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Did Rotorua miss out on $4 million?

30/9/2022

I have been poking my nose around up north recently, mainly because what’s happening up there is just so interesting, and I suspect a taster for what’s coming south. Check out some of my previous pieces on this.

I noticed that a couple of funders had Rotorua venues, but there weren’t corresponding grants going into the region. So I have dived into some data for three years, 2019, 2020 and 2021.

Firstly I’ve looked to see what the average machine would produce by taking the total dollar value of grants made in a particular year and dividing that by the number of Class 4 gaming machines in NZ. Of course there are some huge health checks on using averages: is that site a big or small earner, when did the site transfer happen etc. I just look at who manages that site on 31 December and work back from there. It will be more nuanced.

Secondly I’ve then used the DIA’s newly launched Granted system to look at actual grants going into the Rotorua region by provider. This information allowed me to produce the table below. Health check again: the quality of the data is only as good as the data provided by the gaming trust.

Now before you judge too much, of course Rotorua is a part of a wider area, Bay of Plenty. A lot of money generated from Rotorua will go to support those regional bodies generally based out of Tauranga. I also wouldn’t expect this to balance at all: in a community of this size there will be significant capital expenses which will swing the grant total of all applications. However, there are some interesting decisions.

Dragon is pretty stingy to the Rotorua community. Over three years they have netted out over $1.1m from this community. This seems to contradict with their authorised purpose from their website (copied below).

Dragon was set up to support the local community where the funds are generated and give priority funding to Asian organisations within the local community, in particular to the young and elderly members of the Asian community.

Dragon's gaming venues are located across the country. It gives priority to grant applicants based in the cities where its gaming venues are located.

To be fair they only had 19 applications totalling $86k from maybe 10 different organisations for the period under review.

Youthtown too looks a bit tight: of course one expects that their funding to themselves supported Youthtown activities in Rotorua over this time. The relationship with the venue clearly didn’t last long, as now Air Rescue Services manages it, however with the same impact on local communities. And although the data not in the above chart, my up to 30 June 2022 information on Air Rescue Services has them giving $20,000 to one school. Again, no other applicants. Youthtown picked that venue up off Aotearoa Gaming, which may explain the big contribution that gaming trust made over my theoretical number.

The good folk of Rotorua must love NZCT and One Foundation! Not so much Lion and Grassroots. TAB of course takes out a lot gaming grant money to fund their own organisations: below is a graphic I’ve taken from Granted showing the top five organisations supported by TAB Class 4 gaming.

Where did the money go? I’ve again used Granted to pull the information out onto a spreadsheet. This supports the statement that a lot of sport support in particular will be run out of Tauranga.

Now the gaming funders make their own decisions based on the applications that are on their desks at any one time. Rotorua also has other funders within their funding ecosystem: Bay Trust, Lotteries and probably few others as well. Thinking about this, I really think that local councils need to be over which organisations are operating in their region, and making sure that groups within their community are aware of the funding ecosystem. Otherwise groups won’t apply, and communities like Rotorua will miss out on millions. What do you think?

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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A Million Dollars a Month

16/9/2022

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There have been a few good articles recently around my obsession of late.
https://businessdesk.co.nz/article/charities/supreme-sikh-council-under-scrutiny-over-crematorium-pokie-grants
https://www.stuff.co.nz/national/129999258/new-pokie-trust-in-canterbury-gives-only-one-local-grant--so-far
https://www.stuff.co.nz/business/130205773/milliondollar-library-never-opens-yet-claims-small-fortune-in-community-funds
https://www.stuff.co.nz/national/crime/130287653/pool-champ-and-pokies-boss-on-dishonesty-charges-after-major-investigation

We hope that investigations happen looking at the issues. I also hope its being looked at soon: when we see what’s happening and what has been going on unexamined and unabated for at least six years, this costs our communities at around $1million per month. There is considerable opportunity cost to our communities of that money.

What I have done is combined the grants from those gaming trust based grant makers who were identified in the third article: Milestone, Rano, Blue Sky, and Dragon. These grant makers share the same characteristic: they make a large number of grants to a few of the same organisations. Just to explain my methodology: I copy the grant disclosures off websites, clean it up and categorise it. The year I report against is the gaming trust’s financial year. So if you are looking at Granted.govt.nz, my information will differ because they work on calendar year, and they don’t seem to clean the data. Together, in the last six years these groups have provided $86.6m to 1325 different organisations. That’s a lot of money.

