Philanthropic trends – international, Aotearoa New Zealand and Covid-19 related

July 27, 2020

Philanthropy New Zealand Chief Executive Sue McCabe’s speaking points from the Both Sides of the Coin webinar

Introduction

This talk will cover international philanthropic trends, trends in Aotearoa New Zealand and Covid-19 related shifts.

There are generalisations – as the community sector is wonderfully diverse and it experiences philanthropy in many ways. And the funders are incredibly different as well in terms of what they fund and how they do things. So please do bear in mind that one size does not fit all with the trends.

Five international philanthropic trends with relevance to Aotearoa New Zealand

The first global trend to touch on is an increasing international critique of philanthropy

Overseas, there is increased scrutiny of philanthropy and grantmaking in terms of how it made its money, how it gives it away and who to. Private philanthropy is not accountable to anyone, and there is increased commentary around the importance of community accountability. We’re not seeing the same level of public comment in New Zealand, apart from in philanthropic circles. One thing I’ve been struck by is the way the philanthropic sector is always critiquing itself and is very aware of the power that money brings. So it’s a live discussion within philanthropy.

Human rights funding is the second international trend

Philanthropy and grantmaking responds to the evolving needs of the world and there’s increased focus on human rights as a result of the huge number of refugees in recent years. There’s also a significant focus on the damage that has been done to indigenous peoples and awareness that current structures and processes continue the problem.

In New Zealand, many funders are looking hard at how they can build better knowledge of Te Ao Māori, be a better tiriti partner, and strengthen relationships with mana whenua and tangata whenua so they can do better to fund Māori aspirations. It is widely accepted within our funder membership that philanthropy is a colonial structure, therefore, just like other sectors, has institutional racism in the way it operates.

There’s been increased philanthropic focus on climate change at a global level

Last year we published research on philanthropic funding to the environment which can be found on our website. It shows that a tiny percentage of philanthropic funds is going to environmental causes in NZ. Anecdotally, we think this is growing as more funders announce initiatives to fund the environment. It will be interesting to see how the economic recession caused by Covid-19 may disrupt funding areas. As with many Covid-19 implications, time will tell.

Advocacy and systems change

There’s a number of terms out there to describe different types of philanthropy. One is ‘strategic philanthropy’ which aims to fund solutions to the cause of a problem, rather than fund the symptoms. So to use an oversimplified example, strategic philanthropy seeks to prevent hungry kids, versus the type of giving that funds food for the hungry children.

Amongst strategic philanthropy, there is growing awareness of the importance of advocacy to create system change. Advocacy to Government of what policy levers need to change or advocacy to raise public awareness or get behaviour change needed for system change. This global trend is a hot topic in New Zealand. Some NZ funders have been operating in this space for years, while others don’t currently funding advocacy or system change.

Data informed giving

This is not surprising given technology supports more accessible data. We’re hungry for data on philanthropy in New Zealand, where it goes, its outputs and the outcomes it generates. We’ve become more sophisticated in terms of our thinking around what makes a difference. I’ll leave it to Emily Mason from the Impact Lab to expand on this one more.

Trends in Aotearoa New Zealand

The JB Were New Zealand Support Report

Earlier this year JB Were released its NZ Support Report, which was developed in collaboration with Philanthropy New Zealand. It provides a profile of giving in New Zealand and is a treasure trove of information.

The NZ Support Report provides good scene setting for philanthropic trends in NZ. It said $3.8b was given in philanthropic funds in 2018. Just over half of this was given by individuals – members of the public – versus organised giving by trusts, foundations etc.

One startling fact is that 91 per cent of philanthropy and grantmaking goes to just 9 per cent of charities. This means that 91 per cent of charities are competing for just 9 per cent of the funds. This is an ongoing trend as big high profile brands are accessing the vast majority of funding.

Other trends (noting that this was pre-Covid) were:

  • An increase in business giving
  • An increase in individual giving. Fewer people donating but they’re donating more.
  • There is an expected transfer of wealth to the next generation who may well give very differently.
  • The cause receiving most private donations is religion, but it’s declining. Social, community and disability charities have seen the greatest increase in philanthropy. The report predicted the environment and universities will gain in popularity as giving causes.

Research on the impact of Covid-19 on philanthropic funders and grantmakers

Last month we released survey findings of PNZ funder members about their response to Covid-19. This survey highlighted the impact that lower returns on investment are having on the pool of philanthropic funding. Our respondents overall indicated about a five per cent drop in the funding amount they expect to distribute over the next 12 months. This was a very early snapshot in an evolving situation.

Interestingly, we can link many of their responses to the increased community need and changed circumstances of not for profits to existing trends.

