Society, family, legacy: The new priorities of philanthropy
When it comes to charitable donations today, it’s not just how much you give but how you do it.
Some of Australia’s charities may be at the point of no return. But the nation’s high net worth individuals have the chance to make a difference – for society and the generations to come.
COVID-19 will be hard on many Australians – which makes it all the more worrying that so many of our charities may not be around to support them.
While a growing number of us are going to struggle to make ends meet due to rising job losses and under employment, charities will feel the brunt in the form of falling donations and a reduction across other sources of income, including from goods and services and government grants.
The figures are stark. JBWere’s latest research estimates that total giving will fall by around 7.1 per cent in 2020. In 2021, the drop is likely to be even steeper – 11.9 per cent. According to Social Ventures Australia and the Centre for Social Impact, a projected 20 per cent reduction in income would see almost one in six charities (17 per cent) at high risk of closing their doors within six months.
“[Australia’s charities] run very lean as it is,” explains JBWere Head of Family Advisory and Philanthropic Services Shamal Dass. “They don’t have all the levers at their disposal that a bank or a mining CEO does. They can’t easily access resources to rebuild or transition; they don’t go to the [equity] or debt markets to regenerate capital.”
Their failure would see 200,000-plus more people out of a job. More worrying is the fact that they’d no longer be around to meet the needs of their beneficiaries. “So what does this mean for the homeless?” Dass asks. “What does this mean for domestic violence victims? What does it mean for children who have learning difficulties? What is the real, long-term impact to society from the loss of these critical organisations?”
It’s time to step up… thoughtfully
There’s an opportunity for high net worth individuals and families to step up to the challenge. “Now is the time they actually need to give more,” Dass says. It has to be done with careful thought though. “It’s [also] about how those dollars are applied and where they’re applied. That is really important right now.”
Dass suggests philanthropists take a step back and work out where their money is most needed in the current crisis. Ultimately, this may require them to be less prescriptive in how they give. As he points out: “You need to give [charities] the flexibility to manage their organisation.”
And the time to be flexible
Some of Australia’s wealthiest families are already doing just that, says JBWere’s Director, Family Advisory Peter Roach.
“I’m on a couple of family private ancillary fund [PAF] boards and none of them have reduced their levels of support to charities. In fact, what they’ve done is lifted some of their restrictions. They acknowledge these charities simply need money to keep going… so the distributions aren’t for specific programs but rather for the sustainability of the charity.”
According to Roach, “that’s a very deliberate departure from how the boards would normally operate”.
Thinking about the bigger picture
Roach believes this departure sends an important message to the next generation. “It provides a great opportunity for the more senior members of the family to really set an example to the following generation about how to deal with things in a calm, measured manner and to continue to support their causes – probably even more so – in these times where there’s greater need.”
At a time when Australia is witnessing the largest transfer of wealth in its history, there’s considerable onus on today’s matriarchs and patriarchs to prepare those who’ll come after them – to ensure they’re ready to pick up the family mantle, so to speak. Philanthropy plays a critical role here.
“For a lot of families, philanthropy is not just about giving money away and supporting good causes,” Roach says. “It’s their way of embedding an ethos through the family – through the generations. It allows future generations to have some understanding of what motivated their grandfather or great, great grandmother to do what they did.”
At the same time, many of Australia’s wealthiest are putting careful thought into the impact their money will have on those outside their family. As Dass says: “Does it matter that your kids or your grandkids are thriving when the society around them is crumbling? [HNWIs] are thinking about these things – not just the opportunities for their family, but for the wider community and for the Australia they think is possible.”
Finding a shared vision
Of course, the younger generation will often have different passions and priorities to their elders, and JBWere’s Family Advisory service exists to bring these disparate visions together. “It’s an interesting and important discussion [for us],” Dass says, who explains that JBWere specialists will sit down with families to help them find a balance between what they’re trying to achieve today and their “vision – what they are really trying to create and preserve over the long run”.
Rather than providing answers though, JBWere helps create the processes and systems for the family to communicate effectively and make decisions. “It is not for us to tell them what they should do,” Dass says. “Our job is to provide families with the mechanisms to decide what they should do – and to make sure that [all] generations have their voices heard.”
The current pandemic also calls for this kind of objective, third-party input. Says Roach: “We can draw on our [experience] to help them navigate through some of the tricky specifics of dealing with a crisis. It’s discussions [simply] around what other families are doing – what best practice is, both in Australia and internationally.”
All the while, JBWere continues to lift their gaze to the horizon, as it has through its 185 year history. “Whether it be in our investments or… our work in philanthropy, our work with for-purpose boards, or family governance, we’re always working with clients on sustainable outcomes over the long term,” Dass says. “That’s what our clients are about: they’re about intergenerational work; they’re about long-term impact.”