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Six years of grants from CERT

4/9/2019

CERT started up in 2011 as a response to the Canterbury earthquakes. The name in fact comes from “Canterbury Earthquake Recovery Trust”. Over time the authorised purposes of the gaming trust have changed, and the organisation grown. From their website:

CERT may make grants for authorised purposes as

any charitable purpose;
any non-commercial purpose that is beneficial to the whole or a section of the community; and
promoting, controlling, and conducting race meetings under the Racing Act 2003, including the payment of stakes.

The above authorised purpose includes, but is not limited to grants for:

recognised appeal funds for the purpose of assisting with the recovery from the Christchurch earthquakes;
general public education;
education scholarships (provided the students are selected in a fair and open manner after public advertising, and are overseen by a recognised educational authority or school board, and provided that they are limited to primary and secondary level);
the promotion of public amenities such as parks or museums;
supporting non-commercial emergency rescue services;
public sports facilities (e.g. a stadium) provided that the facilities are not used primarily for professional sport;
amateur sport; and
ground maintenance for amateur sporting facilities.

Thanks to CERT’s great disclosure, we can look at their funding history funding fairly rapidly after financial year end. I’ve copied their disclosure from their website, put through my top secret categorisation, run some pivot tables and whipped up some charts.

This Gaming Trust is, quite possibly, the simplest grant maker I have ever applied to. The forms are easy, the documentation is pretty simple (although all paper based), and the decisions are made quickly. And they are fairly generous in terms of amounts given, I suspect because those seeking funds still have not quite caught onto the fact they are operating.

Unlike many gaming trusts, they do provide funding for organisations across the range of the Third Sector. However, like most within the gaming trust space the majority goes into Sport – over 50% in all years under review). We can see some good amounts going into education (although, to be fair, that’s often to support sports within school).

So which sports are getting the money? Top five over the last six years are the Usual Suspects: rugby ($1.2m), bowls ($719k), golf ($679k), cricket (548k) and football ($532k). That accounts for just over 50% of the total sports spend of $7.2m.

In 2019 they gave away 427 grants, averaging just under $6,300 each. The biggest single grant went to the Bone Marrow Cancer Trust for $35,741, and the smallest to the National Railway Museum for $425.

However, multiple grants per year do go to the same organisation. The Canterbury Regional Basketball Foundation got 8 grants last year (totalling $66k), and five each to Coringa Golf Club ($42k) and Marist Albion Rugby Club ($56k). The lucky recipients of four grants were Belfast Sports and Community Centre ($52k), Tennis Otago ($13k), Christchurch Football Club ($24k), and Kaiapoi Rugby Football Club ($25.7k). Now, of course, a Gaming Trust doesn’t know how much it has to give away until the numbers are in, which could well explain why multiple grants are made.

Another interesting element is around where the grants go location-wise. Now CERT has machines in Waimakariri, Dunedin and Christchurch City. There are five venues in Christchurch, two venues in Waimakariri, and one venue with 18 machines in Dunedin. Third sector organisations in Christchurch got just over 80% of the money, Waimakariri 10%, and Dunedin snuck in with almost 6% of funding. The heavy Christchurch skew is possibly driven by the fact many Canterbury organisations are based in the city and service the region. However, to be honest Otago looks light.

I have had a gander at those organisations that were declined, as CERT publish who they have declined, and why. Very few Otago group fail to get funding from this organisation. If I were a third sector Dunedin based group looking for support, I’d have a look at this. Another tip: in January this year only one organisation was declined. If I was doing funding applications I do think I’d throw it in the mail just before Christmas – although the amounts given in January can be lighter than in other months.

Now, I was about to post this blog when this story came out. Christchurch Casino has to give $250,000 or 2.5% of net profit (whichever is greater) as their license to operate. I think this suggests that in 2017 they would have given $402k off a net profit of $16.1m (plus another $100k which they have chose to do). In 2018 CERT’s surplus before grants was $2.6m. 2.5% of that profit is just over TEN average grants. Clearly, they give a bit more than this. This is of course mandated by the NZ Government. Now, I’m steering well clear of debates about the morality of gambling, but if I actually enjoyed playing the pokies, then perhaps I’d pick a provider whose profits are directed back into the community.

I write about this stuff as believe that as need to understand where Third Sector funding comes from, where it goes, and how it gets there. This money is gathered to be spent on behalf of the community, but we have little oversight into where it goes. 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/

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Virtue Laundering in 2019

3/5/2019

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Thinking about the Earthquake Symposium

1/30/2019

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Late last year I managed to acquire an invitation to the Government’s Canterbury Earthquake Symposium, which had the goal of sharing the lessons from the Canterbury experiences. Now there is a bunch of controversy about this event (mainly around who got invited), but it’s great that it happened, and great that some speakers who may have been somewhat controversial were heard.

