I looked at the Invercargill Licensing Trust a few months ago. http://www.delfi.co.nz/blog/dabbling-in-the-funding-ecosystem . Their annual report states they have total assets of $87.8 million. From that, they made a net profit after tax of $5.6million: $4m came back to the community through grants, and the balance was reinvested in the business. So this makes a 6% return after tax, with 4.5% coming back to the community. In addition, they generated $4m from their gaming trusts, which are run through their venues.
Now, Portage and Waitakere Licensing Trusts are based in West Auckland. Between them they have total assets of $41.7 million. From those assets, they generated a net after tax profit of $4.3m. In both cases, the Trusts’ cash has gone up, by a total of $4.6m.
Now, a 10% return on total assets is pretty good I would have thought. And if this was Invercargill, that funding would have gone out into the community. In the Auckland case, the funds sit within the current assets of the business.
“Giving back” is an important facet of the proposition of the West Auckland licensing trusts. This year, they have done this via a tool kit into every home in the region. Last year, according to the website, it was smoke alarms. Now, while a free gift is a lovely idea, its possibly not quite what the residents had in mind when they set these trusts up. What would I do with a new smoke alarm? Tool kit? Land fill I am afraid.
They also list sponsorships, grants donations and rebates to the community as ways they give back. There are some examples listed, such as the Mystics, but sadly the accounts give no insight as to what the dollar amount of this actually is. Indeed, looking through one recipient, Waitakere City Stadium Trust (The Trusts Stadium) I checked out their latest accounts: it looks like there is no money from with Licensing Trust: rather there is a $200k grant from TTCF, and undisclosed naming rights from West Auckland Trust Services Ltd, who have a management contract between both Trusts (and no disclosed financials). To me at least, naming rights are not a grant, so cannot be considered as “giving back”. As many of you know, there are (or should be) commercial benefits in naming rights. The other thing: this information was imparted through the section on Related Party transactions.
So to me, it looks like not much has changed since 2011 when SST did its review of the Trusts operations. All the grant money comes from pokies, none (to speak of) comes from alcohol sales. If they distributed the same amount as ILT, then we should expect around a $2m contribution to the community through grants. Were the Licensing Trusts not in place, then of course those venues would operate pokies, which are legally obliged to return profits to the local community.
What this does is highlights to me why we need to look more closely at those funding our local community groups, and not get caught up in a halo effect around the good they purport to do.
And while on that subject: submissions to DIA for the Class 4 review closed on Friday. I learnt something new as I did my submission: click here if you want to have a gander at this.
Would love to talk with you if you think this is just a little bit interesting.