The popularity of prescribed private funds (PPFs) continues to swell, but have they affected the giving behaviour of the philanthropists who use them? F&P asked Karen Loblay and Bruce Parncutt, the heads of two separate PPFs, to ‘come clean’ on their PPF experiences.
Bruce Parncutt

Bruce Parncutt built a career in investment banking and stockbroking and is now the principal of his own Melbourne-based investment company – Lion Capital.

Outside the office a couple of Bruce’s main passions are farming and art, and he is a Trustee of the National Gallery of Victoria, and Chairman of the Gallery’s Foundation.

He is also a big believer in education, and is a member of the school council at Melbourne Grammar. He recently chaired a fundraising campaign for the school which raised around $15 million.

Bruce launched his prescribed private fund with the first tranche of PPFs in June 2001, and prior to that his donations were made as a private individual.

Karen Loblay

For Karen Loblay, work, philanthropy and family are all happily intertwined.

As head of the Loblay Group of Companies – a family property business based in Sydney, Karen works alongside her father and niece.

And when it comes to philanthropy, her son, niece and father all play a role in the Matana Foundation (established in 2003), Karen’s prescribed private fund. In fact it was her son who came up with the name Matana, which is Hebrew for ‘gift’.

When not managing the business or foundation activities, Karen can be found listening to her favourite classical music or curled up with a good book.

What sorts of causes or organisations do you like to support? Why?

Bruce Parncutt: Our initial focus has primarily been education and the arts. We have supported education organisations ranging from well-established private schools to embryonic not-for-profits providing specific interventions focussed on supporting schools and students in under-privileged areas. The future of our standard of living will very much be determined by the quality of education that our community receives across the broad spectrum. We also believe the arts play a vital role in education and in stimulating innovation and ideas.

Karen Loblay: I like to support several causes such as the environment, human rights, and refugees; however the foundation supports purely disadvantaged young people. As such, we particularly like organisations or projects that address the most severely disadvantaged young people in our communities.

Do you have a particular process you work through in choosing which non-profits you support?

BP: No we haven’t developed any formalised processes – we tend to support opportunities that come to us that make sense and also where we have developed a relationship or involvement.

KL: Through our website and networks we receive applications from many organisations which we deal with on an individual basis.

How much time does it take?

BP: To date we have found the process of grant making quite undemanding. Our Board of Trustees meets formally once a year for several hours to consider gift recommendations.These recommendations are based on information provided by the not-for-profits, often both in writing and through presentations, which would absorb 1 – 2 hours a week throughout the year.

KL: At busy times (when we receive several applications at once), our work might take several hours per week. When not so busy this can be as little as a couple of hours. This time is mixed with the running of my business, so is sometimes difficult to quantify. My niece and a friend volunteer on my assessment committee and they would also devote a couple of hours a week.

What external support do you use in grant making and/or where do you get information on potential causes and organisations, are you proactive or just review what passes your desk?

BP: To date we have not used any external support in grant making decisions.We have found sufficient good causes to support amongst proposals put to us so we have not had to seek out organisations based on pre-determined criteria or objectives.

KL: We research projects and organisations that we fund and meet with any new organisations that we don’t already know about. We are proactive when we decide to fund an organisation.

Has having a PPF changed your approach to giving? How?

BP: The PPF has certainly changed our approach to giving in several ways. Firstly, it has created a pool of income that is required to be given away each year which has almost certainly caused us to give more than would otherwise be the case and has also enabled us to contemplate multi-year gifts.

KL: It’s changed my approach to giving because I have become more focussed on the severely disadvantaged. We ask ourselves what the young person would do if he/she did not have the opportunity that we are providing and so we concentrate on the more potentially life-changing projects.

Now that you have a PPF, are you giving more, or less, or the same as before you had a PPF?

BP: Undoubtedly the PPF has stimulated a significant increased commitment to philanthropic donations.

KL: Certainly giving far more.

In what ways have you found having a PPF to be a better vehicle to help you make gifts?

BP: It’s helped us create a more formal approach to giving which has enabled us to be a bit more forward thinking and thoughtful in determining the organisations we support. It also helps us respond to requests for donations with greater clarity as we are able to advise organisations seeking funds that we typically make gift commitments on an annual basis and that any gift we might make has to compete with existing multi-year commitments and requests from other organisations.

KL: My gifts before the PPF were much more general and less focussed.

What do you particularly like about having a PPF?

BP: It fits comfortably within our existing stock market investment activities and it is quite satisfying to have the objective of maximising long term returns to both grow the corpus of the funds and also grow the annual income to be distributed. It is also quite satisfying to have to distribute a growing income stream to organisations of our choosing.

KL: Having the involvement of the younger members of my family, my son and niece. And I like the idea that my passion for young people will continue with or without me.

Have you experienced any drawbacks in having a PPF? Are there any negatives to using a PPF as a giving vehicle?

BP: The PPF structure has worked particularly well for us and we have found it an easy structure to administer and operate. There are certainly some administrative obligations to be complied with … but we regard these as appropriate and they are not a burden.

KL: The drawback is the administration, however, I feel that the administration that we do is to be accountable for “public” money – we are using taxpayers’ money in that I receive a deduction for my donations. And so I believe that the public are entitled to these checks and balances. Negatives are that we cannot fund individuals; however, we can fund organisations that do, so that has not, so far, been an obstacle. Saying “no” is more difficult than as an individual donor, but there are more ways of saying no and also inviting the organisations to apply again with another project.

Do you have any expectations that the organisations you support report back to you about how your gift was used?

BP: We certainly want to see that our gifts are used effectively and in fact prefer to make gifts where we believe the recipient organisation is focussed on achieving the maximum leverage it can from the gifts it receives. For instance, we prefer to give where we believe our gift will act as an encouragement for other gifts and where the funds are applied to create long-term and continuing benefit rather than to just meet immediate needs.We do not specifically require reports, but we find most nonprofits do provide ongoing feedback.

KL: Yes, we require the organisations to report back to us, both about how the money was spent, but more importantly, about the project evaluation. That is, was our funding effective?

Do you like to engage with nonprofits in ways other than simply giving funds?

BP: We have become involved in several of the not-for-profits we support acting as board members and also supporting their fundraising activities.

KL: At present I do not get more involved in the organisations that we fund, but I would like to in the future. I presently volunteer in the other areas where I give outside the PPF. Also, I would like a board position with a nonprofit in the future.

How do you see your PPF evolving over the longer term?

BP: Our objective is to grow the corpus so it can become an increasingly meaningful provider of funds. My wife and I are currently on the Board of Trustees, and we are hopeful that our two teenage sons will eventually play an active role. We anticipate that as the fund grows, and with the involvement of our children, that the emphasis will change to reflect their contribution as well as our own. We do not envisage needing to engage staff, but we anticipate there may be a greater commitment of our own time and energies as the fund grows and its interests widen.

KL: In the longer term, I see our issues as balancing our investment portfolio, support staff and expertise, changing trustees etc. However, these are straight forward issues that arise as we grow and as time progresses, and so not all at once. I ponder them, but don’t concern myself with them until they arise.

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