One of the challenges in “lessons learned” is that failures, which we learn the most from, tend to become something else as those lessons move up the chain. I am reminded of The Plan which I recall from my corporate days (when we used to fax jokes to each other) …

But I have a few reflections of my own following the symposium and other things I’ve been thinking about.

One of the biggest points pounded home during the two days was the need to put people at the centre of the recovery. This point was well made by one speaker, who spoke of one family they were helping. There was an issue with plumbing: the neighbour’s pipes would overflow into the family’s section. There were three or four entities who needed to work together to resolve the issue: resolution still pending.

Now, I had the Social Investment Agency’s “Findings of the “Your voice, your data, your say” engagement on Social Wellbeing” document show up in the mail box last month. On page 24 of the report is something that resounds with me: “Putting people at the centre. You support a person-centred approach that puts people at the heart of everything government and providers do”.

So, there is a theme! People at the centre of Business as Usual and at the centre of Disaster Recovery. Who would have thought? But … there are a bunch of barriers in place to what is essentially a common-sense option: namely a system which treats people as policyholders, as patients, as students, as victims, as cases. We have budgets, education systems, careers and entities structured around these specific facets of people. How do we change this? Well, there will be far smarter people than me looking at this, and I am vaguely heartened by the Prime Minister being Minister of Child Poverty Reduction…. And some hope at the Whanau Ora review which puts families at the centre of things. However, at my age I’m getting a bit cynical and suspect that these systemic issues won’t be addressed and my kids will still be dealing with many of the complicated issues around intergenerational poverty.

Back to the symposium. Ryan Reynold’s discussion had a couple of points which struck me as interesting. Firstly, innovation.

Those in Christchurch will undoubtedly recall that Gap Filler was one of the post earthquake groups who made us smile through initiatives like the Pallet Pavilion. They received a lot of media, and a lot of love from locals and of course politicians. Indeed, at the symposium Gap Filler was mentioned many times: if they had $1 for every mention, I reckon that would cover monthly operational costs. And that brings me to funding. They have been told by one funder that Gap Filler’s job is done, so they don’t need to be funded any more. And when I look at my beautiful database I can see funding to post earthquake organisations has dropped by more than a third since 2015. A recent trip to Auckland showed the importance of transitional projects in cities that aren’t completely broken.

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”.

We can see this happening in real time, with the demise of funding support for organisations such as Gap Filler. The funding moves back to the incumbents with decisions made by risk averse committees. But this stifles innovation, and arguably the innovative solutions our communities need. Changing models, such as those by social enterprises, may enable greater innovation, but without decent coherent conjoint meaty funding opportunities (and not endless capacity building programmes!) many are doomed to limp along.

Secondly opportunity.

I had a wee chat with Ryan a bit later. At the time of the earthquakes the founders were footloose. Fast forward 8 years and now there is a mortgage and kids to consider: this organisation probably would not have done what it did if these personal financial obligations had been in place at the time. Again, how can we create an environment where people can take risks, follow passions and be the best they can be… Universal Basic Income perhaps??

The symposium was a worthy attempt to talk about what happened. However, there is still a lot of anger at people and institutions, and clearly many people feel not listened to. Props to those politicians from both sides who listened and heard. However, I think all of us who both experienced the quakes and arrived later have things that we learnt, and would like to share with others. Perhaps a mooted Community event could incorporate something along the lines of “share an idea” to ensure those invisible get a chance to speak.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. 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 www.delfi.co.nz.

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Musings on kids and sport

11/19/2018

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I’ve just come from coffee with the girls. The topic of conversation was kid related: the sports tournaments over the holidays, the upcoming cricket season, and the politics around team selection.

Now, it almost seems a universal truth that, despite code, sports organisations are intent upon ensuring that their sport is the Most Important Thing in the lives of children. We now have certain codes (looking at you football) offering year round programmes. We have some sports requiring practices four or five times a week. We have some codes with high cost development programmes. We have codes, coaches and administrators focused on developing great rugby players / gymnastics / cricketers / ballerinas who just forget that, as parents, we are trying to develop great humans within a family dynamic.

