Stories in philanthropy

The Support Report: John McLeod

Philanthropy Australia Council member and author of JBWere’s Support Report, John McLeod, shares insights and implications stemming from the changing nature of giving as well as some thoughts about the Philanthropy 50 list of the year’s biggest private givers.

Nicole Richards, May 2018

 

JBWere’s Support Report is the latest summation of the evolution of philanthropy in Australia. The Report offers many insights and a few cautions for the social sector to heed, chief among them:

  • The shape of philanthropic practice continues to change with mass market donors (ie general public) becoming less dominant.
  • The continued growth of PAFs, increased corporate philanthropy and the establishment of more mega foundations are all forecast on the giving horizon.
  • Volunteering is trending downwards and presents a significant threat to non-profit organisations that rely heavily on volunteer contributions.
  • Charitable donations remain concentrated with the top 10 per cent of recipient organisations receiving 94 per cent of all donations and bequests.
  • Grants made through structured giving, including PAFs, is expected to constitute 17 per cent of all giving by 2036 (up from seven per cent in 1996).

The Report’s author and Philanthropy Australia Council member, John McLeod, recently shared a few of his knowledgeable observations with Philanthropy Australia’s Nicole Richards.

 

NR: You’ve commented that this year’s Philanthropy 50 list is notable for the dramatic growth in the scale and visibility of giving – spurred along by the Paul Ramsay Foundation. Did you come across any surprises when you compiled the list?

JMc: Yes and no. There are a lot of obvious names in this year’s list and many of the same names that appeared last year. I don’t think that’s a bad thing because even though it’s great to have some one-off mega donations and bequests, we should applaud the fact that many of the same givers are in fact there each year, giving large gifts year after year. Sometimes this ongoing giving can go un-noticed because the names do appear each year.

One thing that did surprise me was seeing the environment feature quite strongly among the cause areas these givers were focused on. Last time it didn’t seem to crop up anywhere near as much as it has this year.

If we look at all the causes and the direction they’re going in over the medium term, religion and social welfare are areas that are dropping in terms of support which gives an opportunity for other cause areas to grow.

If you think about all-encompassing causes, the environment is certainly one of those. The environment is something that affects everyone all the time, while it could be said that welfare or medical research affects a portion of people at a given point in time. That said, the amount of dollars flowing towards environmental causes is still fairly small compared to the most popular cause areas with these givers which are universities, medical research and the arts.

 

Those causes sound reasonably consistent with what’s happening in the US and globally.

They are. In fact, Harvard and UBS just published a study on global philanthropy looking at big end of town givers and the global findings look exactly the same as what we found here in Australia.

 

Why do you think universities, medical research and the arts are so favoured by big givers?

I think it’s because they’re less emotive and more measurable. The ability to measure impact is a key driver for these givers.

In the case of universities, a lot of philanthropic funding goes towards establishing a chair in a particular area of study where the funder wants to encourage knowledge growth or research – it’s finding out new things and solving problems – all of which is very measurable.

Medical research is quite similar in that the giver is supporting research to solve medical problems. Again, very measurable.

The one area that I’m not quite sure about the motivation is the arts. It’s the one cause area among the three that doesn’t neatly fit into the measurable side of things.

Interestingly, if you were to look at the major causes favoured by mass market donors (ie general public), religion and international aid are still very popular whereas they’re rarely found among the preferred cause areas of wealthy private givers.

 

The Support Report tells us that, relatively speaking, the Paul Ramsay Foundation is bigger in Australia than the Bill and Melinda Gates Foundation is in the US, but that you’re hopeful that we’ll see more mega foundations established in Australia in the years ahead. Can you elaborate on that a little?

If you look at the gap between the Paul Ramsay Foundation and the next biggest foundation in terms of assets under management, there’s an enormous gap. Ramsay has around $4 billion dollars in assets, whereas the next biggest, The Ian Potter Foundation has around $700 million which means the Paul Ramsay Foundation is almost six times bigger.

In the US, the Gates Foundation has $41 billion worth of assets and the next biggest foundation has $12 billion, with another 5 in the $9-12 billion range, so the gap is significantly less.

The thing to bear in mind of course is that the Paul Ramsay Foundation is really only just getting started, they’re not granting at their full $200 million a year mark so there’s a way to go yet.

In terms of the establishment of other mega foundations, we won’t know for certain who it will be who steps into that space or when they’ll do it, but given the growth in structured philanthropy and the growth in the number of wealthy Australians getting involved in giving, I’d suggest it’s only matter of time before we see more foundations around that size.

 

What are some of the “rapid changes in donor segments” you’ve identified in the report?

Over the last 20 years, giving in Australia has changed from being dominated by mass market donors to what we’re now seeing with the rise of PAFs, high net worth philanthropists and corporate giving – especially corporate partnerships. So essentially, it’s a shift away from the broad population dominating giving.

When we consider the growth rates for the next 20 years, those areas are going to grow and we’ll see further shrinking in the mass market

The mass market gives to very different causes, for example religion and international aid, whereas the biggest private and corporate givers favour universities, medical research and the arts, as we discussed before.

So, the implication is that if I’m sitting in a university as a fundraiser, the future looks quite bright. Universities in Australia are getting around seven per cent of philanthropic dollars at the moment and it’s very likely that will grow towards the US which is around 15 per cent.

I expect arts philanthropy and support for medical research will also go up.

But, if I happened to be fundraising for international aid and religion – I’m probably going to have to be a bit cautious and start appealing to other segments. International aid is the biggest fundraiser in Australia but it’s a cause area that’s got to start turning the ship around and stop relying just on the emotive appeal.

In terms of givers, if we look at PAFs, their preferred cause areas are about halfway between those of HNW donors and the mass market – some are supporting social welfare, there’s a bit of international aid as well but also arts and culture, medical research, universities and education. That’s entirely logical when you consider that PAFs comprise really wealthy and medium wealthy givers.

 

You note in the Report that under 60 per cent of Australians earning $1 million claim a tax deduction for charitable giving. You’ve been monitoring giving for many years – what do you think it will take to grow giving in this country?

Yes, that figure’s a little bit disappointing and although we’ve seen growth in the visibility of large givers, and we’re certainly getting more of them coming up through the ranks, it hasn’t lifted that percentage. In fact, that number has been sliding over time.

I guess I’d offer the same comment that I would for growing all philanthropy. While we do see the proportion of those giving slide, we’re seeing it across all income levels which makes me think we need to change the mindset.

I’ve put a ‘Wish List’ in the back of the Report which goes into more detail, but I think we need a campaign to grow giving that’s a bit like the ‘Slip. Slop. Slap.’ [sun safety] campaign. We need a public campaign that shows that giving is actually good for us. That I benefit and we all benefit if charities operate better and help us live in a world that’s safer or healthier.

There needs to be a strong marketing message coordinated across a range of peak bodies, including Philanthropy Australia, the Prime Minister’s Community Business Partnership, the Fundraising Institute of Australia and the charity sector more broadly. 

 

Download a pdf copy of The Support Report from the JBWere website.

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