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Post COVID grants from CERT

29/7/2020

Our big bold disruptive future in a post COVID funding world does not seem to have happened, and we are going back to BAU. The Government’s fairy dust to Sport seems to have displaced any tension for change, and there seems no engagement or discussion on the whole ecosystem by any party (save TOP). So back to my knitting.

Canterbury Earthquake Recovery Trust publishes their grants fairly promptly after the decisions are made. I have written about them previously. Below is a chart showing grants by month for the last 3 or so years. Now, they are a fairly small player (which makes analysis simple) giving out $2.8m last year, but I am a fan as they seem broad church in their approach to grants.

As someone who occasionally looks for grants I am pleasantly surprised by this. Obviously there were no distributions when our nation was in lock down in April and May so that will reduce the total given by around 16%. And in June, when we opened up again, they have only dropped 25% off the average for the previous 3 years, 30% compared to last year. My previous work suggested that we would see a 40% reduction… so my guestimate turned out OK. It will be interesting to monitor this moving forward to see if gaming habits have structurally changed.

I have started capturing declines in my database, and noticed an interesting new tag for CERT. Bug 4/2, which runs the Imagination Station, has been turned down by CERT in the last financial year, with a comment “Inconsistent with CCC Gaming Policy”. We can see in the Annual Report that “CERT accepts Christchurch City Council’s sinking lid policy. To be consistent with Council’s approach, CERT does not favour grant applications that involve Council”. They also turned down Canterbury Literacy Association, Christchurch Symphony Trust and Vikings Swim Club for the same reason. Tough luck for those organisations, and an interesting quandary for organisations who are CCC supported should this get picked up by other funders.

CERT have also started capturing and reporting the NZBN. This is a Government issued number to organisations to help these businesses manage their relationships with Government It also happens to be a handy unique identifier just in case any entity did want to construct a database with many of the third sector organisations, so nice to see disclosure here.

No real change where their money goes: below is a graph showing the quantums by sector. Sport is getting just over half of the money, but there are some decent dollops going to other sectors. Education too is often sport related so we must be careful about interpreting this.

The average grant in 2019 was $5,519. Interestingly this has dropped from $8374 in 2014. I would suspect that this is because more organisations are applying to it. The top 10 organisations supported by CERT in 2019 are below. What I find interesting about this is that all have multiple grants. We also have some “unusual suspects” at the top of the list: although with the drama over sport funding for basketball at a national level at least this gaming trust is a big supporter!

However, when we look at where the money goes by sector, old patterns are restored. In the financial year ended 31 March 2020 Rugby received 7% of the total amount given ($206,470). This was followed by cricket receiving $148k, Golf on $140k, Basketball $133k, Football $86k and Bowls $84k. What is happening here is that there are fewer organisations asking for funding in Basketball. Indeed, only two clubs receive funding from this organisation: the money mostly goes to organisers. I have a kid just started playing basketball amongst other sports: as parents we pay the cost of the competition, school provides the uniforms thanks to the good old PTA, facilities are CCC funded by ratepayers, and the coach is a wonderfully passionate teacher. Simple.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Grant Funding Manifesto 2020 - For discussion

16/6/2020

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Last time I wrote about the implication that the COVID pandemic was going to have on funders. It’s a little too early to look at what is actually happening here: June will have the first full data for some funders, and sure as eggs I will do so.

But, in some words that have been attributed to Niccolo Machiavelli, lets never waste the opportunity offered by a good crisis.

In my last blog I wrote this. The impact of the COVID pandemic is going to have a profound effect upon how third sector organisations deliver their services. It exposes a funding ecosystem in New Zealand where around 2/3 of the grant money coming to communities comes from gambling activities. It exposes chronic underfunding of core service delivery by government, and a rise of professional staff (and their resultant cost) within third sector organisations tasked with getting that diminishing pool of grants and private philanthropy.

What are the answers? If I knew that I wouldn’t be writing this. But I do know that if we want to make some systemic changes, the opportunity is now, so let’s get those ecosystem conversations going.

So with some dog walking time, a few conversations, and some reading, I do have a bit of a solution which will put the control of community funding back into the hands of those who receive the benefits: the community.

The issues are complex.

We have supply issues. Money coming from gambling makes up over two thirds of grant funding for community groups. Around $358m goes into the New Zealand TSO ecosystem from gaming trusts. Lotteries too put $261m into the community last year.

We have demand issues. Most groups want more money. But sometimes there seems little community benefit in how that money is spent. We have a lot of middle class capture within the sector, little benchmarking, and little innovation due in part to lack of access to capital.

We have cost to serve issues. Some of my earlier work suggests that the cost of this process to NZ Inc is around $260m per annum, and that a grant costs around $4k to get into the community.

Any conversation around third sector organisations always ends up with money. This is driven in part by the fact that many people participating in these discussions are paid members of community organisations whose mortgages depend on this, which is perfectly reasonable. Those groups who are purely voluntary, be they structured or unstructured community groups, just keep on doing what they do and don’t realise they have a place in the conversation. Funders too drive the conversation, but see solutions which put them at the heart of a solution, rather than as an enabler.

The Problem Gambling foundation have proposed to the Minister that Class 4 gaming is phased out. That has huge implications for the sector. Now the simplest response will be to stick with the status quo. It will be interesting to see how the Government reacts to this proposal, and of course community groups will come out in favour of the status quo due to their inability to actually say what they really think as they need the money produced by this sector.

A key issue is WHO gets to decide where the money goes. Gaming trusts by and large are middle aged men allocating “their” money to various groups, with some eyebrow raising resource consequences. Check out some of my blogs for a dive into that stuff. Community trusts and various local and central government funds have a legion of staff making assessments, with either elected politicians or friends of those elected politicians determining what communities need. Surely the people who know what their communities need are people within those communities?

So let’s get radical.

