“The best kept secret of philanthropy in Australia”

Community foundations are uniquely positioned to address broader societal crises, from cost of living to COVID, but there isn’t enough understanding of the sector, says one industry professional.

The Lord Mayor’s Charitable Foundation (LMCF) has been delivering impact across Melbourne for the past century, but it’s just one of a few community foundations operating in Australia.

LMCF uses philanthropy to address local social and environmental issues, from affordable housing to building a sustainable economy, which CEO Dr Catherine Brown OAM says is successfully achieved as a result of its structure.

Brown argues that community foundations are uniquely positioned to address broader societal crises, including natural disasters, COVID and fluctuating economic conditions, due to the deep roots they form in local communities.

“We’re here for the bad times as much as the good times – that’s kind of, I think, what community philanthropy really is,” said Brown.

“We’ve built not just the funds, but knowledge about the charities in Melbourne, and who’s working on different areas, who’s doing innovative work, and who could be funded in the time of a disaster. During COVID, we were able to work very quickly because we had some amazing connections in the charitable sector.”

“I’d like to think that community foundations grow in understanding in Australia.”

While LMCF is regarded as a long-standing philanthropic institution, community foundations – place-based charities that support local issues – are part of a small, but emerging, sector in Australia.

There are just 40 community foundations currently operating across the country, with nearly one third established within the last decade, according to the Community Foundations in Australia: a Blueprint for Growth report.

Despite its size, community foundations play a unique and critical role in the philanthropy ecosystem, with four out of five based in regional communities. The sector will mature by 2025, with 60 per cent of community foundations reaching a 20-year milestone, signalling clear opportunities for accelerated growth and impact.

“I think community foundations are the best kept secret of philanthropy in Australia. They’re very big all around the world now, in the US, UK, Europe, Asia, but we’ve been a bit gazumped by private philanthropy,” said Brown.

“Through community foundations, everyone can be a philanthropist at whatever level they can be. Someone might be able to give $1,000 a year, which is still very generous, [but] if you put that with 100 other people in a collective giving circle or a community program or with us matching, you have more and more impact by working together.”

Funding the future

Last year, LMCF awarded over $11.6 million in grants to enterprises and projects delivering community impact, including not-for-profit organisations Foodbank Victoria, Justice Connect and Launch Housing.

The organisation applies a climate lens to the projects being considered for funding. Brown said this approach, which began in 2016, was “one of the most important things” she’s led.

“Climate change is going to impact everything we do – whether it’s where jobs are; how energy efficient and climate safe housing is; what the health impacts will be; what the impact of increasing natural disasters will be – to think about that, and about our climate transition and reducing emissions, that has changed the way we fund.”

Moving forward, Brown anticipates the growth of social enterprise will be a critical investment area, with the foundation set to join other key industry stakeholders, including Infoxchange and Social Enterprise Network Victoria in a new impact accelerator hub in August – an office space designed for collaboration and leadership amongst the sector in Melbourne’s CBD.

Other areas of interest include investing in areas of employment that will match future needs, as well as building neighbourhoods that are less vulnerable to the effects of climate change.

“We don’t want to fund employment in areas that are not going to be part of our future. So we’re looking for enterprises and projects that relate to the clean and green economy, including getting women into those areas, and also in the caring industry and the digital industry.”

The charity was responsible for funding Infoxchange’s not-for-profit digital transformation hub during COVID, which has received further financial support due to its important role in helping the sector to address technological challenges.

“The need for the not-for-profit sector… not only to have innovation in service delivery and to cope with working remotely and hybrid working, but just to have really good digital capability as organisations, that’s huge,” continued Brown.

“The organisations that can adapt and take opportunities and move, they’re the successful ones.”

The next generation of giving

With the Productivity Commission expecting over $3 trillion of generational wealth to transfer from baby boomers to millennials over the next two decades, tapping into the younger market is essential to the longevity and strength of philanthropy.

Micro-philanthropy social enterprise and not for profit Little Phil, which links donors to Australian charities through its online social impact giving platform, said the key to achieving this outcome is simple: it’s all about impact.

In creating its technology, Little Phil focused on enabling individuals to track their donations with complete transparency and removed the use of third-parties that often take a portion of the funds raised.

“Our donor market through Little Phil is predominantly millennials and younger,” said co-founder Mathew Sayed.

“Millennials are moving into this market… they want to give, they want to be impactful, but they want to have a tangible feel to that.

“Millennials and younger [people] are quite concerned with transparency and the impact going forward. They want to know that most, if not all, of their money or time is going to go to solving a problem they care about and not being absorbed by large administration fees.

“We wanted to make sure that you can just come on and click once or twice and donate, and see where all your impact is around Australia, it’s all in one spot. We really focused on that.”

Impact is also driving the decision-making at LMCF, and also personally for Brown, who sits on the board of Impact Investing Australia, a not for profit aiming to accelerate the growth of impact investing across the country.

“I think the next generation is more interested in giving now, and also social entrepreneurship… They want to see business for good,” said Brown.

“[LMCF] has allocated up to five per cent of our fund into impact investments, which is an increase from two and a half per cent. That’s just been increased in the last six months, and we expect that to grow. I would expect in 10, 20 years time, it’ll be all impact investment, but we’re on a journey.”

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