The Changing Face of Giving in Australia

The different giving areas of the “philanthropy pie” are all growing at different rates and support different types of causes, according to a new report.

The Support Report: An In Depth Analysis of the Changing Face of Giving in Australia, soon to be released by JBWere, explores how philanthropy is evolving in Australia, looking at each of the different giving areas and the types of givers who support each cause.

It found that there is a dramatic difference in who, why, where and the way support is provided across donor segments and highlighted a need for not for profits, particularly in certain cause areas, to evolve rapidly to continue to attract support.

Speaking at a launch event in Melbourne on Friday, report author John McLeod told the audience there would be winners and losers going forward.

“All of those bits are growing at very different rates and they all support very different types of causes,” McLeod said.

“Philanthropy is going to look a lot different in 20 years time to how it looks today.”

He told Pro Bono News that his aim for the latest report, which is a companion piece to The Cause Report, was to educate charities on where they should be putting their fundraising efforts.

“If you’re talking to an individual charity it is them thinking about, ‘for my cause where should I be putting my efforts?’,” he said.

“So leave aside do they do good things with the money, let’s hope they do and I’m sure they do, it is ‘where do I raise money?’ ‘Who should I approach?’ And ‘if where I raise all my money at the moment is one of the problem areas, but what I do is really important, then I’ve got to change something’.”

He said the main takeaway was thinking of the different areas of the pie.

“To me the big revelation was the different areas of the pie, so not thinking of philanthropy as being one big homogenous thing, but recognising it comes from different groups, and that’s ok,” McLeod said.

“If you are projecting out, what’s the growth rate in all those groups, and then who do they give to? If you analyse it that way you get a very different picture to one big homogenous thing.”

The report identified volunteering, mass market giving, bequests, high net wealth, Private Ancillary Funds (PAFs), Public Ancillary Funds and corporate giving as all parts of the pie.

It found that self-earned income accounted for the biggest proportion of money received by charities.

When a dollar value was placed on volunteering, this also accounted for a “huge part” of the operating model for charities.

“As a total it is a lot larger than the dollar donation,” McLeod said.

“One of my concerns is do charities put as much effort into how they use volunteers and how they retain volunteers compared to the effort they put into raising money?

“I’ve rarely met a charity that puts more effort into their volunteering than they do into the fundraising and yet if we look at its importance to the model it is significant. So that to me is a little bit of a flag.”

McLeod concluded that volunteering had probably peaked in terms of proportion of people.

He said this was important as half of all charities costs were employee costs.

“And that hasn’t changed for 20 years,” McLeod said.

“So a, they’re not being innovative about their cost base. That sounds glib and it’s easy for me to say but it hasn’t changed. And yet they get a quarter of their cost base for free through volunteering.

“So if that’s at a risk of falling away, that’s a huge part of their cost base that they’re not going to rely on as easily as they have in the past. So that’s in a way more important than the dollar side of it although that’s what everyone focuses on.”

Mass market giving was also shown to be falling.

McLeod said the picture presented by the report was “a good news story” overall with philanthropy as a whole expected to grow, however “the two biggest bits of the pie”, volunteering and the mass market, were “looking a bit sick”.

“If you go to that mass market, then it’s well, why do the ones there who give, give? And what have we got to do to convince the others,” he said.

“So the ones who are giving in the mass market are doing quite well, they’re increasing the amounts they give, they are reasonably consistent with it. But it’s that growing cohort of people who don’t give. So what are we going to do to change that?”

During the presentation McLeod suggested philanthropy needed the equivalent of a “Slip, Slop, Slap” campaign.

“It’s really saying what can you do nationwide, so it’s not World Vision going and saying ‘hey everybody we need to give more’, and it’s not a university, it’s not any one individual charity, it’s coming together as a total group,” he said.

“The sector’s not always been great at that, because it’s so big and diverse, everyone’s trying to get their own share bigger rather than think about the pie. But the pie is becoming a problem.

“So we need to talk as a broader sector and that’s where a national campaign of some sort, designed by some really clever marketing people, could well work and it’s been proven in a few other countries.

“So it’s really them putting a sensible big picture together and convincing the population why it’s in their interests, not why it’s good for the charities, but why it’s in their interest to support them.”