Let’s get rid of pokies. We set up a voucher scheme for every citizen of New Zealand.

Third sector organisations can be part of a national voucher scheme: sports groups, arts groups, community groups, education groups, youth groups, health groups, environmental groups. Every citizen of New Zealand could be entitled to a state funded $100 voucher which can be applied through a portal. 5,000,000 * 100 = $500m. The portal takes each person through a few questions around what each person values. Sport? What sports do they play? Do they play for a club? Arts? Like the theatre? Dance? Baby and me classes? Cancer support? The first step helps people consider how they engage with groups in the community. The portal then gives people options around groups, benchmarking them against each other in terms of costs, efficacy and other elements. Perhaps the voucher does not need to be a flat amount. Perhaps in an effort to drive equity poorer communities get a bit more. Perhaps $100 is too low? Too high? Don’t know. Let’s discuss.

Secondly, money is applied from this system to operating costs. It can be spread over as many or as few groups as each citizen chooses. Perhaps we have an age range: from Year 7 and up people create their profile and allocate their money. This could be wrapped around a citizenship module to help students understand their power in a modern democracy. (Or not).

And no, if an individual choses not to spend it they do not get it. Rather, perhaps it gets allocated out according to the profile of the community the person lives in.

Third sector organisations who have chosen to be on the portal have put in what additional value can the voucher income can provide them that their current revenue does not. This could be around ensuring equity to enable children to play sport, ensuring support for health issues, or to keep community groups resourced. They simply fill in a form with their annual accounts and leave it open. No multiple requests: just the accounts, the plan for the money, and evidence to support why a dollar spent with this community group is a good investment. So there is an instant admin saving for those applying for money.

“The vulgar crowd always is taken by appearances, and the world consists chiefly of the vulgar.” Another Machiavelli quote. Because here is where we need to be careful in execution. This voucher scheme is not a popularity contest. There should be no incentive for charities to spend precious money on branding exercises to appeal to people. Rather, we use a bunch of tools to demonstrate community value and drive a bit more critical thinking (a skill, in these unprecedented times, that I am sure we agree needs practice). The number of people playing within the sports club. The group’s cost base compared to others. The outcomes that the group actually achieves with its money.

This portal, and the analysis on each organisation is centrally funded but managed outside government. People are paid a piece rate for analysis, and perhaps go through some form of certification. Analysis is peer reviewed, and public. Obviously there is a cost here: say 50,000 of the 114,000 TSOs are seeking money. If reviewers are paid $200 a review, and peer reviewers $100, that’s $15m. We have an IT system in here to which would cost a bit to set up and run, and a few staff to manage it. New cost? Not so. The cost to serve I mentioned before suggests it costs at least $260m per annum for the status quo. These costs are hidden in the accounts of funders and TSOs seeking grants.

Councils and others such as private foundations and other funders can use the portal too saving costs as well: costs often hidden well within Council budgets. However, I’d like to see a stop in both Council and Lotteries funding for community groups opex: this opex should be able to be covered with the above system, and Council can then focus on community capex opportunities. After all, taxpayer / ratepayer: we are all the same people providing the money for these grants.

When I have floated this concept in the past, some people in TSOs have said, “well, what say we get no money?”. I suspect that’s the point. If the community sees no value in what you are doing, then why are you still doing it? Innovation in this sector is rare due in part to access to funding. JB Were released a report in 2017 called “The New Zealand Cause Report”. This is super interesting, and I would recommend anyone with an interest in the sector to have a gander. The writer looks at Innovation, and summarises “While there have been some large changes in growth rates between different charity sectors over time, there hasn’t been much change in the names of the large organisations dominating the sector suggesting the ability for new and smaller organisations to innovate and grow is limited. Almost 80% of the 40 largest New Zealand charities have existed for over 20 years. This is in contrast to the for-profit sector where dramatic change in ranking order is common, availability of risk capital is higher and the financial rewards for success are greater.” And in the summary the point is rammed home with this comment: “The Facebooks of the charity sector are rare”.

This model as proposed enables some healthy competition for funding. This concept could well be an anathema to many groups, but I suspect funding in a more transparent manner is a better framework for competition than the current murky ecosystem.

Organisations that perform services with government contracts on behalf of the community should be 100% government funded. Some work done by Social Services Providers Association puts the dollar tag here at $630m. To be honest this feels a little on the light side, but it could result in a bunch of cost savings as focus goes on delivering best practice around the social service provision rather than the marketing and other activities that are needed to fill the current funding shortfall.

Organisations that have contracts with the Government around service delivery would register on the portal. People are referred to that portal based on their specific needs. For example, say I have a child with special needs. I have the cost of providing Health, Education and Social Services allocated to me to use as I choose, and those costs are based on audited best practice, Government rates to support my needs. I choose a service provider whose programme best suits my needs, and they receive my voucher income for the contracted years. This should see an increase in Government income to Third Sector organisations, as the contract rate is based on what it would cost the Government to provide best practice support, and bundle service delivery around the person rather than the Government department providing that aspect of care.

Similarly, these organisations undergo review on the portal. We have seen examples of largesse within the contract system, and there seems little appetite within Government for stronger management here. So its up to us, the taxpayers I think to ensure that the groups do what they say they will do, and do it well.

Curiously I wrote most of this before I watched a Zoom with members of different political parties discussing the charitable sector. It was hosted by Hui E Community Aotearoa (I have shared a link on my Delfi Facebook page if you want to watch the 90 minute webinar). The wind was taken out of my sails a bit by Geoff Simmons from TOP advocating just this: a voucher system for funding (funded ex alcohol taxes). This idea was then pooh poohed by Jan Logie who felt it could turn into a popularity contest (which I think I have addressed above). TOP I believe are not precious in their policies, and they seemed the only ones in that chat who had a real alternative to the funding status quo.

