in 2004, I met someone who was in the process of setting up the Sydney Community Foundation and shared an intense and challenging time with her and 30 others on the eight month Sydney Leadership Program – a social leadership program that tends to turn your world upside down (in a good way!). I had undertaken this program because of a growing realisation that I was interested in social issues and that while money wasn’t my thing as such, that people certainly were – especially people who were marginalised in some way. I’d been volunteering as a telephone counsellor for a few years and slowly developing more self-awareness about what mattered to me, what my values were and had started to consider those simple questions like ‘what’s your purpose in life?’ And creating the space for those questions led to some clarity about what I should do next.

David Hardie recently worked as a Program Manager and Intern at the Myer Foundation and Sidney Myer Fund. He is the Founder of the Slingsby Foundation and strongly believes that those Australians who are financially well-off should grow Australian philanthropy and help build the social fabric of the nation that has provided their wealth. 

Why we need to build a culture of giving in Oz and how to do it

Posted: 15 June 2011 | Author: | Filed under: Australia, culture of giving, philanthropic sector, Uncategorized | 5 Comments »

The true test of a civil society is how we treat those less fortunate. A clear indication of this, of course, is how we treat those entities that are trying to assist those that are less fortunate i.e. our community organisations. Do we build up their organisational capacity so that they can thrive and achieve their mission? Or do we let them languish, grossly undercapitalised, with only a few months’ salary in the bank? We need to grow a strong and vibrant philanthropic sector for the benefit of our community. If we build the philanthropic sector to a material size it will have the ability to be a powerful change agent in this country to tackle the ills in society. We have the wealth and intelligence to resolve most of the issues in our community. Do we have the desire?

The giving stats are clear: we only give 0.36% of our income p.a. to NFPs, 62% of us make no gift to NFPs and 37% of the 6,500 Australians who earn over $1m make no gift to NFPs. (2008/09 ATO giving analysis.)

The BRW Rich List was recently released, indicating that the aggregate wealth of the ‘top 200′ was $167b. And this is just the top 200. Whilst there is little transparency in the philanthropic sector, we know that the aggregate annual giving of the top 10 family foundations, all PAFs and all foundations managed by trustee companies is under $400m p.a. Accordingly, despite our significant wealth, I would suggest that the philanthropic sector is distributing little more than $500m p.a.

There are several reasons for the lack of generosity of Australians. I think the major reason is the wealth is new – most of the wealth in our country has been created in the last 40 years. Accordingly, we are yet to build a culture of giving; a culture of sharing our success. “Give it away? Hang on a minute, I’ve just made it!”

I believe there are 3 clear ways to build a culture of giving in this country:

1.) Implement a ‘Giving Campaign’

We need to implement a ‘Giving Campaign’ as done in the UK in 2001. We need to put our poor giving stats up in ‘neon lights’ for all to see. This will stop the constant perpetuation of the myth that Australians are generous. Then we need to set a giving target. I would suggest we start with 1.5% of our income. I recognise that not everyone can do this, however, many can do it without impacting their lifestyle. If we each individually start measuring our giving it will have a material impact. We need to celebrate our giving. Simon McKeon was an outstanding choice as ‘Australian of the Year’. I suggest that in the future the next award on Australia Day after this announcement should be the ‘Philanthropist of the Year’. Other categories of giving awards should be determined. We need an education campaign for financial advisers on giving options including community foundation sub-funds and Private Ancillary Funds. We need an education campaign for affluent families on the incredible educational tool that a family foundation can be. Learnings including: responsibility of wealth, community engagement, vision setting, implementing a giving strategy to achieve the vision, investment strategies and board and governance issues. This is all done within the family, resulting in richer and deeper family conversations.

We need to establish the first $1b foundation in this country and talk about it. We then need to encourage families with wealth of, say, $10m to slice off 10% of the family wealth and put it in a family foundation and talk about it to encourage others. We need to publish a book/brochure listing the ‘Top 100 Grants in Australia’s History’ to remind and inspire people about the number of iconic institutions that have been seed funded (or continually propped up) by the philanthropic dollar. We also need to assist NFPs better tell their stories to inspire donors into action.

2.) Establish an independent Charities Commission

This will not only better and more efficiently regulate the community sector, it will better promote public trust in the sector. This is critical to building a culture of giving. This is looking promising given the announcement in the recent Federal Budget. However, the devil will be in the detail. Hopefully we can learn from the successes overseas and get this right.

