Put out more flags to win philanthropy
Sydney University's Andrew Coats and Denis Tracey argue that philanthropy has a strong foothold in Australia, and that nonprofits need to be more proactive during times of economic downturn.
What should a general do when confronted by overwhelming hostile forces? The answer, according to an unknown Chinese sage, is to put out more flags, thus encouraging your own forces and disconcerting the foe.
How should an organisation that depends on supporters' generosity act during the present financial crisis? Should it keep a low profile until the economy recovers, or try to meet existing philanthropic targets? Historical and recent trends in philanthropy suggest more cause for optimism than despair.
For example, in the US giving has increased in each of the past 40 years, even during recession, although in hard times growth has been smaller. In Australia, philanthropy also appears to have been thriving. In 2008, the University of Sydney had its best year yet for philanthropic fundraising. We received more than $56 million, almost double the previous best performance by any Australian university.
Throughout 2008, as global stock markets fell, donations to the university continued. There was a change towards the end of the year when smaller gifts (less than $5,000), which had been growing strongly, declined. However, this was more than compensated for by continued growth in larger gifts (more than $50,000).
Similarly, the Smith Family's chief executive, Elaine Henry, reported that indications were its Christmas appeal would be slightly bigger than the previous year. Some donors actually increased their giving. For example, when a regular corporate donor was unable to meet a commitment, it's CEO and his wife undertook to raise the money personally. This led to a chain of giving and a donation somewhat larger than the one it replaced.
It would be naive to expect that the crisis will have no ill effects. Many foundations and prescribed private funds (PPFs) will have smaller investment incomes in 2009 and perhaps for several years. Unless they maintain distributions by dipping into capital, their giving will probably be reduced. It will also be hard for corporations to make gifts when they are laying-off staff.
One category of potential givers (sometimes referred to as the VRR: very recently rich) might also be disinclined to make major donations, especially if they are struggling with margin calls and having to sell beach houses, boats and art collections. Even before the financial crisis, Australians had not, despite our notions of ourselves, been a comparatively generous society.
As a proportion of gross domestic product, our donations are less than half those in the United States and also less than those in Britain, Canada and New Zealand. So why do we think there are good reasons for optimism?
First, Australia remains wealthy and richly blessed. Baby boomers are inheriting the benefits of their parents' frugality and for many years we have been creating millionaires at one of the world's fastest rates.
In the past 20 years, as our economy has grown, philanthropy has become larger and more sophisticated. New structures have been introduced (for example, PPFs and community foundations), and new ideas have been widely promoted (for example, social investment, venture philanthropy and corporate social responsibility).
Governments have commissioned and written reports about growing a philanthropic culture. There are signs philanthropy is embedding itself more firmly in the Australian culture.
Second, there is plenty of evidence Australians have the capacity to give far more than they do. The unprecedented response to the 2004 Boxing Day tsunami appeal was attended by predictions it would exhaust Australia's 2005 giving. However, regular giving to charities and other causes was barely affected, and continued its upward curve.
Third, as a visit to Philanthropy Australia's website www.philanthropy.org.au will show, there are lots of tools, structures and ideas to encourage philanthropists to be smarter, more strategic, better informed and more imaginative.
Finally, many wealthy Australians could give away quite large proportions of their assets without the slightest impairment to their lifestyles. Many of these people will not be much affected by the crisis and it would be unfortunate if they chose to use it as an excuse to guard their wealth. A preferable outcome would be their realisation that hard times are an occasion to give more, not less.
Leadership from prominent philanthropists and foundations such as Daniel Petre, David Gonski, Andrew Forrest, the Pratt Foundation, the Myer family and many others has helped raise the profile of giving in Australia, and has put pressure on other well-off people to contribute. Financial advisers are increasingly willing to tell clients about the emotional and financial aspects of giving and to help them set up appropriate systems and programs.
A report prepared by the Centre on Philanthropy at Indiana University and published by the respected Giving USA Foundation found that philanthropy in the US had declined only once in the past 40 years. This is what the foundation concluded for nonprofits: during a recession ensure each board member is a donor and an advocate, develop and follow a fundraising, communications and stewardship plan, redouble efforts to renew gifts from existing donors and use all available fundraising tactics. Or in other words, put out more flags.
Basically it comes down to this: we humans seem to be hard-wired to be generous. People who give almost always find the experience positive. They feel better about themselves, their families and societies in which they live. As we appear better placed to survive the global financial crisis than almost any of our colleagues in the developed world, we believe Australians will step forward and will give more. They will do it to make a difference when it matters most.
Professor Andrew Coats is Deputy Vice-Chancellor, External Relations at the University of Sydney. Denis Tracey is Director of Research & Education, Philanthropy & Development at the University of Sydney and was previously at Swinburne University's Centre for Philanthropy and Social Investment.
This article was first published on January 14, 2009 in the Australian Financial Review.
F&P edition: Agenda e-bulletin - February 2009
Written by Andrew Coats; Denis Tracey