The definition of stupidity is often defined as doing the same thing and expecting a different result. I’m keen to get a community sector discussion going about how we can drive a outcome to solve some of the supply issues, the demand issues, and that pesky cost to serve, As our mate Machiavelli is purported to have said, “I'm not interested in preserving the status quo; I want to overthrow it.”

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Rethinking Community Funding Part 2

30/4/2020

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My last blog has sparked a wee bit of conversation, so I thought it may be helpful for organisations to explore the numbers further. I am already seeing how the reduction in funding, particularly gaming trust, is manifesting itself, with letters from various organisations and public appeals now doing the rounds.

It will be difficult for the community to dig deep, particularly with the uncertainty of what lies ahead over many people.

This chart looks at three years of data, over 12000 grants. I take each grant and categorise it with a bunch of useful parameters. I have then averaged the annual amount given. This chart simply shows the sectors that the various funding buckets put their money into. We can see that sport is the biggest recipient of grants in the Canterbury region.

What I want to focus on is the gaming trust contribution to third sector groups. In the last blog I estimated that nationally, gaming trust giving will be down $120,000,000 this year. That’s a drop of 40% of total giving from that sector. Indeed, although saddened, I was vindicated on this by Martin Cheer from Pub Charity who proffered the same number in a recent interview on National Radio.
Let’s look at the local effect. Canterbury has around 10% of grants into the area. There are a couple of little system quirks however.

For purpose Class 4 trusts give have some preferred organisations they give to. We have two of these in Canterbury: Air Rescue and Community Services, who give to the Canterbury West Coast Air Rescue Trust, and Mainland Foundation, whose primary purpose is amateur rugby union north of the Waitaki including the West Coast. The impact on these organisations is different: the air rescue pretty much gets all of its grant money from their gaming trust, while rugby (last time I looked) gets just over half of their money from Mainland Foundation.

What I have done is assume that Canterbury gaming drops $12m. I have then assumed that Air Rescue will maintain their giving to the rescue helicopters, but that rugby drops with everyone else. I then assume that groups get what they got in the past, just scaled back amounts.

This chart then shows the effect of this. It’s a wee bit complicated so let me explain. The first column is the average of 2015 – 2017 gaming trusts grants allocated by sector. The second includes my scaling back of grants given the pandemic effect. The third column is the average amount given by all other funders, which I am assuming won’t change over the next financial year (big assumption). The fourth column sums what we would expect without the pandemic. The second to last column shows the total projected dollar effect on various sectors, and the final column the percentage drop for each sector.

I have made a bunch of assumptions about how gaming user will behave, and about how the men sitting round tables allocating funds will make decisions. So of course these numbers are wrong. However, while we debate these assumptions, that doesn’t mean the conclusion is off: namely that the supply of grant money is looking pretty ordinary, particularly for sports organisations.

But which ones? Here is a cut of Canterbury sporting codes by Average 2015 – 2017 total grants, with the amounts adjusted down for the 39% anticipated drop. Using averages reduces the lumpy effect of capex.

The effect of reductions in grant funding on many of these codes obvious. Will it impact player numbers? Possibly not, although I can envisage more calls for access to sport as the pandemic increases poverty within the nation. Will it impact how clubs are run? I imagine so. I have not looked at other sources of income for clubs at a macro level as grants are my thing, although I have looked at a few organisations historically and noticed that, with grant income, expenses have risen, particularly around people costs.

The other big loser under this scenario is education with a loss of 23%. Often this money goes to school sport programmes, so there’s a further hit to sport. Of course, a lot of capex for schools, such as play grounds and other small assets. However, there does seem to be a high decile skew around this, so it may be that parents will need to be asked to stump up with a bit more around donations if they want the same. Of course, the bigger effect to schools will be the loss of international student income, which again exposes the fragile funding ecosystem for possibly one of the most important jobs we ask our state to do.

The impact of the COVID pandemic is going to have a profound effect upon how third sector organisations deliver their services. It exposes a funding ecosystem in New Zealand where around 2/3 of the grant money coming to communities comes from gambling activities. It exposes chronic underfunding of core service delivery by government, increases in demand for money by groups for cash, and a rise of professional staff (and their resultant cost) within third sector organisations tasked with getting that diminishing pool of grants and private philanthropy.

What are the answers? If I knew that I wouldn’t be writing this. But I do know that if we want to make some systemic changes, the opportunity is now, so let’s get those ecosystem conversations going.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Rethinking Community Funding Post Covid19

22/4/2020

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My word it’s a crazy old time. Shelves are bare all over town. I can’t help but think how dire funding will be for third sector organisations for the foreseeable future.

I thought it might be interesting to look at where money comes from the third sector. The excellent JB Were report 2020 puts the “…total giving at $3.8 Billion with volunteering adding a further $2 Billion.” This is represented on page seven of the report (which I can’t copy sadly as its subject to copyright). This chart does not take into account funding from contracts (such as the government contracts around service delivery common in the Social Services sector). My work also only looks at about $900,000,000 of this pie chart (the grant ecosystem), and doesn’t look at individual or corporate giving.

Gaming trust returns will be negatively affected. Pubs are closed, and the machines are not running. This will reduce the money available for groups. Lotto too has gone online: although the coffers will be boosted by that huge jackpot a few weeks ago, New Zealanders usually buy them in store – some 75% of tickets are bought in the “real” world. I would expect the sums available to give away as reduced for the next few months (at least).

Ratepayers too will be antsy with their Councils on spending of rates. I can’t see that local government will be in any shape to up their levels of support: pressure will come on Council budgets.

Community Foundations, foundations and those who give money based on investment return will not make great returns on their investments. Indeed, like our own Kiwisavers, I would expect those to be negative this year, and (if we think we are headed for recession) for a few years more. They are required to run those funds into perpetuity: I would expect the money available to groups to reduce.

