The conversation at every good dinner party eventually turns to idle gossip. For one regular supper group, it’s an agenda item. Four times a year, a small group of foundation chiefs and trustees meet for dinner – sometimes in Sydney, sometimes in Melbourne. An agenda is circulated beforehand, and always, right at the bottom, is the last item for discussion: gossip. “I’m always worried about what I don’t know,” says Leonard Vary, the chief executive of the Sidney Myer Fund and The Myer Foundation.
What makes this gossip particularly valuable is the make up of the guest lists: some of the Australian philanthropy sector’s best connectors. These are the people who give millions and raise millions and spend their time trying to work out how to maximise each dollar’s impact. The once discreet business of giving away a slice of one’s wealth is gaining scale, making networking more important than ever. Knowing who’s who in the zoo makes all the difference in finding the right person to fill that spare seat on the foundation board, or how to go direct to the potential donor who’s most interested in the fight against muscular dystrophy, or baroque opera.
$460 million given by top 50
In 2014, The Australian Financial Review Magazine found that Australian philanthropy had reached a watershed moment: within the previous 18 months, five gifts in excess of $50 million had been announced, each with the donor’s name proudly attached. A year ago we published the inaugural Philanthropy 50, marking the first time data of who was giving the most had been compiled. This year’s list shows a drop in the total amount given compared to last year – from $470 million to $459 million. However, the 2016 figures were pumped up by a large number of bequests. Excluding those one-off bequests, the amount given rose from $403 million in 2016 to $455 million in 2017.
Helping to map out the philanthropy ecosystem is Philanthropy Australia, which is compiling a digital map of grants. The peak industry group has also upped its focus on running forums for philanthropists to connect with one another. “It used to be that everyone did their own [projects]; now that there’s acceptance to get these bigger projects over the line, joint funding is the way to go,” Melbourne-based philanthropist and connector Paul Wheelton says, adding that increasingly large trusts are only funding projects where the government is also kicking in.
The cut off for this year’s list of top 50 private givers was $3.3 million, 10 per cent higher than last year’s cut off and the number of private ancillary funds is increasing: there are now about 1600 with a corpus of $10 billion, distributing $500 million per annum. (Private ancillary funds or PAFs are a form of charitable trust introduced in 2001 to encourage philanthropy, where income isn’t taxed and donations are tax deductible.) Data from JBWere Philanthropic Services division shows that PAFs are susceptible to financial market performance. When the GFC hit in 2008, the number of new PAFs fell to less than 50 in 2009. There were more than 150 in the previous year and the numbers are climbing once again.
John McLeod, co-founder of the JBWere’s Philanthropic Services division, which manages over $5 billion in charitable assets, and compiler of the Philanthropy 50 list, expects the gifts will grow each year at about 10 per cent. Increasingly, he says, universities, the arts and medical research are the beneficiaries of the biggest gifts. It’s not uncommon for a top-tier university to raise more than $50 million each year. Thanks to its alumni networks the tertiary sector is considered one of the most sophisticated fund raising machines in the market.
90% of rich give in the US, 60% here
Australia has a large minority of people who can, but don’t, give. According to JBWere’s recently released research, The Support Report, 41 per cent of people who earn more than $1 million a year didn’t make a $2 tax-deductible donation in 2015. That means that philanthropy, while growing in profile and activity, is still a relatively small portion of the overall giving pool. In the US, by comparison, of those earning more than a $1 million a year, only 10 per cent don’t give. Overall, donations account for just 8 per cent of the $140 billion annual income received by charities. The government accounts for about 40 per cent and the remainder comes from earned income. When taken alone, philanthropy (defined as giving from high-net worth individuals or giving via a PAF or trust) is an even smaller piece of the pie: just 1 per cent.
Despite its relatively small size, the sector has an outsize influence on non-profits. McLeod calls it the charity sector’s “risk capital” – the extra dollar that helps fund experimentation and innovation. Others say its role is lifting a worthy project to a great one. Navigating the world of philanthropy can be delicate. Wheelton says he’s conscious of stretching his networks. He initially turned down the role of Guide Dogs Victoria’s campaign chairman for that very reason. “I said I wouldn’t do it,” he says. “You tend to use up your networks by asking them to put in money … you can only go to them so many times.” After thinking it over, Wheelton eventually agreed to take the role.
While some foundations and philanthropists are increasingly choosing to work together, another development is the expectation the government will contribute before many choose to commit. The controversial new wing proposed for the Art Gallery of NSW proved that, once again, when the arts sector chooses to exercise its clout, it does so very well. Less than a year after the capital campaign publicly launched, the gallery has $88 million in commitments, putting it within striking distance of the $100 million it needs to unlock the NSW government’s pledged $244 million. A key moment came when Susan and Isaac Wakil donated a staggering $20 million. Behind the scenes, the role of the Wakils was shrewd: it’s understood that after they committed to an initial, substantial donation, they then decided that an even bigger donation would spur the government to give more.
And once the funds are released, how does a philanthropist measure the success of their investment? Caitriona Fay of Perpetual Trustees’ oversees $3.5 billion in philanthropic funds and says the philanthropic sector needs to better interrogate its impact. She encourages givers to solicit more feedback from the people who receive their money. She also thinks that instead of adopting the start-up mantra of “failing fast”, philanthropists should allow their projects to fail for longer so they can learn what to do differently next time.
Fay has seen how even relatively modest bequests can create extraordinary change. “Stella Miles Franklin couldn’t imagine the type of impact a small $15,000 trust would have on Australia’s literary heritage,” Fay says, referring to the Miles Franklin Literary Award that is overseen by Perpetual. That said, not everyone gets to help fund the next generation of Australian writers. “We’re really talking about getting philanthropists excited by the boring. Instead of funding the shiny new app or innovative new program, it’s about building up a philanthropist’s appetite to fund things like quality governance, investing in leadership.” Vary says that in some cases, it’s impossible and unnecessary to measure impact. The Sidney Myer Creative Fellowships each year gives 10 artists $160,000. How can the impact of funding an artist be judged? And over what time period? For David Gonski, there’s a much bigger question at stake. Instead of asking why donate, people should be asking why not. “Where we are today is if you give money, that’s correctly seen as wonderful,” he says. “If you don’t give, and you’re able to give, it’s not yet seen as letting down the side. That’s the next bastion and it will happen.”
How the list was compiled
The amounts are those given to end recipients, mainly charities, in the 2016/17 financial year, by Australian individuals, families and bequests, both directly and through foundations. It does not include donations to foundations, anonymous gifts or corporate giving. With pledges and multi-year gifts, only the actual amount given to end recipients in 2016/17 is included. Where the exact amount for that year is not known, an average per year over the term of the pledge is assumed. Where the term is not known, five years is assumed. Researched and compiled by John McLeod of JBWere Philanthropic Services. Sources include the Australian Charities and Not-for-Profits Commission, Fundraising Research & Consulting, Fundraising & Philanthropy Australasia and Pro Bono Australia.