So I thought it was time to do a bit of an update to the funding ecosystem work I did two years ago, and am now obsessively working through each funder’s grants line by line. Thought it might be interesting to look into some detail today into the Air Rescue and Community Services (ARCS). I had a wee look at them a year ago, but was focusing on issues around transparency and benchmarking within the underlying charity. This organisation is a “for purpose” Class 4 gaming trust, meaning that a good portion of their funds are channelled to the body who owns them, Canterbury West Coast Air Rescue trust (CWCART). They act as a fund raising body for the limited liability company, Garden City Helicopters, who hold the assets and human capital of the service.
I have taken their published annual data, and the year shown reflects Year End. So 2017 data includes April 2016 right through to March 2017.
If we look at the last four years of data, we can see that they have given almost $27m to Canterbury organisations. Not surprisingly, just over 60% of the funds are sent through to CWCART.
I have taken their published annual data, and the year shown reflects Year End. So 2017 data includes April 2016 right through to March 2017.
If we look at the last four years of data, we can see that they have given almost $27m to Canterbury organisations. Not surprisingly, just over 60% of the funds are sent through to CWCART.
Sport has received some 31% of that money with rounding to other organisations. So which codes are getting that money? If we look at all money given in 2016 and 2017 Football got a decent whack, followed by cricket. What is most interesting is the amount going into horse racing: if I look at the grants its driven by grants given to trotting clubs. This rise in grants to the racing industry from ARCS has swollen over the last two years: in 2014 the industry received $81k from this organisation, last year it was $200k.
However, these figures pale with the amount given to Mainland Football of over $630k in the past four years. They were followed by grants to Cashmere Technical who received over $100k of grant money per annum over the last three years.
Anyway – all this is slightly interesting, and can raise eyebrows if one considers issues like ethics of grants, social and gender equity, middle class capture etc. And there is whole issue of the lack of transparency of this rescue operation which I raised in my previous blog. But these sorts of questions are above my pay grade. However, I reckon that ARCS can do a bit more for less.
Given it’s a “For Purpose” gaming organisation, then why should it not provide all of the funds for the CWCART. In CWCART’s 2016 accounts, they passed some $5.3m to Garden City Helicopters (down from $6m in 2015). They could have funded all of this from their gaming operation, but instead chose to give $4.2m in both years, leaving a deficit which was funded from corporate sponsorship and fundraising. Fund raising raised some $1.76m in 2016, down from $1.8m in 2015. Operating costs relating to CWCART was $731k in 2016 (down from $834k in 2015).
If all the support for the rescue helicopter operation came from the underlying gaming trust, then could ALL of those operating costs disappear? Probably not, but let’s be conservative and say $400k of those costs would disappear if ARCS covered all Garden City Helicopter’s needs.
Now let’s look at the ARCS’s financials. They run the gaming machine operation, and the grant distribution around that. Page 4 of their accounts shows total operating costs of $2.5m. The top cost is depreciation, but if we take that, then we have operating costs of $1.4m, and half of this is salaries. Let’s say the grants process costs $510k - $3m of non helicopter grants * $0.17 (the cost per grant as per my earlier work). If this was whipped out, then the cumulative cost saving from both CWCART and ARCS = $0.9m.
That all sounds interesting, but ARCS generated over $8m in total for 2017. $8m less the $5.3m needed for operating the helicopters leaves some $2.7m. How does that get distributed?
Well, in my world funders collaborate. That $2.7m (which would actually become $3.6m because those whipped out operating costs become money which can go back to the community) could go to someone who does this already and who has a similar philosophy. NZCT looks like a prime candidate as they have a heavy sports skew too. Of course NZCT’s costs would go up (probably incrementally as they will already be funding many of these groups) and quite probably NFPs costs could reduce … so for the sake of argument let’s balance those off to zero.
So all very simple, the business case is clear with an incremental $900k of community funding, and it’s quite doable. But it won’t happen. There is no tension to change the status quo. ARCS are returning money to the community according to set guidelines. Air Rescue is a heart string operation which attracts attention and money. And they do cute money boxes. No-one else seems to be taking an ecosystem view of this space, and that’s what is quite frustrating.
Love to talk with you if you think this is at all interesting. Check out my website www.delfi.co.nz.
Postscript: the dog came up with a sterling idea while we were walking. Let’s let CWCART keep Westpac’s $500k annual sponsorship (BTW that means my $3.6m becomes $4.1m as above). I reckon Westpac has some systems thinking people who understand the concept of cost to serve… so if they chose to they could leverage that sponsorship and effect some positive ecosystem change. Now, that would be quite cool.
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