Australian philanthropy has thrived in the face of global financial uncertainty over the last 12 months. Andrew Thomas outlines how philanthropists are focusing on sustainable giving as donations continue to grow.

Australian philanthropy has thrived in the face of global financial uncertainty over the last 12 months. Andrew Thomas outlines how philanthropists are focusing on sustainable giving as donations continue to grow.

It’s been a difficult 18 months for many households, businesses and nonprofit organisations, but the joy of giving has continued to push through the bleak economic forecasts and uncertainty. Unfortunately, Australia has also endured some natural disasters in 2011, but more Australians are giving today than they ever have before. In troubled times, when more people are in need and there are less resources available, philanthropy in Australia is thriving.

Given the experiences of the past, and now looking toward the future, it’s no wonder that the way we approach philanthropy is changing. We’re entering a more hands-on, transparent era, where philanthropists and nonprofits work much more closely together to generate outcomes.

Examining the way donors give

One of the biggest trends in philanthropy right now is the move away from ‘drop and run’ donations, with philanthropists instead putting more thought into how to give in a meaningful, sustainable way. They’re also becoming more selective in who they’re giving their money to, and why.

Philanthropists are demanding more transparency from the nonprofits they support. They want to know where their funds are being directed and how productively those funds are being deployed.

Many also want to take a more active role in the nonprofit itself, bringing ideas to the table on how to make the nonprofit more effective and investing time, not just money, into creating societal change. They’re investing for impact, and they’re looking for nonprofits that stick to their core services and avoid drifting from their mission.

This trend has had a ripple effect in the nonprofit sector. With increased interest from philanthropists, and more competition than ever to attract funding, nonprofits are wisening-up to the need to incorporate more business-minded strategies to attract investment and demonstrate their efficiency and effectiveness. They’re also dealing with increased government regulation, so processes and systems have been streamlined more than ever before.

Reinventing how and why donors give

This year, several high profile philanthropists – including Australian of the year Simon McKeon – have renewed calls for Australia’s high-net-worth individuals to give more. Dick Smith has demanded that these people ‘come out of the closet’ and reveal how much of their wealth they’re giving away. The debate on public versus private giving has been sparked once more.

Amongst the arguments for a more public giving culture is the suggestion that Australia’s wealthiest aren’t giving enough. That suggestion is accurately reflected in the latest giving statistics, which reveal charitable donations dropped by $253 million in 2008-2009. That’s despite an increase in the number of Australians who gave to charity over the same period.

In fact, over a third of the donations made in Australia during this period were contributed by less than 52,000 individuals.
But the distinction between public and private giving is not the real issue, so long as people are giving. While public giving may set a good example, it may also stifle potential philanthropists who prefer to keep a low profile.

Perpetual, for example, works with many philanthropists who prefer to keep their giving private by using a philanthropic trust. They take an active interest in the sectors and organisations they are donating to, yet also have the option to remain anonymous.

This debate has no clear winner, despite being a popular discussion point in 2011. Ultimately, we should be focused on encouraging more people to give more of their wealth in a more sustainable way. Whether they do it publicly is a subsidiary consideration.

Making more sustainable gifts

The Global Financial Crisis has highlighted a need for more sustainable philanthropy, and we’ve seen the impact of this flow through to how philanthropists are giving today. While the number of newly created Private Ancillary Funds (PAFs) has fallen since 2007 and 2008, we have witnessed annual growth again in 2011, and expect similar for 2012.

The message about the need for more sustainable giving has permeated the philanthropy sector. We’ve seen many high-net-worth individuals revise their current giving structure to ensure it’s as effective as it can be.

There are still significant growth opportunities for philanthropy in Australia. In the next 12 months, the focus for nonprofits, philanthropists and philanthropic trusts should be to urge donors to become more invested in the causes they are supporting. Sustainable giving should be promoted, so as more people start to give more money, its impact is being maximised. That’s the challenge for philanthropy over the next year, and it will continue to be a message worth driving home for many years to come.

Looking to the future

‘Impact investing’, ‘outcomes not outputs’ and ‘maximising outcomes’ are all fundamental pillars of philanthropy’s future landscape. Change is an absolute certainty, driven by the forces of increased transparency, a greater expectation that people more fortunate will give, and increased regulation.

Importantly for the sector, due to media support and public interest, I forecast that the word ‘philanthropy’ will become even more entrenched into Australia’s vocabulary.

Finally, it is exciting to know that whilst charitable giving has tripled during the past decade, there is substantial scope for continued exponential growth in the sector, as more people discover the real joy of giving.