Win-win: strategic giving funds gap in social services

One Donor

The wealth gap in New Zealand is growing – but many people behind philanthropic giving are changing the shape of charity.

The changes are taking the form of new sorts of funds where ‘donors’ still get a return.

They include bonds resulting in community housing being built, investments in education and health and ‘impact investment’.

Today, strategic giving is helping 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, who runs a business called Community Finance.

Palmer’s business raises hundreds of millions of dollars from wealthy people and wealth funds. He then puts the money into building houses for those who need them most.

The result is what he calls a win-win.

Investors buy bonds and get a return for the money they put in. Community housing providers like the 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?” Palmer asks.

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

Palmer says 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.

Wealth manager company JBWere reported last month that in 2018 the charitable and for-purpose sector was worth $12.1 billion to our GDP.

Given the growing number of wealthy people in New Zealand and what’s about to be the greatest intergenerational transfer of wealth in history, as baby boomers reach the end of their lives, what’s the likelihood of the charitable sector benefiting?

JBWere head of philanthropy John Morrow thinks there may be some large increases in giving from the wealthy coming up.

He’s already seeing growth in family philanthropy and says bequests are also set to become more significant with the latest figures showing half of all the money donated in New Zealand comes from everyday Kiwis.

Only 15 percent comes from corporates.

A National Business Review journalist Nicky Shepheard says many on the list of New Zealand’s wealthiest prefer to be discreet about their philanthropy.

She says it is not clear how much those on the rich list give in total.

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