Now, I would hazard a guess that this is just peachy for some kids and some families. Some kids have huge talent, to be amazing at whatever sport takes their fancy. These are the kids who will become Olympians, represent NZ, or be the next Steven Adams. Some parents revel in their child’s success or are That Parent manipulating the team channelling Machiavelli. However, most of us parents want to grow individuals who can charge forward in their own lives as independent adults. Interestingly, I found some 2016 US stats: for those kids playing high school ice hockey they have the best chance at 1:598 chance, the worst chance is for women’s basketball at 1:13,015. Incidentally, the odds of being killed in a car crash were 1:113. So… the chances of actually making an income out of playing sport are fairly low.

Well, why do we do it? Well, there are some great benefits sport offers for kids who are not destined to star in the back pages of the paper. These include things like making friends, learning to win and lose with grace, resilience, persistence, leadership, teamwork and the health benefits. But there are a bunch of other things that we as parents want our kids to do too: talk to any middle class parent and it’s a game of “how busy I am” with after school activities for each child.

Our family had our first ever sports tournament over the holidays for two of our kids as part of a club side. Our objective for going was to have some fun and be competitive. And that’s what was served up in spades. The kids experienced some independence as we stayed at the campground, and they ran wild over the grounds nearby. They came together as a group, showed real heart when they were thumped, and great sportsmanship when they won. We were so proud of our wee team, some of whom have been playing the sport together for six or seven years. And the experience has created some memories of sporting magnificence that will last their lifetime. Glory days indeed.

Playing sports with your mates is a huge motivator for kids. Yet, when kids get to a certain age, the sports codes separate the kids out to build teams that can win. And then they tap a few of those one the shoulder and ask them to join development… Those kids who are tapped are in. They are focused 100% on their sport. But the ones left behind… not so much. They have been told they are not good enough for their mates and are then jumbled in with another bunch of kids. They then believe they are no good. So they leave that sport, hopefully to another sport (which is fine) but more often to nothing.

I see that the NZ government has recently handed out $10m to Sport NZ to help keep girls and young women active. The underlying issues document, which can be found on SNZ website, is pretty on the money. However, the challenge (I think) is getting the right sort of change within codes.

From what I have observed, those employed by the codes tend to love the game they represent. Their boards set targets around numbers and results. Some schools do the same too (and then provide loads of counselling for the kids to deal with the downstream effects of those expectations). As a result, actions are focused on winning. One woman in grants laughingly told me that a code had asked them for funding to get top performing kids from another code into theirs. “No”, she said. And rightly so. However, sure as eggs some other funder said YES.

And our wee sports club has just employed someone as a development officer. He is from the provincial team, and, given the club is a junior one, I assume it’s his role to help do something…. To be honest it’s a bit hard to see what the role is. Perhaps coaching? Now, this is all well and good for the new person as a job has been created which plays to his strengths. However, I doubt its being done for love. So, who pays? We shall see next year when the fees hit, but some clubs which employ people have fees $100 higher per annum than our club with no employees. Or, grants will kick in. And who can say no to support for helping kids get into football. But hang on – those kids are already playing the game! Could it be a jobs for the boys paid for using community money? And the money that’s spent on this role will not be spent saving women from violence, diagnosing children with learning issues, or whoever else misses out on those charitable dollars. And so the NFP ecosystem evolves.

How many jobs are there out there like this? I suspect quite a few, be they employed by clubs, codes, or schools.

So what’s the answer? Chatting with the girls one solution is to start a new family oriented sports club with lots of sports on offer, where the focus goes on the positives. But this is a pipe dream: those who go into governance roles on these sorts of organisations tend to be the aforementioned aficionados. I guess, to me anyway, the answer is to support our little darlings in whatever they want to do, give them opportunities to try new stuff, and try to keep them active despite the systemic challenges that continue to exist. And perhaps walk away from clubs where this is not being fostered.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. 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 www.delfi.co.nz.

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Rugby Racing and Beer

9/9/2018

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In the sixties this phrase was once a mantra of what it meant to be Kiwi. Thankfully, as when you look at this critically it’s a teensy bit male on many fronts, this is no longer the case and our society is (in my humble opinion) more open to other things.

Now, rugby is still king in this country, but we have seen a huge change in the way that industry is run with professionalism at the senior levels, and the (hopefully) tongue in cheek request for taxpayer support for top players. The beer industry has of course had a massive change in the last 15 years from the swill to the explosion in craft beer brewers and labels. And of course we drink this beer at cafes and bars, rather than sports clubs.

So then there is racing.

Racing of course has had a few issues over the past few years, mainly that many New Zealanders don’t see this as a viable entertainment option any more. Sure there may be a flutter on the TAB for Melbourne Cup, and in Christchurch the heels go on and hems come up for Cup and Show week, but let’s face it… racing doesn’t have the same hold over New Zealanders as it used to.

