What we can learn from Hands Across Canberra about intergenerational wealth transfer and donations that last forever…

In their recent presentation at the F&P Fundraising Forum, Peter Gordon, CEO – Hands Across Canberra and Kristi Mansfield, CEO – Seer Data & Analytics shared research that examines the potential of future giving in the ACT. Spoiler alert, the potential is huge and it’s time to start thinking about how intergenerational wealth transfer can transform your own organisation.

We share that research and how it can be used to inform your strategy to build significant and stable long-term income to help the causes you champion.

More about Hands Across Canberra

Hands Across Canberra is the ACT’s community foundation. Back in 2010, when the organisation was established, Peter was surprised to learn how much need there was in the community. 11 years on, his team of two full time and two part time staff work with 300 community organisations (which all work with vulnerable people), most of which many Canberrans have never heard of – and herein lies the issue.

Canberrans are the most generous people in Australia – donating $400 per adult per year – but sadly about 85% of that generosity leaves Canberra.

Perhaps that wouldn’t be an issue if there wasn’t need in the ACT. But there most definitely is. There are approximately 2,000 homeless people in Canberra. “And issues of youth justice, over-incarceration of Indigenous people, kids in and out of temporary care, the challenges experienced by LGBTIQ+ people, people living with disability – all of this is real in Canberra too,” says Peter.

“We don’t need to encourage Canberrans to be more generous, we just need to encourage them to be more generous at home.”

With this mind, Hands Across Canberra has three main areas of focus:

  1. Awareness

Through their regular engagement with the NFP sector, government and business, Hands Across Canberra identify and support the areas of highest need and establish priorities for granting accordingly.

On this note, the foundation announced $100,000 of grant funding in September 2021, supporting 14 local community projects, including those focusing on mental health, domestic violence and food aid, in their effort to address the impact of the COVID-19 crisis in the ACT.

  1. Partnering

“Community foundations really don’t do anything except make stuff happen”, says Peter. This is far too humble a statement to describe the breadth of Hands Across Canberra’s work, but what Peter does mean is that they act as facilitators, particularly when it comes to connecting the right people to the right causes. For example, at their annual lunch at the National Gallery of Australia they are strategic about the 30 tables they offer to corporates, seating eight corporate staff on each table, with the remaining two seats occupied by representatives from charities. Peter says: “We connect good people with good causes.”

The organisation also works with Canberran foundations such as The Snow Foundation, Aspen Medical Foundation and The John James Foundation which, along with individual philanthropists, are welcomed into the granting process each year.

Financial planners, wealth advisors, lawyers and accountants are also important partners for the foundation, playing an integral role in convincing the community of the need for, benefits of and impact created by charitable giving.

  1. Giving

Hands Across Canberra ultimately want to encourage more Canberrans to give and to give more. “We’ve got to try and convince 400,000 Canberrans to act differently,” says Peter. “Half of all taxpayers earning over $1 million in the ACT do not claim one cent in deductions from charity donations.”

That needs to change, but it’s not to say the foundation isn’t already experiencing success.

By 2018, they reached the milestone of securing and granting $1 million per year. That year they also received a $5 million donation from the ACT government to establish their perpetual fund, which created momentum and scale in the organisation.

2020 saw the foundation ramp up their fundraising even further, including running three appeals, and donations grew from $1 million to $2 million.

That year, the foundation hosted the inaugural Hands Up for Canberra Giving Day, held in March on an established day of celebration in the ACT – Canberra Day. Peter’s team felt it was a fitting date to launch the campaign, reminding Canberrans how good their city is to them and to encourage them to give back.

In its first year, the giving day raised $100,000. “We didn’t have a clue what we were doing!”, says Peter, grateful to have the support and expertise of fundraising consultants, Catalyst Management.

Clearly they learnt a lot in 2020, because in 2021 funds raised from the giving day grew to $640,000. They hope to raise over a million next year. By the end of this decade, the foundation aims to be raising $5 million dollars from the annual giving day.

An ambitious target with a clear game plan

This goal is part of a much bigger goal: to have $100 million in a perpetual fund by 2040. While there are several pathways to this target, the main tactic is to encourage donors to leave a sizeable gift in a ‘named fund’, managed by Hands Across Canberra. The structure means these gifts will grow with time, acting as a multiplier for impact in a way a one-off gift cannot.

Key to this strategy is understanding the wealth and capacity that exists in the ACT community. Enter the research of Seer Data & Analytics.

Intergenerational wealth mapping

An estimated $3.5 trillion will be transferred from baby boomers to younger Australians across the country in next 20 years. As Peter says, “I don’t know how many zeros are in 3.5 trillion, but it’s a lot!”.

To understand how much of that transfer will happen in the ACT, Peter started working with Kristi Mansfield from Seer Data & Analytics. Kristi was aware that, if she could paint a picture of the giving potential in the ACT, then she could provide Hands Across Canberra with the evidence they needed to drive a campaign that encourages wealth transfer.

So what is wealth mapping? Well, here’s an example from Yarralumla in the ACT:

The map shows the estimated wealth transfer in Yarralumla, over the next five years, is $187 million, the average wealth transfer per household is $1.898 million and an estimated 99 households will transfer wealth.

Mapping is available at suburb, local government area, local district, capital city and all-of-Australia levels. Australian Bureau of Statistics statistical areas are used as the basis for this selective mapping.

It is also possible to see potential wealth transfer by demographic criteria such as household type (e.g. single person households), age ranges and gender.

In the ACT alone, $15 billion will be transferred over the next 10 years.

