Philanthropisctrtisis this is the rainy day
NOW, right now, is the time when regulators and trustees of charitable trusts should question the notion of “in perpetuity”, or forever.
As the economics of this crisis start to take hold, charities are already closing. Many more will follow, leaving our most vulnerable community members even more vulnerable. “In perpetuity” doesn’t help them – forever is now.
For 27 consecutive years, the Australian economy has grown. It grew through the Queensland floods in 2011, the dotcom crash and subsequent European recession in the early 2000s, and even through the global financial crisis in 2008.
Of course that is all about to change. That economic growth world record will come to an end with the Prime Minister noting on the weekend that the discussion regarding a recession is now simply academic.
A 27-year period of growth and prosperity has resulted in an unprecedented period of wealth accumulation. A Credit Suisse report in 2017 identified there were 3000 people in Australia who were regarded as high net worth individuals having a net worth exceeding $65.5 million.
This economic growth and wealth accumulation have driven an explosion in the development of public and private charitable trusts. Almost all of these eponymous trusts have been designed to be there “in perpetuity”, or forever. They’ve been established as a legacy, to continue to support their range of causes for ever more.
To ensure that these trusts do not just simply accumulate assets, the rules governing them require an annual quantum of grants equivalent to at least 5 per cent of their assets in the case of private trust, and 4 per cent in the case of public trust.
Of course, in recent times these trusts have accumulated assets at a rate that far exceeds the rate of distribution. And, in some cases, those that established trusts continued to add further money as individuals and companies continued to grow wealth.
There are now more than 3000 of these funds in Australia and they hold in excess of $12 billion in assets.
But in a time of crisis, in a time unprecedented in our generation, in a time when humanity is experiencing one of its most significant public health crises, in a time of rapid and devastating economic turmoil and destruction where lives will be changed forever, what are the merits of this notion of “in perpetuity”?
Philanthropy Australia reports that one in four charities rely on philanthropy for 50 per cent or more of their revenue.
Charities employ more than 1.3 million people and engage more than 3.5 million volunteers, as well as contributing more than 8 per cent of Australia’s GDP.
These charities are at the coal face. They’re helping women and children fleeing domestic violence, they’re helping the homeless, feeding the hungry, helping those under the devastating grip of addiction and supporting those with disabilities and mental health challenges.
It is a time like now when we need to provide support more than ever. It is a time when we need to be courageous and, if necessary, change the rules and guidelines that are getting in the way. Legacies will be built during this time not by what money is stored but by what assistance is given.
It is a time to focus on your mission not your falling asset base.
It is a time when we should give and help and act.
Bill Mithen is Give Where You Live CEO and the chairman of G21 Alliance.
LEGACIES WILL BE BUILT DURING THIS TIME NOT BY WHAT MONEY IS STORED BUT BY WHAT ASSISTANCE IS GIVEN. IT IS A TIME TO FOCUS ON YOUR MISSION NOT YOUR FALLING ASSET BASE. BILL MITHEN, CEO OF GIVE WHERE YOU LIVE