The new type of giving

The gap between the rich and the poor in New Zealand is growing, and cash donations and generous cheques aren’t going to close it. It’s something those behind philanthropic efforts understand – and many of them are working to change the shape of giving.

Those changes are taking the form of new sorts of funds where ‘donors’ still get a return; bonds that result in community housing being built;  investments in education and health; and ‘impact investment’.

Today on The Detail, Sharon Brettkelly looks at the strategic giving going on that’s helping to bridge the massive gap in government funding for social services – estimated to be a $630 million shortfall.

It’s philanthropy in action, but not in a traditional way, says James Palmer.

Palmer runs Community Finance, a business that raises hundreds of millions of dollars from rich individuals and from wealth funds and puts the money into building houses for those who need them most.

He calls it a win-win. The investors buy bonds and get a return for the money they put in, and the Community Housing Providers such as Salvation Army and Habitat for Humanity get the funding they need to build affordable homes to scale.

“We’ve got more money than ever in the country, we have some proven solutions and we have growing need. How do we join the dots between those three?

“Philanthropy being effective and scaling up and innovating is going to be really critical, particularly with what we’re going through.”

Palmer explains to The Detail how he taps into his network of philanthropic individuals to help finance the housing projects, but “the power” is with the KiwiSaver funds and fund managers.

A report by wealth manager JBWere published last month says the charitable and for-purpose sector was worth $12.1 billion to our GDP in 2018.

So there are a lot more rich people in New Zealand, and their wealth has grown but are they giving more away? Can the charitable sector get a slice of what’s about to be the greatest intergenerational transfer of wealth in history, as baby boomers reach the end of their lives?

JBWere head of philanthropy John Morrow says "we may be in the early stages of seeing some large increases in giving from the wealthy and we're already seeing growth in family philanthropy … bequests are also set to become more significant".

“There’s one estimate that as much as US$30 trillion is going to change hands over the next 15 years,” says NBR journalist Nicky Shepheard, who worked on the business website’s list of top philanthropists and wealth creators.

Closer to home, latest figures show that half of all the money donated in New Zealand comes from “everyday Kiwis, not what you would call the philanthropists, the family trusts and so on”. Only 15 percent comes from corporates.

“I love what (farmer and investor)Tom Sturgess said,” she says:

"Money is like manure: you pile it up and it just stinks the joint up; you spread it around, it does good. I'm looking at money as a tool."

Shepheard says many on the list of New Zealand’s wealthiest don’t like to talk about how they spread their money around and it is not clear how much those on the rich list give, in total.

Invercargill’s Scott O'Donnell told Shepheard that one of the strongest ways he could give back is to be a good employer.

O’Donnell is co-owner of HWR transport logistics group with his wife Jocelyn, and Jocelyn's mother, Shona. It turns over $1.7b annually and employs 2500 staff.

They also put money and time into a number of local projects including the rejuvenation of Invercargill's flagging downtown area.

The Detail also talks to Nikko Asset Management’s head George Carter about the inspiration for a new philanthropic project, Freedom Fund.

“It’s really captured something in people’s imaginations and hearts that says, this is different, the idea that there is a fund where the economic gain from the capital isn’t being used to enrich yourself, it’s being used  to enrich others.”