A wee while ago I stumbled across a report done a few years ago by KPMG on Gaming Trusts proceeds. It looks at grants made over one year: 2019. I came across this report when looking at Rano Community Trust. One issue I clocked then was the crazy number of grants being given to some groups. The Supreme Sikh Council was identified as having received $3.5m over 86 applications from 6 different gaming trusts in one single year. This resulted in a complaint to DIA, and this piece on Business Desk. I haven’t heard how that complaint has panned out.
The organisation with the most applications was Synergy Community Trust who were given $701k in 95 different grant applications from two pokies. So I had a sniff around and then dived into Dragon Community Trust, downloaded their grants, categorised them and cleaned them all up. I wrote something and then self-censored based on what I found.
That sparked another complaint to Charities Services and Serious Fraud Office for good measure.
Since then I have really gone down a rabbit hole on a few different grantmakers. I’m quite fascinated by how this all pans out, but in the meantime I’ve learned a fair bit about red flags. If we consider this from a risk point of view there are several places where people have opportunities to manipulate the system.
It can be a messy business. In the past two weeks I’ve seen:
I do think the system can be improved: like any industry there are good actors and some who need a bit of help. Some practices seem now so ingrained that they are no longer questioned. Critique is a way organisations evolve and stay at the top of their game, away from complacency. We need to have systemic, independent oversight of the whole of the grant making ecosystem: the gaming trusts, local and central government and trusts set up using community money, such as the community trusts or energy trusts.
A Grant Thornton report into the Not for Profit put funding as the number one issue for community groups. Money is a treasure: we need to be sure that those bodies and institutions who have significant power distribute it in an effective manner.
If I were looking to overhaul the system I’d put some further checks into the system and put some real teeth into investigating and prosecuting infractions of our grant making system. This would include:
There is a fair bit of money floating around the ecosystem which would enable a better monitoring framework. The Government clips the ticket: according to NZCT’s latest annual report, for every dollar into the machines, 91 cents goes back to the punter, 3.3 cents goes to grant recipients, 2.9 cents to Government duties and levies, 1.4 cents to operating and machine costs, and 1.4 cents venue costs. Based on 2021 industry numbers, and if my maths is right (and it probably isn’t) that’s about $236m into government coffers from this industry. I think it would be in everyone’s best interests to push a bit more money over to the monitoring side of the ledger and make sure the ecosystem is fair, equitable and structured to get money to organisations who can do the most good in their communities. And in a shameless plug I’d be super keen to be a part of the solution.
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/
The organisation with the most applications was Synergy Community Trust who were given $701k in 95 different grant applications from two pokies. So I had a sniff around and then dived into Dragon Community Trust, downloaded their grants, categorised them and cleaned them all up. I wrote something and then self-censored based on what I found.
That sparked another complaint to Charities Services and Serious Fraud Office for good measure.
Since then I have really gone down a rabbit hole on a few different grantmakers. I’m quite fascinated by how this all pans out, but in the meantime I’ve learned a fair bit about red flags. If we consider this from a risk point of view there are several places where people have opportunities to manipulate the system.
- Money in. For gaming trusts, obviously they are an opportunity for money laundering (I’ve watched Ozark!). We can’t see how individual machines operate (as quite rightly that is sensitive information), but one hopes that there are checks and balances in place to manage that. I do understand there are around large amounts going through machines.
- Venues. Now the law specifically excludes venues from having any say in where money goes. But I can’t help but wonder why some venues do move operators. Its an issue I have poked at in the past. It would be interesting to understand what checks and balances are in place to mitigate against this: given what I’ve found in my work I’m not sure there are many.
- Community grant decision making. Who gets the money is then the decision of net proceeds committees.
It can be a messy business. In the past two weeks I’ve seen:
- Inflated grant applications. Media has reported on inflated rents being paid as grants. It doesn’t seem that practice is changing.
- New charities receiving significant sums. I’ve found a number of newly established charities who then receive significant support via some gaming trusts. Some have never lodged annual returns, despite receiving significant grants. For example, Waikato Women’s Advancement Charitable Trust registered on 29/3/2016. They were deregistered on 19/1/2021 for failing to provide annual returns. Ever. They received some $219k from Dragon in the four years that my work covered. They have now re-registered as a charity.
