When it comes to philanthropy Geoff Wilson, of Wilson Asset Management, has a new twist on an old idea. He has persuaded some of the most well-recognised names in global funds management to forego all their fees for a new investment company to be listed on the ASX. Nor is the ASX charging any listing fees. Legal, accounting and other professional services are also being provided pro bono.
That allows the Future Generation Global Investment Company to meet its aim of donating 1 per cent of its net assets to youth mental health.
It’s an extension of a listed investment company Wilson established in 2014 focused on investing in Australian equities to support charities helping children at risk. That was oversubscribed, raising $200 million, and has out-performed the benchmark index by 3.2 per cent over the past nine months, with half the volatility.
The inspiration came after Wilson heard about the establishment of a listed investment trust in Britain targeting cancer.
“People are generous if you ask them and you just need to co-ordinate that generosity,” Wilson says.
For investors, of course, there’s no financial trade-off for generosity. Quite the reverse. The money is meant to generate good returns to shareholders – particularly because it provides exposure to key asset managers, many of whom they would not otherwise be able to access. The minimum is 2000 shares at $1.10 each and offering fully franked dividends. Investments so far are more than $300 million.
But if FGG does attract the $550 million Wilson is targeting by Friday, August 28 it will mean $5.5 million a year going to non-profit groups helping youth mental health. Hopefully that sum will increase steadily alongside FGG’s long-term capital growth.
Largest private-sector supporter
This figure might still seem modest compared to government billions of dollars spent on mental health. Or to $100 billion raised by 60,000 registered charities in Australia. It will still make FGG the largest private-sector supporter of a problem increasing rapidly among a younger generation and badly in need of additional support.
It is also part of a much broader shift in philanthropic behaviour in Australia.
Despite a recent fall in the rate of increase, Australians are relatively generous in international terms, rated sixth in the world “giving index” measuring donations, volunteering and help to strangers.
But the money is extending now beyond the realm of quiet individual giving, whether large or small. NAB research shows the average annual donation per donor for all charities in 2014 was $336. Growth in charitable giving slowed to 2 per cent in the year to February, compared to 10 per cent the previous year, which NAB attributed to heightened anxiety among consumers, leading to a cutback on non-essentials.
However, companies and wealthy individuals are demonstrating a new willingness to give large donations and to publicise this to encourage others to follow suit.
Names like Andrew and Nicola Forrest, Graham and Louise Tuckwell, John Grill, the late Paul Ramsay and the Packer family are becoming known for philanthropy as well as for business success. Companies also publicise their financial support and staff time provided for philanthropic purposes as an important part of their appeal to employees as well as helping their corporate reputations.
QBE announced on Tuesday, for example, that it would invest $30 million in FGG. Gary Brader, chief investment officer, says this is perfectly aligned with QBE’s commitment to investing part of its portfolio in opportunities with an additional social objective.
“We believe this initiative will inspire the next generation of Australian private and corporate philanthropy,” he says.
Louise Walsh, former chief executive of Philanthropy Australia, will run FGG with former PM Capital chief executive Chris Donohoe.
She thinks the model has the potential to be transformational in providing a permanent income stream for charities, rather than having even long-term funding or grants typically defined as three to five years.
“It is also easy for investors to understand because it combines an investment return and a social return from the same product,” she says.
Bill Bowtell, from the Global Fund, set up to fight tuberculosis, malaria and AIDS, says there’s no doubt a new generation of wealthy individuals in Australia is interested in serious philanthropy.
There’s also more attention being paid in general to “impact investing” – creating a social or environmental return as well as a financial one.
One obvious answer
For a sector often lacking in measurable results despite all the good intentions, individual successes or money spent, the increased professionalism involved is one obvious answer. And while cash-strapped governments will continue to provide the great bulk of funding to address social needs, there are benefits in trying to leverage alternative expertise to boost effectiveness.
Of the states, NSW is leading the way in experimenting with social impact bonds, for example, in the area of foster parenting. The Baird government is also extending this to try to deal with homelessness and recidivism, evaluating proposals for social bonds in both areas. Although the amounts add up to only several million dollars each, the potential is obvious there too if such programs prove effective.
Another building block in the growth of the not-for-profit sector started in Sydney last May. The Expert Advice Exchange connects organisations with pro bono advice from 24 professional services organisations, law firms and financial institutions.
Trevor Danos, from Corrs, says more than 90 applications were received and 40 are suitable for assistance.
“It’s gone beyond just one-on-one advice to providing education and capacity building across the not-for-profit sector in areas of law, accounting, business case preparation and governance,” he says.
Think of it all as part of the changing face of philanthropy in Australia – and a desire to do more better.