3.) Endorse Philanthropy Australia as a deductible gift recipient

The vast majority of P.A. members can only give to DGRs. Therefore they cannot give to their peak body to assist it in growing its organisational capacity to better promote the sector. Isn’t that odd! We must inspire families to give via outstanding case studies of philanthropy being a powerful change agent. We must get affluent families giving more consideration to the disadvantages of leaving significant income streams to their children. I love Warren Buffet’s saying: ‘Leave enough to your kids to do anything in life, but not enough to do nothing’. As a father, it’s hard to argue against that!

We must encourage donors to talk about their giving. Giving needs to become the ‘norm’ in this country. I know it will. I’m just impatient!

Peter Winneke is the Head of Philanthropic Services at The Myer Family Company.

Peter is a qualified Chartered Accountant. Upon completion of his degree, he spent eight years working in the insolvency and corporate recovery division at Andersen, followed by eight years of media acquisitions at Southern Cross Broadcasting (Australia) Limited. Over many years of overseas travel he developed a passion for philanthropy’s ability to address some of the world’s inequity.

He joined The Myer Foundation in 2003 as Finance Manager. Motivated by a desire to drive the growth of the philanthropic sector, in 2004 he founded the Philanthropic Services division of The Myer Family Company.  In recent years he has established over 60 foundations and assisted with the implementation of their strategic giving programs. He is Secretary of the Sidney Myer Fund and The Myer Foundation and other foundations.

There’s one in every crowd

Posted: 10 June 2011 | Author: | Filed under: Uncategorized | 1 Comment »

Last month I was in Boston for the Centre on Effective Philanthropy’s 10 year anniversary conference, Better Philanthropy: from data to impact. Lovely city, stimulating conference! Debra recently blogged about CEP’S report on exemplary program officers, which was the basis for a fascinating panel session at the conference. Key note presenters at the conference included Geoff Raikes, CEO of the Bill and Melinda Gates Foundation, who spoke with Nadya K Shmavonian, CEP board member about the challenges of foundation strategy. Susan Parker has blogged about that and you can also see the full video of the conversation here.

Geoff spoke about a range of issues and made an almost offhand comment about his view of philanthropic dollars as definitely not public money, but private money. The room seemed fine with that, no-one rose up in outraged disagreement, but in a later session David Hunter of Hunter Consulting expressed, rather forcefully, exactly the opposite view, one that we here may be more familiar with. That view was that philanthropic dollars most definitely are tax dollars foregone, and that therefore it is in effect public money. Hence, in David’s view the absolute imperative for assessing the impact of grant making.

Which brings me to my main train of thought. David was a panel contributor on a session entitled Driving Toward Impact: what funders can do to support nonprofits’ performance management. What I heard as the challenges to philanthropy thrown out by David during this session really made the conference for me. He started by saying that we, philanthropy, should be looking more at what we are doing wrong, in terms of support to nonprofits, rather than focusing on what the nonprofits are doing wrong, in terms of their own effectiveness. Moreover there’s a mindset issue among funders regarding their own accountability.

Increasingly philanthropic trusts and foundations are engaged in working with NFPs to improve their capacity. In the US this seems to be particularly the case, where many foundations, even those with relatively modest grant making, seem to have sizable staff, much of whose time is devoted to working directly with NFPs to develop their capacity. In David’s view, many of these foundations are not a good source of advice to NFPs and should stay out of that particular kitchen. Why? Because they lack clear domains of change for their own grantmaking – that is they are not clear about what it is they actually want to achieve as a foundation; they have no clear metrics of success; and while they may be gathering data from their grantees, they are weak on the use of that data.

David spent many years at the Edna McConnell Clark Foundation, which is very clear about what it is it wants to achieve, and places a very strong emphasis on its grantees measuring their performance. This is very clearly expressed on the foundation’s Results page, as follows:

“Since 1999, the Edna McConnell Clark Foundation has concentrated on increasing the number of low-income youth served by programs with proof or persuasive evidence that they help economically disadvantaged young people [my italics] make the transition to healthy, productive, independent adulthood. To accomplish this, the Foundation devotes much of its resources, efforts and time to assisting grantees in building their evidence base.”

In an earlier session David asked a question of a presenter regarding a foundation’s detailed logical framework for a program aiming to strengthen the field in a particular sector. In his question David pointed out that none of the expected outcomes resulting from strategies in the areas of leadership development, organisational strengthening, network building and so on actually referred to changes or improvements in the lives of the people whom the grantee organisations serve.

