Philanthropy How to Guide: Effective Grant-Seeking Supported by - Philanthropy Australia
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Acknowledgements Philanthropy Australia gratefully acknowledges the many individuals who provided input and comment on some parts of this document including Charlotte Francis, VIC Manager and Grants Strategist, Strategic Grants, who provided editorial support. Disclaimer This publication is intended as a guide only and not as a substitute for professional advice. No person should act upon or in reliance upon it without first obtaining advice from an appropriate qualified professional adviser. Philanthropy Australia is not responsible for any actions taken by, or losses suffered by, any person on the basis of, or in reliance upon, any information in this publication, nor for any omission or error in this publication. Without limiting the generality of the above, the publisher, and the authors, consultants and editors of this publication, expressly disclaim all and any liability and responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. 1
Contents 1. Introduction .................................................................................................................................. 3 2. What this guide covers ................................................................................................................. 4 3. Philanthropy in Australia .............................................................................................................. 5 4. Legal/ taxation requirements ....................................................................................................... 7 5. What are the different types of philanthropic funders? ............................................................. 8 6. Styles of giving ............................................................................................................................ 12 7. Researching funders .................................................................................................................... 14 8. Preparing your submission ......................................................................................................... 16 9. What if your submission is successful? ...................................................................................... 21 10. What if your submission is unsuccessful? .................................................................................. 23 11. Final words .................................................................................................................................. 24 12. Additional Resources .................................................................................................................. 25 13. Further Reading ........................................................................................................................... 25 14. Glossary ....................................................................................................................................... 29 2
1. Introduction The word ‘philanthropy’ is often used but many people find the world of philanthropy quite mysterious. There are many different meanings to the word, usually depending on whom you ask. In the context of this guide, we will be using Philanthropy Australia’s definition, which is: The planned and structured giving of money, time, information, goods and services, voice and influence to improve the wellbeing of humanity and the community. In practical terms, much of the philanthropy that happens in Australian involves gifts of money granted to not-‐for-‐profit entities by philanthropic organisations and individuals, collectively referred to as ‘funders’ or ‘grant-‐makers’ in this guide. This publication is designed as a basic guide to these funders, how they operate, and how you can research them and apply to them for funding. We always recommend that you seek income from a variety of different sources rather than rely on philanthropic funding alone. You cannot depend on philanthropic funding or be certain that your submissions will receive support -‐ there are no magic phrases or surefire tactics. However, this guide contains information and tips to improve your chances of grant success. 3
2. What this guide covers This guide will provide you with advice on: • The different types of funders and what are they looking for when they review submissions. • How to research for funders. • What kind of information you need to provide to funders. • What to include in your application for funding – and what to leave out. • What to do when you are successful or unsuccessful. You will find that much of the advice in this guide is common sense, however grant-‐seeking requires forward planning, research and a strategic approach so you do need to invest sufficient time and resources. 4
3. Philanthropy in Australia Written by Dr. Wendy Scaife, Associate Professor, Director, The Australian Centre for Philanthropy and Nonprofit Studies, QUT Business School, Queensland University of Technology The story of Australian philanthropy has ancient roots, is influenced often by towering individuals and everyday Aussies, molded by rare but significant policy moments, and continues to be written. The practice of giving on this continent is eons old. The rich traditions of the indigenous Aboriginal and Torres Strait Islanders honour reciprocity and relationships with ancestral lands, nature and clan, and an assumption that wealth is distributed. Eighteenth century colonization as a penal settlement heralded a more British style of charity that established Australia’s current nonprofit legal foundations and an enduring philosophy of the government as the main provider. This history contrasts with the United States, which eschewed its British heritage in favour of Abraham Lincoln’s ‘of the people, by the people, for the people’ approach. Some believe this ethos that the community rather than government is responsible for meeting needs explains the perceived stronger culture of giving in the United States