Private givers and businesses will be negatively affected by this all. Many businesses are having to tighten their belts, many will strip their businesses down and focus on looking after that and their employees.

Our volunteers will be affected: for many groups their volunteers are older and more at risk. And of course we are all stuck inside at the moment anyway. However, volunteering may be an upside into the future; with the projected unemployment this will be an opportunity for people to feel better about themselves through volunteering.

The one area of potential growth is quite possibly bequests. But not sure I’d want to be the charity which kickstarts this in the midst of a pandemic!

I do think some structural change is happening with community funding. The third sector is fairly reliant on gaming trusts, with around $300m headed to the third sector from this source. This will drop this year: if we assume customer behaviour picks up the day after we come off lock down, community funding will take a $40,000,000 hit this year. However, I don’t think customer behaviour will return to what it was before: habits have been broken. Further, hospitality businesses have been negatively affected. However, for the sake of this analysis let’s assume for now that the businesses are all good. If we assume that 20% of customers account for 80% of the income (the good old 80 / 20 rule applies for many things), and say half of them have now broken the habit, then that takes about $120,000,000 out of the community funding pool. That’s a lot of zeros, and no amount of Covid special funds from other community funders will bridge that gap. Further, we are seeing greater demand on those funds, as the sector reacts to an instant recession with all of those resultant issues.

So if we look at sectors by funders we can see some stark realities. The chart looks at Canterbury 2017 data where I took all 4,672 grants made and categorised them according to where the money came from. If we assume a 40% drop in those grants that’s a big hit for many organisations. And sport will be quite impacted, both by clubs and at schools. Is this OK? What gets lost?

Missing here is of course the government contract amounts which feed much of the sector - although not the sport sector.

A lot has been said in the media about our team of 5 million. The nation has, to date, done a great job of managing the impacts of the Covid19 virus. We hear of disruption, about a fundamental change to our economy, and the need to think of others during this time. I’d be keen for us to have some conversations about the future of funding for third sector organisations. We have major supply and demand issues for cash within the sector.

As we in the third sector sit around various Zoom calls talking money, can we ask whether our organisation actually NEEDS the money as opposed to wants. Over the past twenty years we have allowed organisations to put costs into to support our community aspirations (or perhaps just the aspirations of the board). Have we professionalised what volunteers used to do? Will spending a dollar with us get a better community return than the organisation down the road? Can we think as a part of the ecosystem and not as individuals?

Moving forward, there are some good questions which we as communities should discuss.

What do we want the government to enable our organisations to do. Why is the partial funding of particularly social service organisations considered OK? If our groups are delivering great results which achieve community priorities at a relatively low cost, why should they have to fundraise?
How should the things we expect to be funded be funded? What’s the role of community in all of this?
How should we consider community asset ownership?
What do good community funding arrangements look like? Who is a part of these conversations? How do we ensure our organisations are accountable to the communities they serve?
Why has the ecosystem evolved in the shape it did and how can we consciously shape it going forward?

Business as usual for third sector groups in a post COVID 19 world seems a little bleak, and an opportunity lost. Let’s use this crisis to ensure that our communities enter the rest of the 21st century strong, resilient and capable of being as great as we know we can be.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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One Foundation Update

4/3/2020

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I thought it might be a good idea to update on this gaming trust. I included these guys in the work I did earlier for my TedX CHC talk when they were called First Sovereign, but of late they have struck me as a bit hard: namely due to the fact they seem to have moved away from identifying where their grants were made and it’s not quite the simple copy paste job it used to be.

But I have time on my hands so started afresh with 5,046 lines of five years of grants data. Some two months later, much gnashing of teeth and questioning my life choices, here you have it.

They have venues throughout the country, with a particular historical strength in Rotorua. Indeed, the men who made the decisions on where the money goes are mostly based in Rotorua.

Looking at the past five years of data we can see a lot of growth in Wellington, and a bit in Manawatu Wanganui. It makes me wonder: Why the drop off in 2019? And what’s the grant growth in Wellington.

To answer the first question. I am pretty sure that incorrect data has been published. Sadly there are no financial statements published for One Foundation since 2017, so I can’t check this, but given the number of gaming machines under their management actually INCREASED by 12 in the nine months from 31 December 2018 to 30 September 2019 (the last time numbers were published by the Department of Internal Affairs on this) I’m guessing that’s the situation. I have a query in with DIA about publication of grants as I’m too lazy to read the legislation, but I suspect, given these organisations tend to be very transparent with their grant making, that this is an error.

The second question is pretty interesting. I have looked at DIA data for venues over the past five years. Wellington region’s machines have grown from 8 machines at 31 December 2014 to an astonishing 205 at 30 September 2019. They picked up nine venues it seems in 2015, all from Infinity Foundation. I’d love to know the story behind that! I did try to see if that affected the grant decisions, but unfortunately Infinity Foundation only have their most recent financial year grants available on their website (again, really?) so I can’t dig. One Foundation’s numbers have held in other parts of the country, although they are now out of Queenstown, and numbers have halved in the Tauranga region. Auckland numbers also rose from 24 machines up to 78 in 2017, only to drop off again to 36.

Then we can look at where the money goes. I’m only going to look at years where I have full data: 2015 – 2018. Money goes to all sorts of community organisations, with sport getting around half, and community and economic development, and education taking around 15% of the total given. They give an average of around $9,000 per grant, in 2018 made around 1,500 grants to 964 different organisations across the country.

What’s quite interesting is the regional split. For example, Bay of Plenty sports clubs get 43% of the Foundation’s total spend into the region, Canterbury’s get 59% while Wellington’s sports bodies receive some 73% of total grants into the region.

Sport? Well it’s a bit predictable: below is a wee table showing the top 11 codes over 2015 – 2018 financial year. Organiser is those organisations who run things (like Sport Canterbury) and Club is those clubs where several codes are offered under one entity.

