Jo Goodhew

9 May, 2013

Fundraising Institute of NZ conference

Introduction

E aku rangatira, tēnā koutou katoa. Ka nui te honore ki te mihi ki a koutou.

Let me begin by thanking the Fundraising Institute of New Zealand for inviting me to open your conference. It is a real pleasure to be here and speaking to you today as Minister for the Community and Voluntary Sector.

I would like to start by acknowledging FINZ President Clive Pedley and Chief Executive James Austin. I would also like to welcome and acknowledge your international speakers.

It is encouraging to see so many from both the local and international philanthropic sector in attendance today, and to share your passion in supporting the valuable work being undertaken in our communities.

Fundraising and charity

The practice of philanthropy and charity is as old as humanity. People have been giving away their money, property, and time to others for millennia. Philanthropy has taken many forms over time, and these forms continue to develop in our rapidly-changing world.

The move to professional fundraising is a relatively recent development in the long history of philanthropy and community involvement. FINZ plays a very important role in the sector by undertaking to promote and uphold professional and ethical fundraising and encourage the development of philanthropy in New Zealand.

The sector benefits from the learning and development opportunities you provide through your training programmes for charities, which cater for local, regional and national groups. And of course, you have also created this great conference, attracting international experts to keep building your own expertise.

I am encouraged to see that the new Certificate in Fundraising you launched earlier this year has been so quickly over-subscribed. High demand for the certificate shows you are filling an important need.

I commend your newest initiative, “Include A Charity”, which aims to build awareness about bequests to charities in New Zealand.

Encouraging New Zealanders to bequeath money to their favourite charities will benefit many important causes. I wish you every success with your campaign later this year.

Government initiatives

Social finance

A priority I have is for government to explore the ways it can support social enterprise and social finance. While the need for donations is ever-present, many community organisations are also looking to diversify their income streams through an increased focus on trading. Social enterprises are organisations that trade to support social or environmental goals. I imagine this is an area of interest for some of the charities FINZ members work with.

The Department of Internal Affairs has recently undertaken research on building social enterprise potential and the role of social finance in New Zealand. An initial online survey, conducted as a mapping exercise, shows a social enterprise sector that is relatively mature and quite diverse. Many respondents did, however, comment about stresses related to funding. Many indicated that they needed external help and advice around marketing, management, and financial and business planning.

The survey showed that social enterprises in New Zealand are operating in a range of industries, serving many different types of beneficiaries. While most organisations are locally based, a number have more regional or national perspectives. Further research underway will throw more light on social enterprise needs and issues.

Social Bonds

Another development in NGO funding is the work the Ministry of Health and the Treasury are doing to look at the possibility of piloting social impact bonds in the New Zealand context. This work is modelled on the various initiatives already underway overseas.

Social bonds are a new way for investors and service providers in New Zealand to work together and with the Government. They are an innovative way of contracting for social outcomes, and are one of the ways that the Government is looking to bring private and public resources together for greater collective impact.

Essentially, the model involves Government contracting with a non-government group to achieve certain social outcomes. Payment for the work comes from the investors, who will be paid back by government for their contribution, plus a return, if the outcomes are successfully achieved.

Social bond trials are already underway in the UK, US, and Australia. In September 2010, a social impact bond was adopted at HM Peterborough prison in the UK, seeking to reduce reoffending by 7.5 to 10% among offenders with short sentences. Private investment of approximately NZ$9.3 million has been made. Finance has been raised from charities and foundations such as the Barrow Cadbury Trust and St Giles Trust is providing services. The Big Lottery Fund and Ministry of Justice have agreed to pay investors on success of the services.

In February 2012, Payment for Success in New York launched a bond for a programme to provide education and intensive training and counselling to at-risk incarcerated youth. This aims to reduce youth reoffending by 10% or more. Private investment in the pilot is approximately NZ $11.8 million. Goldman Sachs has invested in the bonds, largely underwritten by Bloomberg Philanthropies. The social services provider is MDRC, a non-profit, education and social policy research organization.

A little closer to home, in New South Wales, Australia the government has recently entered a contract with UnitingCare Burnside for its first social bond trial – a $7 million social benefit bond for a program that works to restore children in care to their families. It continues to negotiate further social bonds pilots to reduce reoffending and for ‘family preservation’.

Meetings have been held in various parts of the country about how the social bond concept might be applied to New Zealand. These meetings have considered the risks, costs and benefits, what outcomes services could aim for, how success in achieving those outcomes would be measured, and when and how groups would be paid.

If the conclusions of the scoping project support the idea of a social bond pilot, the next step will be for Cabinet to consider whether to go ahead. This would take place later this year.

Financial reporting of charities

We are living in an age of increasing transparency and easier access to information. People want to be able to see that they are supporting a credible organisation that accounts for the way its funds are used. Any lack of transparency and clarity affects the credibility and financial viability of charities and other NGOs.

As you know, work is currently underway to lift the not-for-profit sector’s standard of financial reporting. Although registered charities have to submit an annual return to Charities Services, including financial statements, there are presently no accounting standards for preparing those financial statements.

Dr Carolyn Cordery’s research on charities’ financial reporting indicates that, in general, there is room for improvement. This research, done at Victoria University of Wellington, found that fewer than five per cent of charities produced reporting that could be classed as ‘good’ or ‘very good’.

The External Reporting Board, the XRB, which was established in 2011, is working to set financial reporting standards for registered charities and any other non-profits required to prepare general purpose financial reports. This was partly in response to the problems I have just mentioned.

The XRB has issued drafts of these standards, and they are presently consulting on them. The deadline for submissions is 28 June 2013. The standards are expected to come into force for the financial year beginning 1 April 2015.

The Ministry of Business, Innovation, and Employment has also been considering auditing and assurance proposals for larger registered charities. This includes looking at the levels of operating expenditure at which organisations will be required to undertake either financial reviews or full audits. It is also looking at whether people undertaking audits or financial reviews will be required to have certain qualifications.

Submissions on a discussion paper outlining a revised set of proposals for auditing and assurance requirements for larger registered charities close at the end of next of week, 17 May 2013. I encourage anyone interested to get in and have your say.

Conclusion

Thank you again for inviting me today. I hope you have a very productive and enjoyable conference.

Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa.

ENDS

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