One trend, but occurring in patches rather than universally, is a move to higher trust models of funding, longer-term agreements and simplifying application and reporting processes. In Covid-19 lockdown Philanthropy New Zealand produced an open letter to funders asking them to adopt best practice principles of:

  • Proactively communicate with grant recipients any changes in giving and processes and explain why;
  • Be accessible and responsive to requests for information and engagement from those they fund;
  • Stay as informed as possible of Government support and activity to know what additional help their grantees may get or where there are gaps in support;
  • Collaborate with other funders to identify ways to ease the burden on community groups needing to communicate with multiple funders;
  • Consider what flexibility they can offer including:
    • Trusting not for profits that funds can go to the highest need, rather than necessarily spending it on the activity outlined in the contract;
    • Reducing reporting requirements;
    • Extending reporting and spending deadlines.

Our survey showed that many of the funders were focussed on best practice response. For example, the survey found that about half of the responding funders had adapted agreements with grant holders to introduce more flexibility. Around half have taken proactive approaches to fund community organisations working with those in greatest need.

The scale of the community need that immediately emerged showed the benefits of funder collaboration – another strong trend pre-Covid-19. Immediate collaboration ranged from sharing information on the community need they were seeing and what their responses were, through to establishing joint application processes. For example, in the Waikato, funders created a one door for community groups to apply to for funding from them all. They worked together to proactively check in with not for profits they expected would be needing extra support.

The philanthropic and grantmaking sector is now asking what progress did it make during the immediate response that should be turned into business as usual. Let’s keep the good stuff.

I feel I need to restate my earlier point about these trends not being universal. Many webinar listeners will be aware that there were some funders that demonstrated no flexibility to changing community need or NFP’s circumstances, for example gaming trusts seeking refunds where a charity could no longer deliver on its agreement.

Another important point is that while some funders are set up so they can respond immediately and they chose to, other funders are set up or choose to respond in the medium term to major events. They see that public donations and Government often take care of immediate need, with philanthropy’s strength supporting the medium and longer-term recovery when community needs can change and settle.

There are more ways to give and to make a difference.

There’s a rise in knowledgeable intermediaries that people can give money to that will distribute them. For example, Perpetual Guardian have a foundation, there are other national intermediaries, then there is the local community foundation movement.

There are many niche generosity schemes like the One Per Cent collective which encourages people to give one per cent of their income and choose from about one dozen charities they work with.

Obviously crowd funding, eg via Givealittle, has been around so long it can’t be considered a trend, however ways to give to individuals and also to social enterprise businesses continue to broaden the giving options.

Philanthropic funders are increasingly using capital for impact investment and we expect this trend to grow.

So it’s a more complex picture and there are more options in terms of who to give to and how to give.

In summary

I contacted some of our community members asking them for input into this talk and to share what they were seeing.

Their answers fitted with the key themes outlined, but also highlighted the patchy nature of progress in the philanthropic sector, and that there’s much more than can be done to improve the efficiency and effectiveness of giving.

They showed the jigsaw puzzle that is seeking funding for services – often from a mix of sources like Government, organised philanthropy, business, public donations and then revenue-gaining activity. A lot of philanthropists and grantmakers put a lot of effort into improving the sector in all sorts of ways.

Philanthropy New Zealand is currently exploring the establishment of a platform that seeks to make the connection between the supply and demand for philanthropic funding easier for both parties. You can email me on sue@philanthropy.org.nz if you’re interested in finding out more about this.

In summary the international trends are:

  • Scrutiny of philanthropy.
  • Giving to the environment.
  • Increased philanthropy to support human rights and understanding of the impact of philanthropy on indigenous people.
  • Data informed giving (which I’ve stayed away from as Emily Mason will give more details).
  • More systems focussed philanthropy and support for advocacy.

The NZ Support Report is a treasure trove of trends including:

  • An increase in business giving.
  • An increase in individual giving – fewer people donating but they’re donating more.
  • There is an expected transfer of wealth to the next generation who may well give very differently.
  • Changes in the causes people are choosing to give to.

In NZ key trends that Covid-19 highlighted were:

  • More high trust and longer-term giving and the simplification of application and reporting.
  • Greater collaboration amongst funders.
  • The range of giving options available – in terms of who to give to and how to give or invest.

Notes on the event

Both Sides of the Coin is an event that aims to give philanthropic funders and grantmakers, and fundseekers an insight into each other’s worlds.

The following are speech notes for Philanthropy New Zealand’s Chief Executive Sue McCabe talk on philanthropic trends.

Perpetual Guardian staff also spoke at the event in discussion with funding recipient the Cholmondeley Children’s Centre‘s. Impact Lab Co-founder Emily Mason also spoke about impact measurement. You can find the webinar recording here.

PNZ’s Platinum Sponsor Perpetual Guardian supported the Both Sides of the Coin event.