Now, one thing I just don’t get is multiple applications in any one year. We see this often with “For purpose” gaming trusts, such as Mainland Foundation or Air Rescue, where their bodies they are established to support receive support usually once a month. One Foundation has a fairly general authorised purpose.

There are a bunch of groups that have received multiple grants in any one financial year. Below is a table showing the top number of grant writers and their successful applications.

There seems to be a mix of many small grants and many large grants. Who received the most in 2018? Wellington Rugby Union on $309k followed by Ole Academy with a whopping $280k in grants from this one grant maker. Now, I had a wee gander at Ole Academy last time when I wrote about the Air Rescue Trust. In fact that review sparked this decent look at One Foundation. Stuff had a look at Ole Academy at the start of this year. A cursory glance at what they do and their website suggests it the polar opposite of what Sport NZ is trying to achieve with its programmes to keep young people in sport. To me, it’s another indicator that parent organisations need to understand where the money is coming from, and look to use some sticks to bring grass roots organisations working against the strategy into line.

One Foundation put around $14m into our communities through the operation of their gaming venues. Their processes are simple, they fund a lot of different organisations, but their disclosure leaves a bit to be desired. I’m a little uncomfortable too with those sitting around the table making decisions to fund specific organisations, and I can’t help wonder why all those Wellington venues came over to this organisation in 2015 and why they are so supportive of football in the capital. I also have not looked at who made up the $8.7m declined grants (2018). I have the data but I don’t find it quite as interesting. Let me know if you do!

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Selwyn Funding Ecosystem

2/3/2020

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Something popped up on my Facebook telling me that there is a session on Thursday for those in Selwyn District for those groups looking for funding, with SDC, Rata and Lotteries.

So I thought I would have a wee look at my database and see what is happening over there.

So what does this show? It shows that Gaming Trusts are the most important funder into the region. Lotteries gave it a nudge in 2016 with a $500k grant for presumably capital (to SDC). And you could cry foul: there is nothing here from the local government. That’s because when I did this work a few years ago, I decided the amounts they gave were rounding: the discretionary fund for this year is around $84k. The only local government I have included is CCC, who of course doesn’t fund SDC organisations (and let’s not think about the Christchurch City Third Sector organisations which are utilised by residents of Selwyn… we live our lives beyond municipal boundaries!).

Where does the money go? I was surprised by this. Groups in Community and Economic Development in Selwyn get a greater share than when I have looked at this at a macro level. I suspect this is driven by the fact Selwyn is growing very fast. Groups in other third sector buckets, such as Health, Social Services and Arts, tend also to operate on a provincial level, so its not surprising there is little to those groups.

I have then cut 2017 data to see where money for specific sorts of groups is coming from, as below. No real surprises here of course.

Which sports got the money in 2017? 2017 Rugby received $130k, golf $104k, Selwyn Sports Trust $85k, and hockey $62k.

Gaming Trusts are responsible for the lion’s share of grants going into the region, and the average amount given to each group is smaller than those other grant makers looked at. They are pretty good at funding schools too.

So I’m not sure what will be presented on Thursday at the funders forum, but if anyone wants to better understand the ecosystem for those getting and giving grants, then a little data can be useful. You’re welcome.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Snouts so far in the trough

28/11/2019

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I attended an Annual General Meeting earlier this week of a charitable board that I am on. It was a good, very formal meeting where we went through achievements this year and racked our brains on how to ensure the long term sustainability of the service in an environment of a chasm between best practice service provision and unsatisfactory government contracts, and a tired and increasingly more cynical giving market. We then headed off to lunch which we, as individuals, paid for.

So, you can imagine the head scratching I have had with the recent news of the Hepatitis Foundation. Check out the story here, but the upshot is they have been investigated for some expenditures, hundreds of thousands of dollars of those charitable dollars on travel and entertainment.

The ex CEO of the charity has just been on the radio talking about issues with the board where he was basically told to mind his own business. He talked of salaries to the board members, international junkets and top flight board dinners. Direct quote: I think some people just had their snouts so far in the trough they couldn't see the daylight. This is a truely wonderful sentence!

There are a couple of things with this.

A complaint was made to Charities Services by a member of the public. While I don’t know, I would suspect that that complaint may well have come from the ex CEO. This is because no-one has any incentive to look in depth at the financials of this organisation: it’s 100% funded by the taxpayer under (I assume) a Ministry of Health services agreement.
The investigation has taken two years to complete, and then was not published at the time as the regulator believed the charity would take some action. The report has been made public thanks to an OIA, four years after the member of the public raised the complaint, and goodness knows how many taxpayer dollars spent investigating.
There has been no change to the Board. Indeed, the same board has been in place since 2011 (as at 27 November 2019 – this could well change). I would have expected someone to take the hit acknowledge a mea culpa and stand down. Once again, my expectations are not met.

There is also another interesting snippet in the financial reports, one that has not been covered by the media yet. This is a screen shot of page 19 of the 2019 financial statement. Yes, you are reading this correctly. The charity has stated they have 2 Full Time Equivalents, paid an annual amount in 2019 of $452,537. That’s $226k per annum per FTE. I acknowledge that this is over several staff and governance: the accounts define key management personnel as Board of Trustees, the Chief Executive Officer, the Nurse Manager and the Financial Controller, however they themselves have identified the effort as 2 FTEs. It’s a bit difficult to understand what’s actually achieved by the charity as no statement of service provision is provided: whilst most do give this information these days: operations get more transparent in 2021 when all charities will need to provide this data. Often its hard to separate the good work that a charity does from the money spent doing it, which is where the service provision statement helps.

Now, I don’t know how those salaries sit with other health NGOs. I do know that a salary like this in most third sector organisations would be … unusual.