We can see this with the recently released report into the racing industry. To quote from Minister of Racing (and Deputy Prime Minister) Winston Peters: “… the New Zealand racing industry is in a state of serious malaise, and requires urgent reform. The review also warns thoroughbred horse racing is at a tipping point of irreparable damage”.

I don’t think anyone disagrees with that view of the industry. But should they expect community help to do this?

Well, they do! Steve Kilgallon has had a look at this. The report suggests the lifting of a ban on the New Zealand Racing Board being allowed to own pubs with pokie machines. The Racing Board does operate pokies at 43 sites with a TAB - including their own TAB shops and some larger pubs with on-site TABs. Those pokies already generate about $15 million a year, of which 80 per cent already goes back to racing causes. According to Steve, in 2016, the NZRB returned $11.88m to racing, and only $3.06m to other sporting codes.

Now, you will probably know that I look at where grants go, and I have a wee database of Canterbury grants. In my last blog I noted that the quantum of money going to racing was fairly low, but had trebled in the past three years. In 2017, just over 1% of all gaming trust community money went into racing.

So what’s it for? TCCF are the best on disclosing this sort of stuff: their 2017 money was used to help stage Christchurch’s Cup Day (security, St Johns, seating and insurance). As for the others… well I don’t have the data.

And the recipients of that money? Looks like, in Canterbury at least, that it’s largely going into harness racing.

Rugby, racing and beer. Rugby does leverage grants: as we looked at last time rugby gets around $3m per annum in Canterbury alone from grants – that’s around 5% of all grants into Canterbury. Indeed, they even run their own Class 4 trust (which is what is being proposed for racing), with Mainland Foundation, where the very first authorised purpose of the organisation is “Amateur South Island rugby north of the Waitaki River, including the West Coast”. And beer is drunk in many sports clubs throughout the country, often driving more revenue for the club than the sport itself.

Racing. It’s pretty hard to see community benefit in community funding of race clubs. Yes, they can be a fun day out, and the industry both employs and engages around 58,000 people but actually, should they not rely on their own self generated funds to support the industry? And if the industry is in decline, then perhaps, like many industries before and no doubt after, it’s time to pack up sticks and move on. Both previous events, and recent events suggest the industry has some challenges.

As a community we need to be vigilant in ensuring stuff that is done in our names actually makes our community a better place, and is not a subsidy for a sunset industry. Steve Kilgallon’s article quotes a pokie manager “"There's an obvious conflict of interest here ... they will take control of the donations that will otherwise go to the local community. Not-for-profit groups and charities should be outraged at this proposal." I think COMMUNITIES should be outraged by this proposal: we need to take control of the demand side of grants and start to question Not For Profit needs verses wants.

And, based on all the above, I would like to think that this recommendation is ignored. However, the Minister of Racing, who also happens to be the Deputy Prime Minister, has a wee bit of power in this government. As communities we all need to ensure that our voices are heard. The demand for grant money from groups with supposed community benefits already outstrips supply: adding to that demand by say 5% (if we assume racing needs an additional $30m per annum nationally) would be a huge challenge for the ecosystem.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. 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 www.delfi.co.nz.

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Demand for grant money into Greater Canterbury

7/19/2018

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Something I remember – poorly – from Econ 101 was that demand will meet supply. If supply increases, then demand will generally rise to meet that. Last time we looked at where grants came from. This time I’ll look at where that money went. Remember – this comes from over 20,000 lines of grant data, to almost 3,000 different organisations. And also remember - its just me doing this, applying my own bias to activities done by different groups. What I am implying is that the analysis is not perfect - but good enough.

Interesting? Well, I suspect it is if you receive grants.

Two categories are fairly interesting: Education and Young People. Both have declined a bit over the past three years. The Education spend has dropped around $2m, which seems to have been driven by a reduction in grants to primary and secondary schools: something I have explored previously with Rata Foundation’s strategic changes. There have also been some big grants earlier with capital works: good old school pools sink some serious money, and any school lucky enough to still have a school pool will have had a big fundraising task post earthquake.

The decline in Youth funding is interesting, dropping by almost $3m. Much of this is driven by some real capex going into the sector rather than some reductions in funding for operating costs.
But the biggie here is of course Sport, which clocked over $20m last year. This was driven by $3m ($2m from Lotteries and $1m from NZCT) grant to Nga Puna Wai, so there’s some good news for us beleaguered ratepayers!

We can then break down sports by code. Some has gone to capital items, such as new tennis courts or bowls club rooms, while a fair bit goes to opex: cricket balls, uniforms, coaching costs. We can see this with the average grant, which sits at $11,400.

