An important discussion for funders and grantees alike
by Denise Cheng, Equity Trustees - Relationship Manager, Philanthropy
What does it take to run an efficient, effective, outcomes-driven, for-purpose organisation?
People, infrastructure, support (or “back-office”) staff, office space. Exactly the same as for any for-profit business.
And yet, for as long as the charity sector has been around, for-purpose organisations have existed on the smell of an oily rag.
As a former fundraiser, now supporting philanthropic families to navigate their giving in a strategic and thoughtful way, I have an appreciation for the needs of the for-purpose sector. I know what it takes, in both direct and indirect costs, to support a community.
I have always advocated to philanthropists to firstly complete appropriate due diligence on the for-purpose organisation they have in mind. Then consider the overall outcome of their granting and whether community impact is present or expected down the track - rather than dissect a project budget with specific focus on whether granted funds will be allocated to direct program or indirect costs (often referred to as “overheads”).
In the recent past, there has been much discussion on the global philanthropy scene around the concept of the “starvation cycle” and the chronic underfunding of the sector’s indirect costs. And now, there is a research study produced by Social Ventures Australia, Philanthropy Australia and Centre for Social Impact, to help us better understand the landscape in Australia.
Evidence collected via Centre for Social Impact’s Pulse of the For-Purpose Sector survey (see below) shows the level of costs covered by different types of funding, highlighting the widespread nature of the starvation cycle in the Australian context.