Innovation vital for philanthropy

Charitable sector ‘crying out’ for a different approach that will maximise New Zealanders’ generosity

They say in business you have to spend money to make money. A hard truth about philanthropy is that successful charities – the big brands that market themselves effectively and attract big donor dollarsfor their cause – got there because they were prepared to invest in building an audience and market share in the same way as thriving for-profit companies do.

New Zealanders have long been ranked among the most giving folk in the world. Recent data suggests we donate a staggering $1.5 billion a year as individuals. Trusts, foundations and businesses round the total philanthropy up to nearly $3b.

Considering the amount of money involved, it seems absurd to say we need to innovate to strengthen and grow our philanthropic sector and prevent charities from stagnating, but it’s true. Let me explain what we should be doing differently, and why.

The way we think about charity is wrong.

The position taken by entrepreneur and humanitarian activist Dan Pallotta in his provocative TED talk2 challenges many longstanding beliefs and assumptions about charitable giving. Pallotta makes a good case for how the economies of developed nations have evolved to put non-profit organisations at a serious disadvantage.

He argues we have a tendency to confuse morality with frugality, in that we think a charity’s secondary objective, after supporting its cause, should be to keep overheads as low as possible.

The examples Pallotta gives are USbased, and the puritanical origins of charity as a form of penance for capitalist industry aren’t quite the same here in New Zealand. But we do have a perennial debate over how much charities should spend on running costs versus their primary purpose, and we need to take a more sophisticated, business-minded approach to philanthropic growth.

There is tension between consolidation (and cost-sharing) and creating as much charity as possible. The argument over whether charities with aligned objectives should simply pool their resources is a worthwhile discussion.

New Zealand has more registered charities per capita than any other country in the world, and there may be value in consolidation to share back-office expenses and (in theory) devote more to the frontlines. But equally, many givers say there’s no such thing as too much charity.

Pallotta’s compelling argument is that an activity often dismissed as a costly and dispensable overhead – namely, audience-broadening and awarenesslifting fundraising events – is crucial to growing the pie and making it possible for charities to do far more for their causes over time.

The sector is crying out for innovation, for a different approach that maximises Kiwis’ remarkable generosity.

A terrific example is Wood for the Trees, a charity founded by several mates after they lost their best friend to suicide. Their goals are to help those suffering from mental illness and spread awareness about mental health.

To relieve these intractable problems they are prepared to do some things that break the charity mould, starting with combining their networks to create a powerful philanthropic engine for a charity-event style of fundraising.

The charity is bringing together horses and Harley-Davidsons in an unprecedented family-friendly event, the Out the Gate Race Day at Ellerslie Racecourse on December 16. It will feature horse racing, live stunt shows, performances and speeches from the likes of Mike King, Tiki Taane and the remnants of Hello Sailor, and there will be the chance to win a new Harley-Davidson.

Charity events are not new, of course, but an event of this type, targeting families and offering a fun day out in a large central Auckland location, pushes fundraising and conversation about mental health into a new, accessible mainstream space.

Wood for the Trees is a group from all walks of life, who realised that if they pooled their resources, contacts and energy, they could make a difference, and working with public figures such as King, who already has a high profile in mental health advocacy, is a smart move.

They are piggybacking on existing entities, spokespeople and funding to build their own brand while pushing the whole movement forward, and are setting themselves apart by being willing to spend money (such as by giving away a Harley) to make money and raise awareness. Great innovation doesn’t come from the drive to win. It comes out of a deep desire to contribute to the lives of others.

Givers can target their donations by looking for hallmarks of innovation. We are often asked, how do I know which charity to support? Which organisations are well-run and will do the best with my money?

A good start is to look at how a charity functions in its space.