I think this is pretty interesting in terms of codes: which codes actually get money. Interestingly, cricket used to be in number 2 sport with all the grant money coming in for the new venue in 2014.
Horse Racing is interesting, trebling in three years, albeit off a fairly small base. All this money has come from gaming trusts, mostly the Air Rescue and TTCF. It will be interesting to keep an eye on this particularly around the growth in stakes.

The Environment category needs a bit of a microscope to see the low amounts going into that sector. However, I have not included ECan’s grants in this work: they say they put around $1m into this space per annum. They do have some funding available, but from my couch its hard to see how much and where it goes. Part of my “modus operandi” is around openness and transparency and if its too hard to find then sadly it doesn’t make the cut. And actually this is a comment I need to make around family trusts too: there now seems less information on where they are putting their money. All fine as they have no legal obligations around this, but when they proport to be relevant leaders in grant making, then perhaps this trend needs reconsideration.

The chart below is quite interesting too. This shows a breakdown of sector by funder type for three years of data (2015 – 2017). Not surprisingly, gaming trusts dominate in sports (many do have sport as their primary criteria), but they do participate in all other sectors. Community Trusts and local bodies give to everyone as well, a decision that, if they thought about it, they could reconsider. After all, there are plenty of grant makers. They do not need to be all things to all people.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. 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 www.delfi.co.nz.

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Supply of grant money into Greater Canterbury

6/16/2018

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Super excited to be presenting at One Voice’s Matariki Forum on Monday. As a result of volunteering to do so, I have spent the last six weeks or up to my eyeballs in pdfs, spreadsheets and the like in an effort to update the earlier work I have done.

And after all those hundreds of hours of work, I present to you the upshot… which is slightly underwhelming. No substantive changes. Gaming trusts are still providing almost half of the funding into the region.

Now, there are quite a few health checks on the data. I have changed my methodology: when I did earlier work, it was for the calendar year (or as near as I could get that). I have decided that funder’s financial year makes more sense, as many funders only publish consolidated grants, so that makes the 2014 number look different than I have earlier published. Where those older grants are publicly available I did fill in the gap. The DIA 2014 data looks a bit light, and it seems I only have COGS data for 2014, but historic information is no longer published (and thanks to DIA for providing the later info I did request – so I have put in a (technical term) fudge).

The only local body included is Christchurch City Council, but the grants programmes of Selwyn and Waimakariri are fairly inconsequential. And some of the family trusts are no longer providing information publicly, which makes it trick to see where they put their money… however, their slice of grants won’t impact greatly on the results. Where many of the Gaming trusts shine is around disclosure. They have complete histories of grants on their websites, and many (Trust Aoraki for example) share excellent and somewhat intriguing rationales behind their declines. However, if I can make a request: territorial authority, data files and charity numbers would make my job easier.

Below is a chart showing the specific grant makers who provided the funds. Interestingly the most prolific grant maker seems to be our Council: 11% of their grants in 2017 went to individuals, and many grants to the same organisation are split between various community boards in an attempt to allocate accordingly.

The supply of grant funds is rather interesting. I heard Problem Gambling on the radio the other day saying that people seeking grants should go elsewhere for their money. That strikes me as a little simplistic… where exactly? As anyone raising funds for an NFP knows, it’s pretty competitive out there – for most charities anyway – and given Gaming trusts supply almost half of Canterbury’s grant money our ecosystem will be slightly stuffed without it.

Voices can be interesting to think about too. Who is the voice of grant makers? The local funders’ forum? Philanthropy New Zealand? As far as I am aware, the biggest group of grant makers sit on neither.

So if we are not happy with where money comes from, then what to do? We need to look at demand – where the money is going, and address a few of the big issues around that before making sweeping changes to supply. And I will look at demand next time: spoiler alert – nothing much has changed.

If you have some spare time on Monday 18 June 2018 5 – 7 come on down to the One Voice Matariki forum at ECan on St Asaph St in Christchurch. But if you can’t make it, see the Reports page of Delfi’s website: I’ll put the presentation and notes up there when I remember how.

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. Love to talk with you if you think this is at all interesting. Check out my website www.delfi.co.nz.

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Openness and Transparency: pretty important in a partnership

4/8/2018

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You may have seen a headline the other day talking about Christchurch City Council grant funding. If you didn’t, the gist of the message was that, under the Long Term Plan, there is no increase to Council grants (which add up to around $7.8m per annum).

There were two reasons given to this.

Firstly, the Community Resilience fund. That is a joint initiative between CCC and the Ministry of Health, and promises some $6m over three years. Of course, there is a catch (or two).

