'You've got to engage with people': Turnbull offers his advice for the NFP sector

Australia’s 29th prime minister has shared his thoughts on several NFP sector issues 

Former prime minister Malcolm Turnbull says charities seeking Commonwealth funding must ensure they are on the radar of their local MP if they want to receive government support. 

Turnbull recently spoke to David Knowles for Koda Capital’s podcast With Purpose, discussing his views on philanthropy, the role of charities, and the importance of accountability in the sector.   

With the COVID-19 pandemic leaving many charities strapped for cash, it is expected that NFPs will need to turn to government for funding. 

Turnbull said while charities obviously had to go through all the normal grant application channels, their local MP could prove a useful ally in their quest for support.

“One of the best bits of advice I had as a very young man was from someone who said, ‘you’ve got to snuggle up to the government and keep the opposition closely briefed’,” Turnbull said. 

“So you don’t want to get into partisan politics, but you want to make sure that you’ve got good relationships with some people in the parliament because… they may not be making the decisions about where grants are going to go, but they certainly will get you on the radar.”

Turnbull said as the member for Wentworth for 14 years, he had very good relations with a host of NFPs in his electorate – and often made representations on their behalf to ministers. 

“It is absolutely what local MPs do. The minister has to make his decisions or her decisions… depending on how the grant process works,” he said.

“But getting yourself on the radar screen of your local MPs is very good… People don’t use their local MP enough.”   

Keep management costs low

Turnbull said accountability was very important in the NFP sector, and shared his belief that charities need to be run on a low-cost, minimal administration basis.

He said charities needed to show donors their money was being put to good use.

“You’ve got to engage with people. You’ve got to explain what you’re doing, [and] persuade them or demonstrate to them that they are going to get value for money,” he said. 

“[So] if someone gives them $1,000, they’re actually going to get $1,000 worth of output. They’re not going to take it all in admin and salaries and so forth… Keeping the management costs as low as possible is critically important.”

He said his impression was that – like with small businesses – there were quite a few charities that were started by people with “big hearts and dreams but really don’t know what they’re doing”.

“So it’s very important to make sure that if you’ve got a charity that you are running it lean and efficiently,” he said.

Knowles told Turnbull that there was a common belief that for-profit businesses needed to invest strongly in talent, management systems and marketing etc. to succeed.

But he noted that for charities, these costs were often classed as “overheads” and frowned upon.

He asked the former prime minister if there was an argument to say that this expenditure was essential and could be the best thing to do with some charity money.

Turnbull was not completely sold on the idea.

“I guess the difficulty is that with a business, your KPI’s are fairly obvious. It’s return on capital, profit, share price… [but] with a charity, the KPIs are often harder to discern and define,” he said. 

“There’s no golden rule here. I’m just saying that you’ve got to go further than saying ‘we are trying to find a cure to cancer’ to say ‘we’re trying to find a cure for cancer. This is what we’ve been spending the money on. These are the results we’ve been getting. This is why now we want to do something else’.

“The difficulty is one of accountability, but management is key.”

Turnbull also encouraged charities to use their donors as advocates.

He noted that there was a personal connection that made the philanthropic dollar much more powerful than the government dollar. 

“I always encourage organisations… [to] use your donors as advocates, make them your partners, because they feel they’ve invested,” he said.

“And that’s very important because, frankly, that gives you some influence and some leverage.”  

You can listen to the full interview here.