For funsies below is a pivot table showing the last six years of grant funding by these four organisations to the aggregate top 30 grant recipients by dollar value. No shade to the groups that are on this list: rather they are here because they are the recipients of a high dollar value of grants from the above grant makers. And many have received a large number of grants from these four: the last column shows the number of grants given to these organisations over the past six years. I have got a bit nervous about putting their names in: I can provide if anyone wants them. Yes, Angel's Children Education Foundation is on this list, as are the other charities in the last referenced article.

We can also look at this another way: comparing the total dollar value of grants to the total dollar value of the top 30 applicants. This shows a couple of things: the amount granted has increased over time, and the amount of money going to the top 30 has almost quadrupled. Growth overall is driven by an increase in venues under management by the four: at the end of 2016 there were 14 venues with 225 machines: that number has tripled to 43 venues managing 646 machines at the end of 2021.

I’ve had a glance at quite a few of these organisations, and on the face of it they all do have genuine charitable purposes. However when you drill into the financials – because why not – there are some which are interesting. In this list we have some really quite new organisations, some who share spaces with commercial operators who share trustees and shareholders, some who rent spaces off their business partners, one whose charitable purpose involves taking groups off to skiing, getting $1.3m in the process, some who got money before they actually registered as a trust, some who got some after they deregistered. Others seem to have close ties to venues, or close ties to the management company. But one clearly obvious issue, I think, lies with the sheer volume of grants going to a few organisations.

Check out the column Grant Count. The one that ends in 4,578. This is the number of grant applications that have been approved by these 4 grant makers for these 30 organisations over six years. 45% of all of the grants approved by these organisations has gone to these 30 groups. In dollar terms 59% of all grants have gone to these groups.

Now, for anyone in the grant seeking game, they will quite possibly be surprised by this. Generally, a grant seeker will have a budget they need to find grants to back fill, and they will have a number of grant makers that they apply to, which may include energy trusts, community trusts, local and central government, and other Class 4 gaming organisations, along with a bunch of private trusts. Many grant makers will only allow you to come once, maybe twice, for financial support a year. This is so others can have a fair go at the money, and also to make sure a grant seeker doesn’t become too dependent on one source of money.

In my research, I have seen some organisations receive multiple grants before, but they either tend to be those “for purpose” grants (such as Mainland Foundation or Air Rescue Services), or those more questionable grants, such as many for football clubs (I’m not much of a fan of professional payments as personally struggle to see the line between professional and amateur players – and yep there’s one of these on this list, who, in six years, got $1.45m in 204 grants).

However, here we have some extreme grantmaking. Synergy Community Trust received 425 grants totalling $3.1million off two grant makers in the period under review. That’s on average 71 grants per annum from two grant makers. Anyone who does grants will also know what a headache that would be from an accountability reporting perspective. This does me wonder how the management company is paid: are they paid on a “per grant” basis? This, I think, would be the only possible reason for such an insane number of grants. Any thoughts? I’d love to know!

Supreme Sikh Society of New Zealand in the last financial year reported a total SURPLUS of $1.7 million, which matches their reported grants of $1.7m. These four grant makers provided $602k in 2022, receiving this in one year off 24 successful grants from the four grant makers under analysis. supplemented by a very generous Akarana who I believe gave $1.1m in 35 grants.

I’ve also, in two hours of googling, managed to find two pokie venues where the owner shares a surname with someone pretty high up in an organisation which gets a fair bit of money. Now, this could be a co-incidence. But if I were looking to enforce the law – because lets be clear under the legislations venues cannot have a say in where money goes – I’d have a good hard look at fringe organisations receiving large lumps of cash.

One new issue I’ve just become aware of is kick backs to the venue owner: one instance where the venue was asking for a 20% cash kickback on a grant that “came through their venue”. However, unless that's a line item in a set of accounts identifying "kick back" its hard to prove.

I have reported nearly all of this, so we shall wait to see what if anything happens. In my last blog, I put down some ideas on what I would do to ensure those responsible for overseeing the system do get alerted to potential issues earlier. But what’s playing in my mind is how long this investigation may take, and the cost incurred by communities. Until an investigation is complete I would:

Stop any venue movements to these organisations until the investigation is complete.
Parachute in a few assessors to look at the grant applications going through these organisations. This could be some Auckland City Council grant makers, or Lotteries staff or even other pokie operators who play by the rules. They will have a pretty good idea about costs, others who do similar things, and could likely continue to get money out into the community.
Engage with the Ministry of Ethnic Communities on a programme to educate communities around the law as it relates to grant funding.

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/

Image of course from Austin Powers. Fabulous movie.

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Some musings on things

Did Rotorua miss out on $4 million?

A Million Dollars a Month

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