compared with countries such as Australia or the United Kingdom. Certainly in 19th century Australia a government presence is evident through subsidy of some of the considerable charity and social work performed by faith-‐based organisations, such as The New South Wales Society for Promoting Christian Knowledge and Benevolence (now the Benevolent Society), Australia’s oldest remaining charity that was formed in 1813. England and many of its other colonies at this time were seeing the rise of charities and the merchant/industrialist class as benefactors of community need. Australia too, later in this era and early in the 20th century saw the advent of substantial philanthropy from some of those who had amassed their fortunes in the new colony from gold mining and other enterprises. Prominent citizens, often prompted by their ‘good wives’ led the campaigns to build schools, hospitals and orphanages, and establish ambulance services in this inhospitable land of dangerous snakes, spiders and tempestuous weather events. Board service was a common elite contribution and sometimes governments provided matched incentives to develop education or health services for the growing populace. The 1880s saw the start of the Trustee Company movement in Australia where the charitable endowments and estate wishes of affluent citizens were managed, sometimes multi-‐generationally. Some of the early philanthropists’ actions of this era were visionary and cast a long shadow. Examples include South Australia’s still active Wyatt Benevolent Institution formed in 1881 by Dr. William Wyatt, thought to be the nation’s oldest philanthropic foundation. Notable too was the advocacy and legacy of flamboyant, white-‐suited, confectionery tycoon Sir MacPherson Robertson, who role-‐modelled large scale giving for affluent citizens, sometimes in ‘forward thinking’ areas such as setting up a girls’ high school. Significantly, the entrepreneurial man behind iconic product names such as Freddo Frogs, Columbines and Cherry Ripe also sweetened the act of giving. Robertson influenced the government in Victoria to foster giving through tax incentives whereby death duties were deductible if people established a charitable foundation in their will. 5
Such was the uptake of this notion enshrined in the Victorian Probate Act of 1907 that the weight of Australia’s philanthropy become largely housed in the state of Victoria and directed internally there, from its preponderance of Australia’s charitable foundations. The Boer War of 1899 – 1902 and the Great War of 1914 – 1918 engaged a different level of community philanthropy. Patriotic Funds saw townships rally as givers. Post-‐WWI, committees of returned soldiers, sailors and airmen banded together to raise funds for often tax deductible war memorial projects. By the 1930s, some sense of the sheer impact of individual philanthropic foundations was evident. An oft-‐cited example is the Sidney Myer Fund established in 1934 upon the death of this community-‐ minded and beloved immigrant retailer. The £150,000 gift (more than $10 million dollars in today’s terms) has translated to programs and projects across Australia as the accumulated interest, further family contributions and fourth generation thinking multiply the original impact. As in giving across the world, religion has played its part. For instance, at the community level, weekly ‘two bob in the plate’ giving to support Churches was the forerunner of today’s regular giving whereby a set amount is donated typically weekly from the pay-‐packet or monthly via credit card or bank account debit. In the 1950s, the US-‐based Wells Organisation brought the concept of Church fundraising into Australia and small and larger scale giving was being generated for missionary services, and building funds. Post WWII, the growth of a well-‐to-‐do middle class enabled large direct mail campaigns that continue to fund many causes today. Meantime, the government assumes an even stronger role in social welfare supporting the work of charities and the concept of endowed charitable foundations continued to grow. Examples of the power of endowment funds include the Ramiciotti Foundation set up in 1970 with $6.7M, which has since given away $56M and continues to be a major contributor to biomedical science. The 1970s ushered in the formation of Philanthropy Australia’s precursor, the Australian Association of Philanthropy, the continued growth of corporate foundations such as the Utah Foundation and also Australia’s first community foundation, the Victorian Community Foundation (what is now known as the Australian Communities Foundation was born from the Victorian Community Foundation) formed under the auspices of a bank with two other states following soon after. The notion of sub-‐funds, place-‐based giving and community foundations accelerated in the late 90s and early in the new Millennium and corporate foundations also developed alongside the corporate social responsibility trend. Around this time too, the Howard Government established the original Prime Minister’s Business and Community Partnership and announced a policy platform to increase philanthropy. Workplace, cultural and environmental giving incentives emerged along with the Prescribed Private Funds structure (now Public Ancillary Funds) in 2001. More recently, the past decade has seen the advent of various forms of collective giving, most prominent among these giving circles where members join to give a predetermined amount and select what cause their pooled funds will benefit. Calls for more giving structures that broaden the notion of who is a philanthropist are likely to drive the next change in this ongoing story of generosity, which is so underscored by the timeless Australian ethos of mateship and helping a stranger. 6