In 2017 it could not be applied for. Rather, recipients were identified by council staff in conjunction with the Psychosocial Governance Group (a Health lead organisation which has some 11 central and local government bodies on it’s governance group).Many groups I note did have Metropolitan funding applications declined based on this fund.
Decisions are made behind closed doors. There are no published minutes from the meetings, and all we know is what was provided in the media report.

My issue with this? Secrecy. The optics are not great. Let’s look at this.

Q-topia received $100k from this fund, only applied for $51,536 from the Metropolitan Fund, and staff recommended $25k… (yes, I did go through the minutes and the agenda line by line). What is that $100k for then?

Aranui Community Trust got $230k, around a third of their annual expenses. But no idea what that’s for. Not even an acknowledgement on their Facebook page as to what its for. And disturbingly they have strong governance links back to the current council.

Te Kahui Kahukura received $200k. I can’t find much out about this group or what they do – aside from the fact they sit on Healthy Christchurch.

I am sure the projects are fine projects and will support the objectives of the fund, which are to increase community participation, connectedness and resilience. But I guess we will never know. And did everyone have a fair suck of the sav of this? I see this year there is a two step application process… that’s good I guess?

Secondly, Council now wants to partner with NFPs. “We can do so much more when we partner with our communities”. Now, I get a bit scared of this word as we throw it around a bit. A not for profit is really just looking for a sugar daddy (or mamma), while the funder is saying they are wanting some commitment.

What does the council bring to the table? Money. But the NFP was set up to (insert charitable purpose here). This needs to be where they focus their effort. Putting time and resources into a “relationship” with Council (or any funder for that matter) means the NFP has to put in more overhead and admin costs – which no one is all that keen to fund. And, to be honest, an NFP is rarely exclusive with one funder. You see, funding from any one funder generally makes up only a small portion of overall operating costs. They often get money from between five and 40 other funding organisations, not to mention private givers and corporate sponsors.

I guess Council has done its strategic planning and are looking to add value. But NFPs really don’t care about a funder’s kitten photos on Facebook, or funder’s staff development needs. They just want the cash, and writing about partnership simply highlights the power imbalance.

There is an exception. I can see a big opportunity for funders to get to work on opening up a dialogue about WHY they are being asked to fund certain groups. Are costs which should sit at central Government being asked to sit within charity? As an example, I once saw an application for mattresses for an old folk’s home. Really. Mattresses for the elderly. I expect my taxes to cover these sorts of costs – you? Same with helipads. Same with social services helping vulnerable people. Why do we ask NFPs to scratch around for funding to get our society working better. If the services are doing what Central Government (and thereby the voters) want them to do, and are achieving the results that we expect them to, then fully fund operational costs and be done with it.

So funders, if you really want to partner with NFPs, think about what YOU bring to the table. Are you happy to use political capital to push costs back to where they belong? And do you have a clear sense of what you think you should be doing as opposed to what you are doing? And are your decisions open and transparent to those who care?

I write about this stuff as believe that as need to understand where funding comes from, where it goes, and how it gets there. Love to talk with you if you think this is at all interesting. Check out my website www.delfi.co.nz.

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Fake News - we need your money!

3/22/2018

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I choked on my latte the other day as I was reading Metropol, a lifestyle mag distributed to the leafy Christchurch suburbs. There was a story about a fashion event designed to benefit Ronald McDonald South Island. In here was a direct quote from their CEO “… because we receive no Government funding we rely on community support like this”. Now, last time I looked the Ministry of Health’s Travel and Accommodation Scheme pretty much covered ALL of the operating costs of the organisation. Maybe the statement that “we receive no Government funding” is correct because the funding is linked to the families staying at the house, so it’s not DIRECT funding, but it sure looks like we taxpayers do actually do what we are supposed to do here. Semantics?

And this all leads us to becoming less trusting of NGOs, as this survey reported by Stuff suggests.

I have written about Ronald McDonald House South Island (RMHSI) a couple of times, but thought it might be interesting to put this charity through the GiveWell criteria – or rather, a more concise and desk top version thereof. It’s a tricky one: our hearts tell us to do what we can, but what should our heads say? I believe all information should be easily accessible, transparent and publicly available.

What does the charity do?
I have grabbed the below from the RMHSI website. “Supporting families while their child receives hospital care; more than just a House.
Families stay with us completely free of charge while their children are hospitalised so they can concentrate on what matters most – their child.
Core values

Focusing on the critical needs of children
Keeping families close™
Celebrating diversity
Operating with accountability and transparency

How are we funded?
We rely on the generous support of the public, businesses and volunteers to operate our facilities and we undertake our own internal fundraising to meet costs. We receive no direct Government funding, although we can receive some support from the Ministry of Health’s Travel and Accommodation Scheme for eligible families.

