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.
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/
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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