Good point I thought, and it’s one I’ll be keeping in mind. I guess it’s summed up as the “so what” question: so we’ve supported this organisation to become strong, well managed, well governed and all the things funders value. But what difference is the organisation making in the lives of those with which it works?

Caitriona has referred earlier to the doco “Saving Philanthropy”. This was shown in its entirety at the conference. It too features David Hunter (he gets around) and it speaks to the very question of the difference that programs and organisations make (or not), and the importance of tracking, reflecting and learning.

Someone in the audience during Geoff Raikes’ conversation referred to the Bill and Melinda Gates Foundation as “the fat boy in the canoe”. That may be so, but you know how there’s “one in every crowd”? Well for me David Hunter was that one in the crowd at the CEP conference and I thank him for it. I’ll be thinking about his provocative contribution for some time to come.

Kirsty Allen is a Program Manager with The Myer Foundation and Sidney Myer Fund. Kirsty came to the philanthropic sector in 2007 following nearly ten years working in international development with a focus on women and gender issues. During this time part of her role was to seek funds from philanthropic trusts and foundations and sometimes she was successful. 

The paucity debate that won’t go away

Posted: 6 June 2011 | Author: | Filed under: Australia, culture of giving, philanthropic sector | Tags: , , , , , , , , | 4 Comments »

Another week, another story in the news about Australia’s wealthy being miserly when it comes to their giving. In Saturday’s Age Newspaper, Simon McKeon, 2011 Australian of the Year and philanthropist, led the charge against a paucity of giving from our high net worth individuals.  He was ably supported by more regular proponents of the debate in Daniel Petre, Dick Smith and Peter Winneke. Expect more to come with McKeon stating his intention to ‘elevate’ the issue over the coming weeks (perhaps we should invite him to blog?).

The McKeon focused article raised and addressed some of the myths around the ‘quiet code of giving’; if Australia’s wealthy were giving quietly surely it would show up in annual tax statistics? Or at the very least we could expect to hear more from charities about generous gifts from anonymous donors? No concludes Dick Smith, “I believe it’s a myth, I believe they don’t give”. The naming and shaming (and a couple of billionaires were highlighted) appears to be stage 1 of an attempt to develop an Australian culture of giving.  By increasing our community expectations of giving by high net worth individuals, we start to chip away at the tall poppy syndrome that keeps so many of our genuine philanthropists from speaking openly about their giving.

As I flipped my way through The Age on Saturday I came to the sports section where Australian NBA star Andrew Bogut was profiled, discussing his hopes for his business life after basketball and his philanthropy. It was easy to be impressed by Bogut’s business nous, discussing the need to grow his brand and business ventures at the ‘peak’ of his career, minimising risk and maximising his ability to recover should things go wrong.

Bogut then goes on to talk about his philanthropy and an interesting contradiction occurs.  He initially discusses the $25K he put up as reward for information on missing Melbourne teenager Jesse Densley. What Bogut recognised was that while the reward money would help, throwing his name behind the hunt for the teen would add to public awareness and ultimately might help to get Jesse home.  That’s masterful leveraging and it worked, with Jesse found hours later. Cash + Leverage = Impact. Bogut then goes on to tell of his new approach to giving – he follows world events and gives in a vein similar to the ‘secret millionaire’.  Much of the fundraising he did for the Victorian Bush Fires and Queensland and Victorian floods was without public attention or media, “that’s the way I like it” he notes.  So what we have is one article with a combative Dick Smith calling the myth of Australian ‘quiet giving’ rubbish and then just  few pages later we have Andrew Bogut espousing the value of it. The irony however is that Bogut provided the perfect example of the power of talking about giving via his donation to the reward for finding Jesse Densley. Here he acknowledges that the power of talking about his gift generated more impact than cash alone could. I wonder then what drove him to approach the rest of his philanthropy quietly?

Reading about Andrew Bogut’s business ventures and what drives him you get the feeling he has the potential to be a part of a new generation of philanthropists in Australia. They’re the ones that bring their business nous and clout to their giving, but critically, don’t mind talking about giving money away. Perhaps Simon McKeon needs to get on the phone to Andrew and encourage him to keep using his ‘brand’ to highlight issues that are important to him and to throw his giving into the spotlight. One thing that is clear about Andrew Bogut is that he is not a part of Australia’s miserly high net worth individuals, so ten more of him would be very nice.

You can follow Caitriona Fay on Twitter via @cat_fay

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