There is no acknowledgement that the taxpayer is actually a stakeholder here. The charity is 100% government funded. I know that I have been arguing for 100% government funding for more charities, but if this level of what I perceive to be largesse is a consequence, then perhaps not. After all, its taken a number of years for the Charities Services to review the organisation, and the result of that review was a report which had no real consequences for the charity.

I suspect the whistle blower on this is a bit peeved given the lack of consequence given the hit over the wrist with a limp bus ticket response from the regulator. Organisations who benefit from public monies and an accommodating legal structure to achieve their charitable purpose do have to be open and transparent. It should not take two years to look at an organisation to see if its acting in accordance with the spirit of the law.

There is also considerable onus with the organisation providing the funds: the Ministry of Health. They are about to write a letter to the charity to express their “concern and disappointment”. Four years after the complaint was made. I also hope other charities don’t shrug their shoulders and wonder what they could get away with. I also hope our donors don’t shrug their shoulders and view all charities through this lens of entitlement.

If I were in charge, I’d look to beef up the investigations of charities. We need a bigger, faster stick. We need to support members of the public who see things happening in the communities that are a bit whiffy and enable them to do something about it. We need to keep an eye on things like costs both within organsiations and across different ones: benchmarking perhaps. I’d ensure that those funding organisations under review were part of that process.

But what can WE do as citizens? I have written before about a need for vigilant eyes. And what I wrote then still stands: its good to be more curious about the organisations that serve our communities. Its good to understand how and why they operate, separate the spin from reality, and how money spent in the name of community is spent. In the meantime, our Board will continue to do the right thing, and look to make our wee piece of the world a better place, following principles and values of integrity, trust and compassion.

I write about this stuff as I believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more then happy to do so. Check out my website http://www.delfi.co.nz/

Apologies to the swine for the photo. A much maligned animal.

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Rata Update 2019

22/10/2019

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One of the things I like to do is sit on the couch and cut and classify data from various funders. I know, it’s weird. But I’m a bit fascinated by the dynamics of grant funding, power imbalances and how decisions are made. Indeed, I have seen this as both a grant maker and a third sector organisation (TSO) seeking funding and reckon there’s a wealth of unexamined stuff that happen here.

I last had a good look at Rata a good eighteen months ago. What I found there was some increases in the amounts given, to fewer groups. I had noted a change of Trustees given the change of government (Trustees are appointed by the Minister of Finance) and wondered if there would be material changes in where the money goes. Since then, we have had two more funding years published, so I’ve taken a deep breath and jumped on in. I’ve found a few pretty interesting things:

Top of the South (Nelson and Marlborough regions) got 30% of 2019 grants, whilst having 23% of the population
Rugby is still the number one sport getting funding from Rata.
They are giving fewer, bigger grants.
The cost per grant has shot up by over $1500. This is driven by both rising costs and fewer grants.

Now, there are a couple of health checks on this. Firstly, they have introduced multi-region funding. Now this is a grand idea as it means that organisations who service the whole area, Canterbury, Marlborough and Nelson don’t need to faff around figuring out how much to apply for in each region. However, for me, who has decided to look at how the grants are allocated within region, it does complicate things a bit. So I have applied a wee calculation based on 2018 census data. Secondly, it looks like in 2018 they re-introduced multi-year funding. What I did was simply divide the amount by the number of years of funding (generally 3). A twist on this is that the 2019 grants have not actually been published in the same form as before (although it is stated in the financial statements that they are – oversight perhaps?). They have been included within the 2019 financial accounts however. But I have found that key information, such as whether or not the grant is a multi year one, isn’t actually there! So I have eyeballed each large amount and, based on history, tried to determine whether or not its multi year (2019 – 2021).

They have also changed the way their grants work into several different buckets: Support, Connect etc. This doesn’t actually tell us much: indeed the bucket any particular group is allocated to can vary year by year. So I have used their old classifications although of course with some of my own bias in classification.

Another wee quirk is the use of “Special Funds”. After the quakes the Foundation put aside a wedge of capital - $25m – to help with Canterbury recovery (although Top of the South did receive about 20% of this money). Similarly after the Kaikoura earthquakes, around $1.2m was allocated to recovery. For the sake of analysis these funds are excluded from the following numbers.

So this is a wee line which shows where the money is going. Top of the South getting a bit more than before. Looking at 2019 allocations, these regions got around 30% of the available money, despite having around 23% of the population (2018 census). I find this a little surprising: bigger cities tend to attract a bit more challenge in terms of social issues so I would have thought more funding would be directed to Canterbury. Although when I looked at where Trustees came from it made a bit more sense: those 2019 Trustees were 50% Canterbury based and 50% top of the south! And this will be something to keep an eye on this year as two Canterbury based ones have now gone, replaced by another Nelson based chap and a Cantab.

The next question is where the money went. Answer: the usual suspects. I was surprised again to see this: as any reader of mine knows, there are plenty for places for sports to get grants. Indeed, rugby has its own pokie! Community and Economic has grown a bit. I have tagged all the money given over to capacity building here: it’s the latest and greatest for grant makers to throw money at (although, as one lovely chap running a really innovative TSO told me the other day, I don’t need some kid coming in and telling me how to run my organisation!). We also have a couple of large chunks to one or two capital projects.

Sport has seen a jump in 2017 and 2018 with a fall again in 2019. Organisers of Sport, such as Sport Canterbury or Sport Tasman, have received the most at $437k. As far as codes go, rugby got the biggest chunk in the 2019 year totalling almost $400k, driven by a big $200k grant to the New Brighton Rugby Club (presumably capex). Cricket was second getting just shy of $250k, tennis received $221k, and basketball $203k.

Environment had a big jump in 2019 due to $1m going to a stoat eradication project on D’urville Island. Health and Wellbeing too has fluctuated, namely due to a couple of large capital donations in 2018. A few organisations who always did receive funding no longer do: as Rata doesn’t publish declines I don’t know whether they didn’t ask or they were turned down. Interestingly Social Services has dropped a bit too, from 15% of funds five years ago to 12% these days. While social services do have the highest average grant ($30k rather than the average of $22k) the actual quantum given has dropped by around $500k.