4. Legal/ taxation requirements • Some foundations can only fund organisations that the ATO has endorsed as a Deductible Gift Recipient (DGR). • Some foundations can only fund organisations that are registered with the ACNC and endorsed for tax concessions by the ATO. • Some foundations can only fund organisations that are both of the above. • Some foundations can fund almost any not-‐for-‐profit entity provided that the funding is spent on activities which are legally charitable. Some foundations can only fund organisations that have a certain kind of DGR endorsement. There are two main kinds of DGRs: Item 1 DGRs, known informally as ‘doing’ DGRs. These are the organisations which carry out the hands-‐on work – health promotion, environmental, arts and welfare organisations etc. Item 2 DGRs, known informally as ‘giving’ DGRs – which have no purpose other than to make or collect money in order to give it away. The rule is that one ‘giving’ DGR cannot give to another ‘giving’ DGR. Most organisations that are seeking grants from foundations are Item 1 DGRs, ‘doing’ charities, but there are some entities which have been set up as fundraising foundations – often attached to a hospital or cultural entity – which are ‘giving’ DGRs. There are many funds, including Private Ancillary Funds (see Section 4), which cannot fund the ‘giving’ type of DGR. To ascertain an organisation’s charitable and/or tax status go to: ABB Lookup: http://abr.business.gov.au ACNC: http://www.acnc.gov.au 7
5. What are the different types of philanthropic funders? This guide focuses on how to seek grants from philanthropic funders. These are funders who have an asset base known as a corpus and use the income generated to provide grants or make impact investments. Although this is not a guide to seeking Government funding, many of the same principles apply. Funders derive income from their investments, socially responsible investments and potentially via impact investments. Generally, they allocate the income generated as grants, but more recently, some funders are investing directly in social enterprises. In Australia there are a variety of different types of funders and each type will have an impact on: • How easy it is for you to find and to communicate with them. • The types of project they will and will not fund. • The amount of funding they will have available. • When you can apply for funding. • What their requirements and expectations of you, the grant recipient, will be. The following descriptions are general in nature and designed to provide you with a guide to the different kinds of philanthropic funders, what they support, how they operate and how they are managed. Private foundations Typically, a ‘private foundation’ is one that has been established by an individual or family as part of their Will/estate/bequest and is managed by independent Trustees under the terms of the Trust Deed. Private foundations vary greatly, not only in size depending on the amount of the original bequest, but also in their purpose as determined by the wishes of the original benefactor. Some private foundations may try to retain a ‘family linkage’ to the original benefactor; however, the Trustees manage the private foundation independently, except where living family members are Trustees. ‘Non-‐discretionary’ private foundations allocate their funds to individual charities where the benefactor has left money in their Will to benefit a specific organisation. An example would be: “I want the funds to go to the Lost Dogs’ Home and the Royal Children’s Hospital”. When this occurs, funds will be allocated in perpetuity to those named organisations and, as such, these private foundations are not available as sources of funding for other charitable organisations. Private foundations known as ‘discretionary’ are those where funds are left to benefit certain purposes such as the arts, education, a specific geographic area, people with disabilities or ‘general charitable purposes’, rather than specific organisations. The purpose of a private foundation reflects not only the wishes of the original benefactor but also the prevailing social and economic needs at the time of establishment. This is why contemporary societal issues such as, for example, refugees and asylum seekers, may not be reflected in the granting guidelines of many private foundations, especially those that were created in the early 20th Century. 8
If the funding purpose for which the foundation was originally set up no longer exists – for example, a trust established in the 1920s to fund orphans with polio, then the Trust Deed can be amended. This is a lengthy legal process that has to be initiated by the foundation Trustees, and any changes are not undertaken lightly. In fact, as long as the original purpose of the foundation can still be fulfilled, there are unlikely to be any changes. Only in cases where the original purpose is obsolete and cannot be fulfilled, would the Trustees make an application to have the deed amended. For instance, a fund that was established solely to support environmental groups to purchase land for conservation purposes must fund only that purpose until there are no longer any eligible groups carrying out that particular work. The foundation’s Trustees cannot decide that they would prefer to give the funds to, say, arts or welfare organisations instead. Other foundations are prohibited by their governing documents from funding certain types of entities or projects – for example, some foundations are unable to fund capital works as their Trust Deed specifically prevents them from doing so. This is why it is so important to do your research first and to read a funder’s guidelines. Because no matter how strong your application for capital funding, or however much the Trustees may endorse it personally, they are legally unable to provide funding if the Trust Deed excludes funding for capital works. Private foundations are governed by the requirements of the Will/Trust Deed – rather than specific legislation and as such may be able to support general charitable purposes (i.e. they are not limited to charitable organisations and/or those with DGR 1 status). The management of private foundations consists of two main types: 1. Private foundations, which are generally larger, may operate independently with Trustees self-‐managing their operations, governance, investments and grant-‐making. They may also employ staff to assist the Trustees in performing their duties and responsibilities. 