One of the other key facts from the report was that the money was concentrated at the top end of the charity market with the top 25 charities getting around 20 per cent of the money.

McLeod said this had long been the case.

“We did a list in the Cause Report of the top 20 charities today, just in size, and the top 20, 20 years ago and apart from the fact that a number of aged care groups had snuck into the top 20 the rest of them were the same,” he said.

“So, it’s an easy line but where’s the Google and Facebook and all of that of the charity sector? There are none.”

He said it tied back into philanthropy, as only philanthropy would pay for new ideas coming through.

“Government contracts aren’t, fees that they charge to clients for services don’t have the margin to do new exciting stuff. So it’s philanthropy that can do that,” he said.

“But if most of the philanthropy has gone to the big names. You are wanting to reorder where the philanthropy goes.

“And I think the big philanthropists – in terms of dollars, I don’t mean better just bigger – they don’t tend necessarily to give to the big names, it tends to be more medium organisations that  they can have a stronger, more intimate relationship with and all that sort of thing. So maybe that will help some of Google’s and Facebook’s form within the charity sector.”

According to the report, the philanthropic dollar is 8 per cent of sector income.

But McLeod said it was very important as it could be used differently, and had the ability to take risks and fail.

“I’m not sure every charity uses the philanthropic dollar differently. I think a lot of charities use it to plug the gap. And while that’s necessary I guess it’s not the best use of the philanthropy dollar,” he said.

“So I guess it’s just a hope that it gets used to do new innovative things and you come back to the Google’s and Facebook’s in the sector. So that’s where it should be used.”

He said for smaller charities, it was difficult for them to stand out and secure funding, in part “because there are so many of them”.

“It’s not going to be in bequests unless you’re lucky, because most bequests are left to organisations that didn’t know who the bequestor was, it’s a surprise. Most corporate giving, they’re not going to risk their own reputations on an unproven small charity probably, ” he said.

“So it’s being known, its connections to others. I think one angle that might help is, more so some of the bigger funders are looking to not fund one organisation but they’re saying to solve a particular cause, generally you need two, three, four charities doing different things but in combination. So the funders are saying ‘I’m not going to fund any one of you, but I’ll fund all of you if you come together’.

“So maybe for that small charity it’s them recognising they can’t solve whatever it is themselves. Who are their sensible collaborations? And I don’t mean mergers, and all of that, but you know they’ve actually got a strong working relationship with two, three, four others to achieve the thing and so that makes them much more marketable then to some of those funders.”

Interestingly different causes fared better in different areas of giving.

A key message for charities was that depending on what cause area they are in, they should talk to different groups of people rather that just talking to everyone.

McLeod also identified religion, international aid, and potentially welfare as the causes most at risk.

“So the caveat is if they change and I’m not the expert on what they’re going to do but if they change this doesn’t necessarily have to happen. But you know it’s like if you keep on eating chips you’ll die from eating chips. So it can change,” McLeod said.

“A caveat again, fundraising is getting better in terms of total dollars so that’s good.

“But its share of it, religion, international aid, potentially welfare are some of the causes that look most at risk.

“The ones that are winners from it, I think universities are a clear one. Arts and culture have already done quite well but with the demographics of who gives to it, the growth is in that area. By definition they should continue to do quite well.”

He also identified the environment as a potential area for growth.

“If you think of religion as a cause, and this isn’t a pro or anti-religious comment, but religion is something that’s been the biggest sector and it’s been a cause that sort of is an overarching ‘this is the important thing in my life’,” he said.

“People who are into arts and culture, that’s not the only thing they do. They do other stuff but they’re into that. Religion tends to be an all encompassing thing, or was.

“So what causes could be the religion of the future? And that’s where I think environment is one. You know in the sort of climate change view of the world and all that. All the other bits are really nice and important but what’s the overarching potential cause, I’m not saying it’s going to be the same size. But if I was a marketer that’s what I’d be marketing.”

McLeod said it wasn’t all doom and gloom but the message to charities was that they need to adapt to change.

“Generally they move at glacial speed, for a whole range of reasons. They need to adapt to this change quite quickly,” he said.