The evolution of a sector – a concise history of philanthropy in Australia

• A look at how trust structures originated in the Knights of the Crusades.
• How a low point in sector governance led to the professionalisation of the sector.
• The ACNC continues to open the curtain on the sector, while society is also demanding a redistribution of power.

Read part 2 here: Evolution of philanthropy: Seven guiding principles for a more effective future

Philanthropy is on the cusp of a new era of public accountability as the expectations of our time change, and the probity and transparency conferred by the sector’s relatively new governing body, the Australian Charities and Non-For-Profits Commission (ACNC), start taking effect, says Simon Lewis, Partner at GoodWolf. GoodWolf provides strategic advice and impact alignment services for foundations, impact investors and for-purpose organisations. Simon recently addressed the Philanthropy Australia team to share his retrospective and insights on the sector, which we are passing on here in a two-part series – today, the evolution of structured philanthropy sector in Australia, and next week, seven guiding principles for a more effective sector into the future.

Structured philanthropy’s origins in Australia lie in trust law, a peculiar feature of English law, which was created to protect and transfer the wealth of the Knights of the Crusades from the Middle Ages. As a reward for doing God’s (and the Monarch’s) bidding, they were permitted to set up trust structures to assign control to trustees during their long absences, and to transfer these assets and accumulated riches to the next generation in the event they did not return. The preamble of the Elizabethan Statute of 1601 provided the first definition of “charity” as a way to provide greater guidance and incentives for the private sector to bring their resources to bear on the growing problem of poverty in England at the time. Why? Because in the century prior, the Reformation movement fomented by the Crown had systematically sacked and plundered the Catholic Church, the largest institution addressing the growing needs of poor people in age-old traditions of almsgiving and charity.

The expanding law of trusts, and its various codes for ownership, control, succession and charity soon became instrumental parts of the colonial scaffolding assembled across the parts of the world painted Imperial pink over the next 400+ years. Licensed Trustee Companies, as we know them, became purveyors of such trustee services, and the vassals by which new-found wealth was collected, stored and transferred across the fast-expanding British Empire. The Public Trustees, one in each state, were also set up as Government-owned entities and operated as the executors of last resort for those who couldn’t afford a private service.

Licensed Trustee Companies were the forerunners of the investment management industry with their collective investment vehicles called Common Funds, and forerunners of the wealth management industry with their services on estate management and succession. They had close associations with shipping companies and colonial outputs, almost like a concierge service for ‘Wealthy Gentlemen’ as they systematically conquered far flung places and their people around the globe. There numbered around 50+ individual trustee companies in Australia at the turn of the last century, their large sandstone edifices with named inscriptions lining the main streets of our capital cities. And they had a front-row seat in the formation of the philanthropic corpus that was accumulating through generations of testamentary gifts in the wills of early Australians that had struck it rich or made good in the ‘Lucky Country’.

Professionalisation in practice has contributed to growth

Collectively, this phalanx of philanthropy still sits in the belly of our remaining Licensed Trustee Companies, and will do so in perpetuity (as the name of some of these trustee companies have us believe). Victoria and its capital city continue to dominate the philanthropic landscape due to the legacy of ‘Marvellous Melbourne’ (the apogee attached to Melbourne when it became the richest city in the British Empire in the 1800s as its settlers collected up gold nuggets from the surrounding rivers and hills of the state) and specifics in Victorian Trustee Law that created incentives to domicile charitable trusts in the state.

A century later in the late 1980s, as structured philanthropy continued to expand in the shadows of high society, and sometimes beyond the purview or comprehension of appointed trustees or directors, the theft of Father Vincent Kiss, Manager of Charitable Trusts at ANZ Trustees, turned on a much-needed spotlight.  This time probably marks a low point for Australia’s philanthropic sector and a peak point for the complacency of Licensed Trustee Companies that were, ironically, meant to be the experts in governance. The subsequent professionalisation in practice and contribution to the growth of the philanthropy sector in Australia by Licensed Trustee Companies in the decades since has been a welcome change.

The ascension of Ancillary Funds, both Public (the first was The Ian Potter Foundation in 1964) and Private from the early 2000s, started to really change the story for philanthropy. Family offices and private wealth companies and division of banks started to spring up and tap into these new structures and into the latent philanthropic potential of an increasingly wealthy society that has gone a whole generation without a recession. Giving while living is becoming more popular, and Peter Winneke’s new book, Give While You Live, illustrates this pendulum in full swung. Meanwhile, Licensed Trustee Companies continue to amalgamate to satisfy shareholder returns no longer flowing from their core business model to the point where there are now only three left.

A more contemporaneous code

The advent of the ACNC in 2013 created a public register of all the charities including those endowed to make grants, and for the first time in 140 years, trusts and foundations of all types had to publicly lodge their governing documents and accounts (with notable exceptions given to the Church) and subscribe to ACNC governance principles. A new definition of ‘charity’ enacted in the same year gave us a more contemporaneous code that includes policy advocacy and influence to replace the preamble to a Statute that was now 412 years old. A Corporations and Markets Advisory Committee (CAMAC) Review of 2013 into the fee practices of Licensed Trustee Companies was commissioned by the Assistant Treasurer after lobbying by a group called the Charitable Alliance. The Commission and the Charitable Alliance knocked on the door of conscience for Trustee Companies around the specific matter of reasonable fees, but no-one was home.  

As the ACNC continues to open the curtain on what has been a very private affair for philanthropy in Australia with successive instruments such as Annual Information Statements and Related Parties Disclosures, there are also changing expectations of philanthropy and its role in society to “distribute” its assumed power, and seek to more meaningfully address the systemic causes of disadvantage and injustice in our Lucky Country.

Simon’s perspectives come from a 15-year career spanning licensed trustee companies, family offices, foundations and for-purpose organisations, and now as co-founder and Chair of the Australian International Development Network (AIDN), our first Philanthropy Australia Chapter Group established in 2019.

Read the next edition of Philanthropy Weekly for Simon’s Seven Guiding Principles for a More Effective Philanthropy Sector in the Future.