2. Smaller private foundations, or those where the benefactor appoints an organisation to be one of the Trustees, may be managed by a trustee company. Trustee companies are profit-‐making entities that are legally empowered to act as professional Trustees for all kinds of trusts, including charitable trusts. Trustee companies have been administering philanthropic funders for over a century and are often chosen by donors who do not have heirs or other people they can appoint to look after their private foundation. A trustee company will sometimes manage the private foundation completely – looking after both the investment portfolio and the grant-‐making. In other cases, they will only manage the investments. A trustee company may act as the sole Trustee for the foundation, or it could be one of several Trustees. 9
Family foundations Family foundations consist of either living donors or living people with a close connection to the founder who may themselves be donors to the foundation or have a family connection to the person who established the family foundation. They normally give funds via a Public Ancillary Fund (sub-‐fund) or a Private Ancillary Fund. Sub-‐funds generally allow people who may not have enough money to establish a Private Ancillary Fund, so that they can be involved in philanthropy. Sub-‐funds are management accounts (via a trust company, community foundation or any other entity which establishes a Public Ancillary Fund Endowment structure) bearing their own name (e.g. The Jane Smith Family Fund) and established for specific charitable purposes. With family foundations, funding decisions are often influenced by personal preferences or interests, and the Trustees may include the original founder, partner, sons, daughters and/or grandchildren. They have greater flexibility to change what is funded over time, especially when new generations take over as Trustees. Many Family Foundations are very private and do not accept unsolicited applications for funding. This is usually because they are very specific about their funding priorities, are very small and have no paid staff with family members acting as Trustees over and above their other commitments. These foundations tend to research and self-‐select which charities they want to fund, or they may co-‐fund in collaboration with other similar funders. Family foundations are generally structured as either a Private Ancillary Fund or a Public Ancillary Fund and can only support charitable organisations for charitable purposes with DGR Item 1 status. Community foundations Community foundations are established to benefit a specific geographic area. Like most philanthropic funders, they have a corpus, however they differ from private and family foundations because the corpus is built up from a variety of sources including individuals, local businesses and government sources. Many community foundations in Australia also receive funding from bequests. They make grants to fund local activities and not-‐for-‐profit groups and may also fund training and organisational capacity building. Community foundations are governed by a board of people from within a specific geographic region, who are familiar with the needs, demographic profile and community organisations in that region. Community foundations are generally structured as a Public Ancillary Fund and can only support charitable organisations for charitable purposes with Deductible Gift Recipient 1 status. 10
Corporate foundations Companies which are active in the philanthropic space and/or provide community donations and/or sponsorships and/or corporate social responsibility may establish their own corporate foundation. These corporate foundations may be established as a separate legal entity or as a separate division within their business. The legal structure is determined by where the funds come from and what they are funding. As with private and family foundations, corporate foundations set up as a separate legal entities are charitable in nature and therefore have to comply with the same rules as regular foundations. For example, they can only fund charitable organisations for charitable purposes with DGR 1 status. Corporate foundations favour organisations or projects that align with their corporate mission and help to promote and build the profile of the company. If a corporate foundation is structured as a division within the business and allocates funds directly from operating profit, it can support a wide variety of individuals and organisations, both charitable and non-‐charitable. Government-‐initiated foundations Some foundations were set up by Government with initial seed funding, but have received no further government funding since their establishment. These are generally independent foundations which have gone on to raise further funding and become self-‐sustaining. Examples of these kinds of organisations include the Foundation for Young Australians and the Victorian Women’s Trust. There are other government-‐initiated foundations which operate with varying degrees of government oversight; this is usually because they are still in receipt of government-‐ directed support. Government-‐initiated foundations have many advantages for grant-‐seekers as they are often relatively large, publicly advertise their granting programs and usually have paid staff available to discuss your application. However, some of the drawbacks associated with government foundations include the high level of bureaucracy and detailed, and often complex, reporting requirements. There are also other government funding programs which may use the term ‘Foundation’ in their titles. DGR separately listed foundations On some occasions, charitable funders may obtain separate DGR status – such as The Foundation for Rural and Regional Renewal (FRRR) – which is a unique organisation created through collaboration between philanthropy and Government. 11
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