The trend I noticed previously has continued: namely the average amount of a grant increasing. This is up from an average grant of $15k in 2014 to $22k in 2019. The number of grants too has reduced, from 1240 in 2014 down to 841 in 2019. And this last figure is overstated what with my fudge for multi-regions.

The last question is how much it costs to get a dollar into the community. If we look at a simple figure of the staff costs divided by the total grants given, it now costs 9 cents for Rata to get $1 into the community. This is up from 6.4 cents in 2014. This is driven by staff costs increasing around 50% over this time period, which is rather interesting, especially given fewer grants are being made now. We can put this another way: looking at total costs, in 2014 the cost per grant was $2262, in 2019 this rose to $3962. Now we could argue that better decisions are being made: of course there is (at this stage) no way to measure this. However, the irony is not lost on me: sure as eggs if a TSO’s costs had risen so much you can be sure the funder would be asking some questions.

Then of course there is the other side: the time and cost for an organisation applying for a grant. Anecdotally I have heard some pretty outrageous numbers on this. The challenge is that Rata is the biggest funder in the area, putting around 30% of total grants into the region. The power imbalance is out of whack. Media publishes its good news stories (although there has only been one press release this financial year), academia isn’t interested in the ecosystem (I’ve asked!), government perhaps sees organisations such as Rata as a way create a diversion from actually funding TSO provided services sufficiently, and TSOs are obliged to fawn and laugh at all the funder’s jokes in order to keep a relationship, while privately grumbling. This organisation was set up for citizens of the area covered by the old Canterbury Savings Bank, and as such, us citizens do need to give a rats. Power corrupts after all, and, as The Tuesday Club weekly emails say (stolen themselves from The Washington Post), Democracy dies in darkness.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Cutting the Apron Strings

13/9/2019

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Early September there was a bit of media flurry with the announcement by Sport NZ, NZ Cricket, NZ Football, Hockey NZ, Netball NZ and NZ Rugby of a shake-up for youth sport. It stated:
Individually and collectively we commit to:

Ensuring all young people who play our sports receive a quality experience, irrespective of the level at which they compete.
Leading attitudinal and behavioural change among the sport leaders, coaches, administrators, parents and caregivers involved in youth sport.
Providing leadership to our sports in support of changes to competition structures and player development opportunities.
Working with our sports and schools to keep minds open while identifying talent throughout the teen years, including reviewing the role and nature of national and regional representative tournaments to ensure that skill development opportunities are offered to more young people.
Supporting young people to play multiple sports.
Raising awareness of the risks of overtraining and overloading.

The six organisations have also announced that they will be launching an integrated marketing campaign early next year, targeted at youth sport influencers such as parents, caregivers, coaches and administrators, to further raise awareness of the issues and help drive positive change.

Now, as the parent of 3 young girls who enjoy sport but not stars by any stretch (they don’t read my blog either) I am really pleased by this. The ages they are now are the ages they are likely to quit. My own love of netball was rudely halted when I didn’t make the Otatara Primary Standard Four netball squad. As a family, we have talked around the dinner table about all the amazing opportunities there are out there are for young people: sporting, cultural, academic and community, and how now is the time to sample stuff and find out what they like. But we also are guilty of extensive post-match analyses of the weekly footie game: when husband is the coach it’s hard not to.

When we think about the strategy it’s interesting to consider how these great objectives will be put into action. A marketing campaign is supposedly the answer. So we will see a bunch of famous sports stars talking fair play, playing for fun, supported by cute gifs and various pieces on social to help us ancients change our attitudes to winning, talent pathways and playing cool about winning and losing.

While I did a marketing degree way back when, I’m not convinced that this is enough to change the way we think. Let’s reflect on WHO is on these sports bodies and sports clubs. Generally a bunch of people who love playing the game. Over the last few years we have seen a rise in academies, intensive training and the like. This meets a market demand (parents and kids who want to excel at a given sport) and a market supply (people who love the sport and want to be paid for providing a service). Those then left behind, who perhaps haven’t the skills, the desire, the transport or the time can then get turned off. Or they just want to play with their mates, but when that doesn’t happen they quit.

We then have a grant ecosystem awash with money to spend on getting kids into sport. Each year in Canterbury alone Sport gets around $20m in grants from community funders and gaming trusts. Scale that up nationally then that’s $200m. In Canterbury the five specific codes mentioned received $22m in the three years 2015 – 2017. And of course some of that is good spend: for shiny new facilities which probably encourage people to get into and stay moving. But a significant amount will go on programmes which actually work against the strategic intent of the five codes.

So if I were in charge I would look to the grant making community for their support of the strategy, and provide the stick to the carrot of marketing. Cut off the money and change would happen. Sport NZ, or the local body (such as Sport Canterbury – or they could get a contractor in to do it (hint)), could run the ruler over the various clubs, see whether their programmes stacked up, and give them a tick (or not). There would be howls from the clubs as their staff wages were no longer funded, but imho this community money is not about jobs for the boys (or girls), or cheap drinks at the bar: it’s about making our communities better places. That grant money could then be used elsewhere rather than on activities that governing bodies – and communities – are no longer that keen on.

This could at least put some of the brakes on some of the thing happening within the club environment, and the spiral of spend that some seem to be in: spirals that many parents are not that happy about, but, given our relative antipathy about the whole palaver, don’t do much about except moan over our flat whites.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. Third Sector organisations are perfectly entitled to ask for money from grant makers. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. I reckon it’s a more informed conversation when we know more. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Air Rescue and Community Services Part Deux

14/8/2019

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US Poet James Whitcomb Riley may have coined the phrase “When I see a bird that walks like a duck and swims like a duck and quacks like a duck, I call that bird a duck. This phrase, according to Wikipedia, has been used to describe communists, terrorists, a health insurer and Fidel Castro. I first heard it on Beverley 90210.