That is marvellous. I can imagine how hard it is for a family to have a child in hospital, and being far away from community support must make that so much harder. I also imagine the community that it forms: having others who are going through similar situations and emotions to yourselves can be most supportive. However, do they need my hard earned dollars?

The RMHSI accounts are interesting. Firstly, I have looked at their latest 2015 accounts on the Charities Services website to see where their costs lie to get an understanding of what they actually do. The 2016 accounts on the RMHSI website do not have much detail – curiously enough there is a comment in the notes section (note 3 page 12) of their 2016 report that for detailed accounts we should contact the Trust office. I raised an eyebrow as this seems to contradict their core value number four of being open and transparent.

Not surprisingly, RMHSI is really about two things: operating the facility, and generating funds. However, I have had to resort to the 2014 accounts for real numbers around their service provision, as the 2015 and 2016 ones from their website are a bit less helpful for what I want to do.

Revenues come in two forms: one from operations, and one from fundraising. Let’s look first at operations.

In 2015 they earned some $676,606 from Accommodation. I believe this is the money referred to above as coming from the Ministry of Health’s Travel and Accommodation Scheme. This makes sense as it’s cheaper to centralise services, and it’s proper that the taxpayer covers this cost.

It also looks like they make money from subleasing their premise ($67k), but more interestingly generated almost $144k in interest.

Total operating revenue for 2015 was $905k, up from 2014’s $762k.

Operating costs (which include operating staff expenses, trust expenses, utilities and repairs and maintenance) for 2015 come in at just shy of $600k, up from 2014’s $528k. Depreciation is on top of this, coming in at $238k.

So the Christchurch operation made an operating surplus in 2015 of $68k, which compares to an operating deficit the previous year of $52k.

However, on top of this there is fundraising revenues. Both years generated around $1.2m in fundraising income. This came from donations, grants, fundraising initiatives and direct marketing. There was a cost to this of $443k in 2015 ($431k in 2014). This created a fundraising surplus of $840k.

I should also mention here (as I think it’s a fabulous feature of the organisation) that volunteer hours and donated items are enormous. In 2014 volunteers gave 16,600 hours of time. If we use $24 / hour as a surrogate for the cost of that time (for yes, volunteer hours are costed) then that’s an additional $398,400 of cost (offset of course… but it is important). Donated items are identified, but not included in the financial statements. Donated items (page 33 of the accounts) is listed which is helpful: for Christchurch the total came to $591k. If we take out things donated for events, we get $255,286.

How cost effective is each programme area?
There are no figures provided for the actual numbers of families helped in 2015, nor in 2016 (over 1000). I will use the 2014 figures: the annual report states that in 2014 they helped 763 families over 1162 visits, over 30,084 nights. So if we look at simple division, that equals 30,084 / (598,570+238,605) = $28 / night. That looks pretty cheap to me! If we add in volunteer hours and donated items then the cost per night per person increases to $49.55. Still pretty good!

How robust is the evidence behind the programme?
No evidence provided. I make the (fairly safe) assumption that they are part of the Ronald McDonald international programme. I also assume that, as the commercial McDonald’s business has fairly tied down commercial franchise agreements, that they have brought that philosophy to this element. Efficacy of the programme is probably not that important: just that families feel supported. Nothing is published about this in the annual report.

How well is each programme implemented?
No evidence provided. It is very hard to find anyone who has had the experience to say anything negative about the service. I expect it’s marvellous.

Does the charity need additional funds?
Here’s where it gets interesting. No. If we look at their Charities Office profile, they have not made a single deficit in the past ten years.

They have a solid war chest, with assets of $17m in 2016. Of course, we have to go back to 2015 to see how this is made up: there are fixed assets of $12.3m, and cash of $4.1m, $2.6m earmarked for building projects. They have a fund “Operation Provision Funds”, which I believe is there to support the operating costs. Direct operating costs are around $600k.

This means that, should they not make ANY money, they should be able to cover operations for two years. This is prudent to have provisions of course, and two years seems fine.

And there is this. The name of the organisation.

Now, one would expect McDonald’s to be a significant contributor to the organisation given they have their name on the door.

The graph shows the past nine years of accounts for RMHSI. The last significant contribution from the stakeholder was in 2013 totalling $150,000. This makes sense: the organisation has a great capability to generate funds for its operations, for growth, and looks well placed for the future, and I guess that the overarching global organisation is focussed on other markets.

Now, this seems limited to the South Island operation of RMHSI. The two North Island operations have been gathered under one umbrella, Ronald McDonald House charities. Here it looks like McDonald’s (as Mission Partner) gave the North Island organisations $1.6m in 2016, up from 477k in 2015.

