Thinking about your charitable giving as you would any other investment gives you freedom to prioritise the issues you care about over random requests for donations, writes Karyn Tattersfield.
Racing into the supermarket to grab that last-minute ingredient for dinner, it’s not unusual to be accosted by a charity worker with a great cause. According to research, only one in 10 of us is happy to stop and chat. For the other nine, getting to the vegetable section can feel akin to running the gauntlet.
Picking up an extra charity along with your broccoli is unlikely to be in your master plan for managing your approach to charitable giving – but do you even have a plan? Without one – as anyone without a shopping list in their back pocket can also attest – anything can happen.
Why we love to give
The benefits associated with giving are well documented. Kind acts lead to increased serotonin levels – not only for the giver, but for the receiver and anyone who happens to witness the act. Generosity is associated with positive effects on the immune system, makes us feel connected to our communities and gives us a heightened sense of wellbeing.
Kiwis have a reputation for generosity. A 2016 Charities Aid Foundation report ranked New Zealand the second most generous country worldwide, behind the United States.
“We give the equivalent of 0.79 per cent of our GDP to not-for-profit organisations,” Stuart says. “But balancing careful personal money management with generosity and making sure what’s invested goes to the issues you care about most can provide challenges.”
Manage your donations like an investment
“Like any investment, the best way to measure the value of your charitable giving is according to what it achieves, rather than how much you invest,” says Stuart.
A well-thought-through giving strategy can be the perfect antidote to conflicting feelings about the stream of worthy causes coming at you each day on the street, on social media and via your inbox.
“You can’t support everything, so think about what you can and want to support, what kind of impact you’re looking for, and how you can measure that.
“The best way to measure impact is by asking ‘what does my money change?’ This can mean directly asking the charity to provide an explanation of the outcomes related to that extra injection of cash, but also balancing our own need to do the ‘due diligence’ on the social impact of the donation with the charity’s need to get on with the job at hand.”
Thinking about the ‘proof point’ and what success looks like in line with the cause you care about can be an excellent starting point.
But philanthropy dollars are also essential to innovation in a healthy community sector.
“It’s the job of philanthropy to take risks, to innovate – not to do what people already find acceptable,” says Stuart. “Once a solution is proven by this ‘risk money’, it provides a proof point and opens the way for the government to spend with confidence with its vastly more powerful taxpayer dollar.”
Deciding how much to give
Deciding how much to give is a very personal process. It’s important to consider your own life stage, your personality and unique personal circumstances. There will be times you can afford to give and times your resources are needed closer to home.
“In the ‘sandwich years’, where 40- and 50-somethings may be juggling young families, demanding careers, mortgages and aging parents, it’s unusual to have a solid personal-giving plan in place,” says Stuart.
‘Collective giving’ and mixing community impact with fun are emerging as popular ways for those short of time and money. They include giving events (like The Funding Network’s events), and ‘giving circles’, like book clubs, where people get together regularly to connect socially with like-minded people with an interest in making an impact.
Another idea taking wings in New Zealand is ‘live charity crowdfunding’. The Funding Network is described as a ‘Dragons’ Den for charities’, holding events to raise as much money as quickly as they can.
At the other end of the spectrum, there are people ready to take a more solitary, or longer-term view of their giving. They may consider setting up their own trust, creating an endowment or planning a bequest as part of their legacy. Perpetual Guardian, for example, will administer trusts, or offer subtrusts of its own trust, The Foundation.
People often rethink their approach to giving around major life events, or as they approach life transitions, says Stuart.
“Somebody significant may have passed away. Your kids may have left home and become more independent. Your business may have reached a size and value that takes you by surprise, or you may be disposing of an asset. You may be downsizing your house. You may have decided you want a complete change in terms of what you want out of life.
“It’s these transition points that cause people to consider what’s important to them – to stop and say, ‘what more can I do?’ And we’d like to be able to help them answer that question.”
What is a community foundation?
Community foundations are not-for-profit donor services groups helping people create social change in their local area by taking care of administration, investment, and governance. They offer local insights into social issues and advice on effective giving.
Community foundations are a 100-year-old global movement and the fastest-growing form of philanthropy. There are 15 community foundations in New Zealand and more than 1800 around the world.
Being place-based, community foundations focus on their local area and are in a unique position to provide advice on effective giving. They are not-for-profit organisations, built around a cost-recovery model to maximise the impact of every dollar given.
Community foundations are the giving option of choice for both big donors like Facebook’s Mark Zuckerberg and the humble guy next door. They are popular due to their simplicity and the fact that donors decide where to spend the dollars.
Donors can be as involved as they like. They are highly flexible, and operate according to the donors’ wishes.