That phrase has come to mind as I have been buried in the data on this gaming trust. There are, I reckon, some decisions which look, and quack, like ducks. But what species?

In my last blog I looked at where the Air Rescue and Community Service grants went at a macro level. I found a few things out about where their money goes, and the regions it comes from. You can read that here, but the snapshot is that in 2018 total grants had increased to just over $11m (up from $8.7m in the previous year), due in part to the switching of venues in Wellington region to this gaming trust. Over half of that money went to organisations within their “Authorised Purpose”, the Canterbury West Coast Rescue Helicopter (their only shareholder), and now the NZ Flying Doctors service (both owned by the same limited liability company).

Just as a reminder, in italics is the Authorised Purpose of this organisation. The second paragraph is pretty generalist, which is marvellous.

To assist in the provision and development of rescue and medical equipment operated by the Canterbury West Coast Air Rescue Trust. Includes, but not limited to, the provision of winch training and helicopter expenses.
also,
Donations to bona fide charitable, educational, sport, cultural and community organisations within the local community. Excludes payments to professional sports people

Sport gets an awful lot of the funds from this gaming trust. In 2018, there were seven Third Sector Organisations (TSOs) who received over $100k from this grant maker.

Canterbury Regional Basketball Foundation requested $274k, got $185k from 11 applications, 2 of which were declined
Cashmere Technical Requested $230k, received $149k from 6 applications, one of which was declined
Mainland Football Requested $284k, received $129k, from 10 applications, 2 declined
Ole Academy Requested 146k, received $123k, from 14 applications (3 of which were declined)
Ferrymead Bays Requested $128k received $117k, from 12 applications, 1 declined
Coastal Spirit Requested $152k, received $107k, from 6 successful applications
Theatre Royal Requested $377k, received $100k from 2 applications, one of which was successful.

Let’s have a look at this. In the list we have two sports organisers, Mainland Football and the Basketball Foundation, and four sports clubs. Why so much for the clubs? I get it. They are popular sports. But why the money? Is it player payments? Who knows. Annoyingly, the three clubs I looked at did not explain in any detail how this grant money was applied in their financials. Gaming trusts funds are not supposed to be used for professional sports fees according to the DIA – and of course it's excluded within the authorised purposes of this grant maker. However, how do we know how the money is actually applied?

I have looked at the club financials on the Societies and Charities office website and wrote a fair bit of pretty boring stuff on this, which I’ve now cut. Suffice to say:
·         Grants go to things like Admin, coaching and training, playing strip and tournaments
·         There are a number of people employed by some clubs.
·         Grants are given year round
·         Costs tend to be higher for adults

Now, how clubs run themselves is up to the members. But the narrative we, the community, are sold, that these pokie funds are used to support kids to play sport. That assertion is not really supported by the numbers.

You may think this money is great, and the benefits to our community are enormous. Look at the successes internationally of our sports teams. Our juniors are getting more and more competitive on the world stage. That needs money. Much of this money (from my observations of my own club) goes to help our talented players pay their rent. Fair enough. However, the outcome will be that other clubs look to increase their cost base as well, which then leads to more pressure on grant money, and so the ecosystem evolves.

You could also be thinking so what. Surely its up the venues where the machines are located to determine where their funds go to. Actually no. In the rules set out by the DIA about how money is allocated:

Formerly 'Sites', these are the pubs and other venues where gaming machines are located. They do not own the machines and must not be involved in decisions about who can apply for grants, who receives them or how much the grant should be.

We rely on the process and the rules that there is no undue influence from the venues – although I can’t help but wonder WHY those four Wellington venues decided to move to this gaming trust. Over half of the proceeds from those machines will end up with the Canterbury West Coast Rescue Helicopter, which is great for us Cantabs, and possibly those Wellingtonians driving round the South Island. 38% of the money staying in Wellington goes to football. 11% to rugby and 9% to golf. It would be interesting to understand the value proposition of one gaming trust over another to venues.

What gets me about this is the lack of transparency in the process. We have a group on the net proceeds committee allocating $6m to one charity with limited transparency, and then determining how an additional $5m of community funding is allocated, making fairly crucial judgements about what we, as a community value. They have placed the needs of four regional football teams over other TSOs that were declined, who had grant requests reduced, or who didn’t even bother applying. You will have your own view of the species of duck you see.

Solutions? Perhaps the funds should instead go to the sport organising body who can distribute it evenly. Perhaps the community could be required to have representative on the resource allocation bodies of these funding groups. Or perhaps we just suck it up as a cost of doing better in a sport on the world stage. If we do ignore it, the outcome then will be more money going to football each year as clubs seek to compete on an equal footing– and indeed I have just cut in the Jan – June 2019 data and am seeing a 33% increase in money going into football between the same period 2018 and 2019. And lets not forget we could equally ask questions about other groups receiving this money: Miramar Golf Club for example, currently negotiating a $31m sale deal and the $240k given to racing in 2018.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. These organisations are legal. Third Sector organisations are perfectly entitled to ask for money from them. As a citizenry we allow both those supplying money and those asking for money to operate, and as a community we need to ensure we have oversight over the organisations they choose to fund. I reckon it’s a more informed conversation when we know more. Love to talk with you if you think this is at all interesting, and if you want to dive into the data a bit more than happy to do so. Check out my website http://www.delfi.co.nz/

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Some musings on things

Post COVID grants from CERT

Grant Funding Manifesto 2020 - For discussion

Rethinking Community Funding Part 2

Rethinking Community Funding Post Covid19

One Foundation Update

Selwyn Funding Ecosystem

Snouts so far in the trough

Rata Update 2019

Cutting the Apron Strings

Air Rescue and Community Services Part Deux

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