The mapping doesn’t stop there

What Kristi’s work also revealed was the propensity to give in each area. “Now we know where the wealth is, we ask: What is the likelihood of people giving in those areas?” says Kristi.   

And propensity to give is certainly high. What the above infographic shows is that:

80% of Australia’s most generous givers live in the ACT

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A potential wealth transfer of a whopping $7.2 billion from households aged over 55 by 2025

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Incredible potential for endowment funds (if only 10% of households in the ACT made endowments of 5% of their wealth, they could contribute $36 million to Hands Across Canberra by 2025).

Another example, taken from Seer mapping analysis undertaken for Into Our Hands community foundation in Wangarrata showed that, based on $1.2 billion Net household wealth transfer within the four LGAs of Wangaratta, Alpine, Indigo and Mansfield over 5 years:

  • If 2% of households gifted 5% of their estate, an endowment could be grown by $1.2 million.
  • If 10% of households gifted 5% of their estate, an endowment could be grown by $5.8 million.
  • And if 10% of households gifted 5% of their estate, over the next 10 years, the endowment could be grown by more than $12 million.

Before we move on, a clarification on terminology here:

  • An endowment fund is a perpetual fund set up by an organisation such as Hands Across Canberra
  • A named fund is established by a donor with an initial gift, which feeds into an organisation’s overall endowment fund, with that organisation (e.g. Hands Across Canberra) acting as trustee.

Volunteers make a big difference too

It may not come as a surprise, but Seer’s analysis found that in communities where there is volunteering, people will give more. The two graphs below show that for every additional 10% of volunteering, giving grows by 3.5% and, in wealthy areas, the growth is 4%  – more evidence to validate that your volunteering and fundraising programs are not mutually exclusive!

 

How community funds (and all nonprofits!) can use data like this:

Whilst a lot of wealth is tied up in superannuation and real estate, the mapping data leaves us in no doubt of the potential of funds available to make a difference in our communities

The data generated by mapping can help:

  1. Targeting – both enabling more effective major gift and bequest campaigns and, conversely, understanding where areas of high need exist in your community.
  2. Expanding on existing donor data – knowing more about the wealth transfer potential in the areas your current donors live in will help you understand more about their giving capacity.
  3. Advocating – the mapping provides convincing evidence of giving potential and why it is worth investing in activity such as major gift programs and endowments funds.
  4. Building more value for your network of partners, such as financial advisors and lawyers so they can have conversations with their clients about leaving a bequest or setting up a named fund.

What this all means for Hands Across Canberra

In a nutshell, the mapping data gives Hands Across Canberra the tools to tell compelling stories. Those stories will help Canberrans realise just how much wealth is available, that they have the capacity to give and that when they do choose to give, the need very much exists on their doorstep.

Peter talks about how helpful this is in seeing the bigger picture, especially with so much of Australia currently hunkered down in crisis mode. As challenging as COVID-19 is, we must continue to think about the future and the people and causes we will always need to support.

What Hands Across Canberra’s work with Seer Data & Analytics inspired was their ‘Named Fund’ campaign, which is to be a priority of the foundation’s work over the coming months and years.

“It’s the idea that we can convince people that, through establishing a named fund, they can leave a permanent legacy in their community,” explains Peter.

Named funds and how they work

Put simply:

  1. Someone makes a tax-deductible donation (often a minimum $10,000) into a named fund – in this case, the trustees of that fund would be Hands Across Canberra
  2. The fund is managed by expert investment advisors, who grow the pool of named funds (the ‘pool’ being the foundation’s overarching endowment fund)
  3. The pool is used to allocate grants to nominated charities serving those in need in the community

Peter explains that the foundation sourced inspiration from Canada, where named funds are commonplace. In Calgary (a city of 1.2 million people, no wealthier per capita than Canberra) they have $1 billion in their community foundation endowment fund. That $1 billion comes from thousands of Calgary people, families putting $20,000 – 30,000 into named funds, which grow over time.

What matters is that the gift is permanent and the gift over time will create an unbelievably large legacy for communities.

Hands Across Canberra is asking people to donate a minimum of $10,000 into a named fund. “Part of my job is to speak to every financial advisor, every wealth manager, every lawyer and every accountant in Canberra – and to ask them to speak to their clients about philanthropy,” says Peter.

When Peter and his team are pitching the idea, they explain that when a gift is permanently donated into a named fund, it has a perpetual opportunity to grow and make profound impact over time. The idea that “the donation is forever” is critical part of the incentive and, the foundation would argue, far more valuable than a one-off gift.

Over the next 12 months, Peter’s team is focused on educating Canberrans that leaving money behind is normal. Peter describes their strategy as “persistent and informed storytelling”. His board are along for the journey too, with its chair describing the money she and her husband plan to leave to their named fund as their “seventh child”!

The campaign has already had its first taste of success; upon its launch, nine named funds were set up in eight days.

Setting up an endowment fund for an organisation needs to be carefully considered – there are strict taxation rules about managing money perpetually, so any nonprofit considering this approach needs to speak to their tax advisors.

But logistics aside, we hope that, by now, you are convinced of the power of intergenerational wealth transfer and the ability it has to shape your both organisation’s fundraising strategy and its future growth and sustainability.

To find out more about community foundations, and those near you, click here.

To contact Seer Data & Analytics click here. Read more about their work in the ‘A blueprint to grow structured giving’ report with Philanthropy Australia here.

You can learn more about endowment funds from Gavan Woinarski’s ‘How to build an endowment fund’ session at the F&P Big4 Fundraising Conference , 26 – 28 October. Click here to find out more and register!

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