For a growing number of philanthropic foundations, supporting the nonprofit sector means much more than simply writing cheques, as Natalea Iskra discovers.


For a growing number of philanthropic foundations, supporting the nonprofit sector means much more than simply writing cheques, as Natalea Iskra discovers.
A Broader Foundation for Giving

What is the role of philanthropic foundations?

If you answered along the lines of “to give monetary grants to nonprofits”, then you’re right – but only partly.

The popular perception of the relationship between foundations and nonprofits is defined by dichotomies. Foundations are seen as the givers; nonprofits the recipients. Foundations are passive in effecting social change – their involvement stops after the cheque is sent; nonprofits are the doers who identify the need and actively address it … and so on.

But this simplistic concept no longer suffices to summarise the work of philanthropic foundations, because many take a much more creative and diverse approach to supporting the nonprofit sector.

The definition of philanthropy, according to peak body Philanthropy Australia, is “the planned and structured giving of money, time, information, goods and services, voice and influence to improve the wellbeing of humanity and the community.”

This multifaceted definition has been embraced by a number of foundations not content to merely sit on the sidelines.

They Come Baring Gifts (of Many Shapes and Sizes)

A relatively young organisation, the Foundation for Rural & Regional Renewal (FRRR) is involved in a range of activities above and beyond providing cash grants. These include collaborative funding, conducting research into areas of need and project impacts, convening stakeholders to educate and share learnings and exercising leadership on tough issues.

Advocacy is also central to FRRR’s approach.

“Currently there is a great opportunity to influence policy at the federal government level,” says chief executive officer, Sylvia Admans. “Governments are increasingly taking note of philanthropy and we are being asked to the table … It’s important that we make the most of the unique role and influence of philanthropy.”

For The Myer Foundation and the Sidney Myer Fund, a well-rounded approach to philanthropy is built into their ethos. “Right from inception 75 years ago, the founders were thinking broadly about ways to address existing and emerging issues,” says Myer Foundation chief executive officer Christine Edwards.

In addition to straight up grants, The Myer Foundation and the Sidney Myer Fund support the sector through collaborative funding and investing strongly in evaluation to promote best practice for nonprofits.

Another key way it contributes to the sector is through “providing a mechanism to bring people together around an issue, idea or project,” says Edwards, “such as we have done with the National Roundtable of Nonprofit Organisations.”

The roundtable looks at the regulatory and legal framework of giving, examining what needs to be changed to promote giving and the easier delivery of services.

As another example of its commitment to the broader philanthropic sector, The Myer Foundation recently wrote a submission in response to the government’s discussion paper Improving the Integrity of Prescribed Private Funds.

“Efforts that support the sector are essential components of good philanthropy,” Edwards asserts.

Since 2002, the Colonial Foundation has granted $30 million to the ORYGEN Research Centre for mental health research. Complementing cash support, the foundation also extends its involvement to include a foundation representative on ORYGEN’s board, so as to lend expertise and influence the direction of the program.

The foundation also funds external reviews to assess the efficacy of programs as a way to assist nonprofits achieve best results.

One of New Zealand’s largest grant-making organisations, the Community Trust of Southland has a range of philanthropic devices in its ‘toolbox’. Convening, integrating research and advocacy, exercising leadership, expanding philanthropy through co-funding with other funders, and taking a seat at the policymaking table are all part and parcel of its strategy.

Even under the umbrella of distributing money, the trust takes something of an innovative approach by providing low-interest loans in addition to cash grants and scholarships.

The Philanthropic Continuum

John Prendergast, chief executive officer of the Community Trust of Southland, theorises that there is a natural continuum along which philanthropists evolve from being ‘Neanderthal Grant makers’ to ‘Philanthropist Australis’. The steps along the evolutionary path follow: simple granting, co-funding, research and evidence based granting, leadership and convening, and, finally, policy influencing.

This model suggests that the further along the continuum philanthropists move, the greater will be their capacity to influence positive change in society. And the better supported the nonprofit sector will be on the whole.

An Organic Evolution

This trend towards diversifying support to the sector seems to be emerging organically within foundations that, firstly, have scope within their trust deed to do more than provide cash grants. And those that, secondly, comprise board members and staff who are passionate about greater involvement.

“Our board continues to drive the agenda for change,” says Edwards. “Family engagement with the foundation and the fund ensures that people are putting forward their ideas.”

It’s arising not from dissatisfaction on the part of trustees as to how their grants are spent, but a growing recognition that they can do much more than give money to bring about social change.

“It’s incumbent on us to do some of this work because otherwise it’s a waste of opportunity,” says Prendergast.

For the Community Trust of Southland, the evolution occurred “partly due to the fact that we have always been a large trust in a small population, which has given rise to this opportunity. Perhaps it’s also because we’re 20 years old – we’ve built the confidence to venture into new areas.”

And, according to Edwards, the capacity to do more isn’t necessarily limited to the larger, better resourced foundations.

“It doesn’t depend on the size of the foundation. There are different ways of being effective and engaging in the community, which we are seeing with some of the smaller prescribed private funds.

“A lot has to do with the type of model that the foundation has and the choices they make regarding how they want to be effective,” Edwards says.

Like Edwards, Prendergast believes that passion is the driving force for philanthropic evolution. “To take a broader approach you need to have the resources,” he says, “which may preclude some smaller trusts. But a lot comes down to the people involved and whether they have the interest and motivation to expand their approach.”

The Future for Foundations

Is this the paradigm for the future? Will – and should – a greater number of foundations that are constitutionally able to do so, seek to enrich the sector through means other than cash grants?

Most definitely, says Prendergast.

“Philanthropists across the board should be looking to utilise every resource they’ve got to the full,” he says. “Many have the ability to do more than write cheques, such as convening groups and making loans … We think it’s very appropriate for philanthropists to take as broad an approach as they can.”

That said, Prendergast concedes that there are risks involved with philanthropists becoming more involved in the sector. “Having influence can be very seductive,” he warns.

According to Andrew Brookes, executive officer of the Colonial Foundation, “unless we can be providing valuable expertise, we should only be providing cash. There’s no point in out-experting the expert, and we have confidence in the charities we invest in.”

“I think we’ll always see a mixture of approaches,” Edwards concludes.