The case for doubling giving: ‘Now is the time to lay the groundwork’

We can increase giving to not-for-profits by double or more in the coming years by fostering trust, implementing strategic policies and engaging generations young and old, says Doug Taylor, CEO of children’s education charity The Smith Family. But it is a two-way street and NFPs will need to work hard to ensure impact also grows to meet donor expectations.

Philanthropic giving has played a crucial role in our nation since the 1800s supporting our economic, social, cultural, physical and environmental wellbeing. Today, our most vulnerable Australians and communities can’t survive without it. Yet across the not-for-profit (NFP) sector, just 7% of revenue nationwide comes from donations and bequests. The Productivity Commission is currently hearing submissions on how we might double philanthropic revenue by 2030. Doubling it by 2030 is a necessary, important and an ambitious aim, but that’s less than six years away. You have to ask – is it really achievable?

We need a long-term plan that sets up structures to grow philanthropy into 2050 and beyond. Now is the time to lay the groundwork that enables stronger philanthropic giving, in line with the current transfer of intergenerational wealth from older Australians to younger generations.

It must be a two-way street. If revenue grows, rightfully, so will donor expectations. To ramp up revenue, NFPs need to guarantee good practice, use evidence to drive what they do, and invest in the systems, people and processes to measure the outcomes of their support, year after year.

Not-for-profits are also working together (as part of the Pay What It Takes charity campaign) to develop initiatives aimed at providing donors with a deeper understanding about the crucial spending on overheads that charities need to make in order to deliver effective and sustainable impact for their beneficiaries. This is about communicating transparently and with consistency to shift perceptions, so the focus is on the impact the sector has, not how little it spends making it.

The government can help too. Overhauling the regulatory and legal environment governing NFPs is a logical first step. The current lack of harmonisation across states and territories limits charities’ efforts to fundraise efficiently and expand services sufficiently to dramatically increase their impact. We also see opportunities for the government to grow giving by enabling the transfer of unspent superannuation funds to a charity after a person passes away. Increasing participation in workplace giving and allowing individuals to donate some of their tax return to a charity are other straightforward ways to increase the pool of people giving.

The sector also needs to continue to engender trust. If the Australian government adopted national operating principles around fundraising and required all charities to adhere to them, (rather than, for example, just those who are members of the Fundraising Institute Australia) it would help buoy trust in the sector – critical to growing donations and therefore impact.

But times are tough and the NFP sector, like others, is feeling the effects. The cost-of-living crisis is hitting Australians in ways many of us haven’t experienced for years. More of us are struggling to pay the mortgage or rent, household bills and expenses such as doctors’ visits. We’re watching our discretionary spending closely.

So, what does this mean for organisations like ours when fewer individuals are donating?

We are a charity where 85% of our financial resources come from individual donors, or from philanthropists, trusts and foundations and corporate partners. Today’s economic climate could keep me up at night, worrying about the impacts on the student and families we support and how we can continue to attract funding to sustain our work. But, thankfully it doesn’t, because when so many are struggling, some philanthropists are stepping up in a hugely impactful way to help. One of our long-time donors has just reaffirmed his commitment to support 300 young Australians through our educational Learning for Life program, a significant annual investment in their futures. For years now, this philanthropist has seen us tracking the difference we are making to these young people’s lives. We enquired about whether we could share his story publicly recently. No thanks, he said. He values his anonymity.

 Seeking recognition or not, all philanthropists who give to us, do so because they want to make the world – and Australia – a better place. They’ve seen the evidence and the outcomes that illustrate investments like theirs allow us at The Smith Family, to double, even triple, our impact.

Philanthropy has always been a pioneer in meeting new and emerging needs in the community and this is a different role to governments. Now more than ever, we need philanthropy to be a catalyst for supporting innovation. We need philanthropy to work with the sector to help tackle the type of highly complex challenges and emerging challenges we are facing as a nation, with innovative responses that increasingly require collaborative ways of working that shape the systems that too often hold people back from thriving.

By fostering trust, implementing strategic policies, and engaging generations young and old, we can build a greater proportion of NFPs’ revenue coming from philanthropic donors, doubling it, and more, in coming years. This will also require new ways of working for the NPF sector. Achieving this together, will unlock a sector able to deliver far greater impact, creating a significantly more resilient nation and benefitting us all.