The foundation takes care of compliance and administrative matters, investment, and governance. Donors can be as involved as they want to be, with many delighting in focusing on the giving and the benefits their gift will bring.
Ways to practise thoughtful giving
• Giving circles appeal to people who want to make a bigger impact than they could alone. They can pool resources with friends or meet new people with similar goals.
• Giving events connect donors and donees. They’re enjoyable for donors who don’t want a regular commitment, who may be time-poor but enjoy direct relationships with charities.
• Planning a bequest is a great way for people who have accrued wealth during their lifetimes to make sure a percentage of their residual estate goes to an organisation they care about, in one lump sum.
• Endowment funds are popular with people with a long-term view of supporting a cause. They have usually taken care of their own affairs – for example, their children have left home – but are still earning, so can make regular contributions. Endowment funds are a particularly useful resource for the community sector, as they offer a regular stream of income without having to manage the fund. They appeal to people with a
certain amount of discipline, who want to
leave a legacy but who don’t need the immediate gratification that comes with making an impact.
• Contributing to an existing fund through a community foundation or other type of foundation will appeal to people who may be time-poor but value due diligence and the ability to provide an agile response to issues that matter in their community.
• Starting a new fund, trust, or charity often appeals to people who have had a significant event occur in their lives. Often the sudden death of a loved one can be the impetus for an
‘in memorium’ fund, for example.
The Fabulous Ladies’ Giving Circle
“Academics? Fabulous ladies?” Professor Deborah Levy laughs. “You don’t usually think of academics as fabulous – it’s meant to be whimsical.”
‘The Fab Ladies’, was established by Professor Levy and her colleagues at the University of Auckland Business School as a way to connect. “There are a lot of working women who would love to join book clubs or knitting circles, but we just don’t have the time to read all the books because we’ve got other things to do.”
With a giving circle, along with a reason to connect came a fun, low-administration way to make an impact in an area they all cared about.
“We wanted a big objective – we wanted to reduce child poverty in New Zealand through education.”
Consequently, the group supports young parents by paying for childcare, allowing them to finish their education and, as a secondary benefit, providing education to their preschoolers.
The group makes decisions by consensus. They agreed they’d each donate $20 per week, and that they would grow the fund’s capital. The fund’s income plus a portion of the capital is given away each year, enabling the fund to exist in perpetuity.
The Auckland Foundation handles documentation, money and donations.
“My real fear was touching money – I didn’t need that in my life, I didn’t want that responsibility,” says Professor Levy. “All you have to do is try to agree on where the money goes.”
Lee and Penny Stevens: Career Philanthropists
A trust established in memory of his mother Rua has shaped the lives of Lee Stevens and his wife Penny. It has also provided the lifeblood of many young, dynamic community organisations in New Zealand and beyond.
Rua died of leukaemia at a young age nearly five decades ago. Lee’s father Clarrie died 25 years to the day after Rua, on 12 July, 1995. It was then that his name was added to the trust.
The Rua and Clarrie Stevens Memorial Trust’s capital value has now reached over NZ$1.5 million, and over its lifetime it has distributed more than NZ$1.4 million to around 200 organisations.
Lee took over the trust from his father, and it became his full-time job. Penny joined him administering the trust and it became a lifestyle of giving for the couple. As part of its succession planning, the trust was formally signed over to the Auckland Foundation, becoming a ‘sub-fund’, on 12 July, 2015 – 45 years to the day after Rua’s passing and 20 years to the day after Clarrie’s.
Lee Stevens became a member of the New Zealand Order of Merit in the 2016 New Year Honours. He says it’s only now he’s handed over the trust to the Auckland Foundation to administer that it is beginning to dawn on him how much this journey has enveloped his life.
“As the philanthropic journey has progressed, I’ve had to learn and upskill myself, without the benefits in those very early days of such organisations as Philanthropy New Zealand, and latterly community foundations such as the Auckland Foundation.”
Lee and Penny’s advice for small philanthropists:
• Take risks with your philanthropic dollar – where else will small charities get money? Don’t be afraid to make mistakes; something else will pay off.
• Support organisations that work in areas to which you feel an emotional connection.
• Support local organisations, so you can get in your car and have a look at what they’re doing.
• Help start-ups become sustainable: paying salaries is important.
• Support small organisations, where you can really see the benefits.
• Don’t get bogged down in the detail: use organisations like the Auckland Foundation to manage and administer your fund while you enjoy the relationships and outcomes.
• Get a team around you who you trust, and who support what you believe in.
• Get to know your beneficiaries and take an interest. “We always say to them, ‘We want to hear about things that aren’t working – we don’t just want the good stuff’,” says Lee.
By Karyn Tattersfield, Social Effect
First published 20 November 2017
The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.