The challenge with critiquing such loved organisations is thinking with the head. I see that they seem to do a wonderful job of supporting families in times of need. RMHSI has huge brand equity, and McDonald’s certainly gets considerable brand value from this. But as such, as a community I think we have to ask whether this brand love is deserved. And whether we should take what these organisations say at face value.

It’s not surprising that people don’t actually trust Not for Profits. Sorry, I won’t be attending the fashion show. And if I was the Minister of Health, I’d probably be a bit snippy that the government contribution is effectively sidelined. After all, there are plenty of other NGOs who could do with a tidy $676k.

Love to talk with you if you think this is at all interesting. Check out my website www.delfi.co.nz.

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Where is Rata Foundation's money headed?

1/9/2018

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There was a flurry of activity a few years back as Rata changed their name, brand and funding framework. I thought it might be interesting to look back at this data, and see what, if anything, has changed.

I have four years of financial year (31 March) data, from 2014 through to 2017.

One of the challenges in doing this sort of thing is making the right comparisons. For example, large amounts spent on capital items can skew the results. And Special Funds, like the post earthquake monies, can make year by year viewing a bit tricky. So I have excluded capex and special funds from the numbers below. I have also classified all the grants by (mostly) Rata’s old classification methodology, to try to put groups in meaningful buckets.

The chart below looks at where operational money for Canterbury has gone for the past four years. The biggest loser here seems to be Education (grey): if I look at the quantum the spend has halved over four years. This appears to have come from grants to schools: primary schools are down from almost $900k in 2014 to just under $180k in 2017, and secondary have gone from just over quarter of a mil in 2014 down to pretty much nil in the last year. Interestingly, preschools have jumped, albeit off a small base, of $181k in 2014, up to almost $340k in 2017. Whether this reduction is a function of no need, easier money elsewhere, or declines, is unknown, as Rata do not publish their declines. There is a small increase in spend last year in environmental, and perhaps slightly more to Community at the expense of social services and sport.

Ah sport. Still going to the usual suspects: Sport Canterbury get a fair whack, as do others who organise things like events. Middle class subsidies abound: cricket is the number one code receiving $185k in 2017, and just under $500k over the past four years (excluding capital), followed by league. Swimming is next: driven by a healthy contribution to the Council for their learn to swim programme (still, only equates to one FTE). I expected to see Bowls in the top ten takers of funding and was surprised its came in at 11, although one club (Parklands) did get $400k of building funding which I have excluded. Basketball and Gymnastics got just over $100k, and Golf received $80k from Rata.

Community and Economic Development is an interesting “catch all” bucket. In here are all of the post earthquake groups, and again its apparent that they will be feeling a funding squeeze: money into those groups down this year to $133k (down from a high of $370k).

Last time I looked at Rata I did a wee chart to look at count and averages (note – the numbers are different as I have realigned the data in my database to reflect funders’ financial years). So, again using the magic of Pivot Tables, let’s have another look. In blue are the numbers of applications approved. And in pink are the average grants given (in thousands).

This is showing what the data hinted at a year ago: yes, that things have changed. Fewer organisations are getting funded. Those getting money are getting larger on average amounts. Rata looks to be funding fewer groups in Arts and Heritage, Education, Social Services, Sport and Young People. And, except in sport, the average grant is up a bit. The list of those who are declined is not provided, so it’s uncertain as to whether this is driven by groups not applying, or groups being declined.

But, just between you and me, the biggest change is yet to come. You may recall that board appointments are made by Government, and you also may recall that we had an election last year. A very wise gentleman once told me that the most effective Community Trust Boards were those with a mix of both opposition and government appointees. I guess we will see the impact of this in a year or two – it will be interesting to keep an eye on funding to the various sporting codes (especially cricket!).

I do think it’s important for us to understand the funding ecosystem, as the allocation decisions are made on our community’s behalf. And, with many of New Zealand’s over 100k NFPs crying out for more cash, it’s fairly important that we, as a community, keep a vigilant eye on where our money goes – and what’s achieved from that spend.

Love to talk with you if you think this is at all interesting. Check out my website www.delfi.co.nz.

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Some musings on things

Six years of grants from CERT

Virtue Laundering in 2019

Thinking about the Earthquake Symposium

Musings on kids and sport

Rugby Racing and Beer

Demand for grant money into Greater Canterbury

Supply of grant money into Greater Canterbury

Openness and Transparency: pretty important in a partnership

Fake News - we need your money!

Where is Rata Foundation's money headed?

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