- Significant number of grant applications. Synergy Community Trust received 201 grants from Dragon totalling $1.4m in just 6 years. That’s 33 a year and suggests a very close relationship between grant maker and charity. In 2021 Eastern Suburbs Football club received 58 grants. Many grant makers will only entertain one or two applications per annum in order to allow others a chance for funding and manage their cost to serve.
- Venues switching operators, and then the grant profile of that operator changing. I’ve written on this before.
- Significant amount going to organisations before they were registered as a charity, and after they deregistered as a charity
- Significant amounts going to various organisations, including sporting, where there remain questions over professional fees.
- Significant amounts of cash ending up in Auckland instead of where it was generated (from the latest numbers, Dragon have 88% of the cash going into Auckland from 62% of the machines). But that’s OK because Rotorua has no discernible social issues that this money could have helped with right?
I do think the system can be improved: like any industry there are good actors and some who need a bit of help. Some practices seem now so ingrained that they are no longer questioned. Critique is a way organisations evolve and stay at the top of their game, away from complacency. We need to have systemic, independent oversight of the whole of the grant making ecosystem: the gaming trusts, local and central government and trusts set up using community money, such as the community trusts or energy trusts.
A Grant Thornton report into the Not for Profit put funding as the number one issue for community groups. Money is a treasure: we need to be sure that those bodies and institutions who have significant power distribute it in an effective manner.
If I were looking to overhaul the system I’d put some further checks into the system and put some real teeth into investigating and prosecuting infractions of our grant making system. This would include:
- Capture all grant information on a monthly basis from all those making gaming trust grants, including the following information:
- The purpose of the grant, including physical address for any rent payments
- NZBN of the organisation receiving the grant
- Declines
- Territorial Local Authority of grantee
- The purpose of the grant, including physical address for any rent payments
- Run exception reports looking for organisations receiving large numbers of grants. Review those organisations for links to gaming trust / venues. Ensure stated process followed for those grants, and the accountability reports are completed.
- Pull data from Societies and Charities with registration date, key person data and other key flags including street address, and missing financials. Map this to grant data and venue data and investigate issues.
- Examine grants made for rent and other opex, flag up rents which seem out of context for the location and investigate building ownership. Share same with IRD.
- Gather the accountability reports for cumulative annual grants over a certain threshold. Ensure those reports include IRD numbers and share same with IRD.
- Review venue changes as they happen, look for linkages between the venue and any recipient charities, then review profile of grant making decisions.
- Work with Lotteries on benchmarking organisations who do similar things – for example football clubs, youth organisations, rescue helicopters. Use those benchmarks to ensure that amounts going to “for purpose” Class 4 operators are fair and reasonable.
- Come up with clear enforceable guidelines on for sport club grants and monitor for compliance
- Add in company name and directors / shareholder information into the Gaming Machine data provided by DIA.
- Make available grant reports to TLAs so they have a better understanding of the funding ecosystem that operates within their own communities
- Grow the database to include other sources of contestable funding, including community trusts, Lotteries and Local Government so that the ecosystem is available for scrutiny. Communities can then better see who is getting what, why, and perhaps have some voice in how this precious resource is allocated.
There is a fair bit of money floating around the ecosystem which would enable a better monitoring framework. The Government clips the ticket: according to NZCT’s latest annual report, for every dollar into the machines, 91 cents goes back to the punter, 3.3 cents goes to grant recipients, 2.9 cents to Government duties and levies, 1.4 cents to operating and machine costs, and 1.4 cents venue costs. Based on 2021 industry numbers, and if my maths is right (and it probably isn’t) that’s about $236m into government coffers from this industry. I think it would be in everyone’s best interests to push a bit more money over to the monitoring side of the ledger and make sure the ecosystem is fair, equitable and structured to get money to organisations who can do the most good in their communities. And in a shameless plug I’d be super keen to be a part of the solution.
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/
RSS Feed