Lauren Vertigan, fundraising consultant based in Melbourne, reacts to a new directive from the Victorian Government that might change the landscape for charitable endowment.
Directive 1.4.5 has the potential to significantly impact endowment fundraising by charities that are also state government agencies – public hospitals, their associated foundations, art galleries and many arts organisations.
The directive enacts the Treasury and Investment Policy by which “Public sector agencies are required to undertake all borrowings, investments and financial arrangements with TCV (Treasury Corporation of Victoria) or VFMC (Victorian Funds Management Corporation).”
The impact this policy could have on endowment fundraising cannot be underestimated. Philanthropists care about how their donations are invested and managed, and, in my experience, they want to ensure their donated funds stay far away from government hands.
While public sector agencies can apply to the Treasurer for an exemption, their application must have the support of their department’s minister. Even if exemption is achieved, until this time it is understood the direction is mandatory.
If entities that fundraise are unable to achieve exemption, their ongoing endowment fundraising efforts will be seriously challenged. Their current endowment donors – many who have given on the premise of a different investment – are likely to be confused, frustrated and angry. So too may be trustees of existing endowment funds, as the directive may conflict with their trustee obligations.
I understand many entities are currently in serious discussions with their governing bodies and State Government departments about this.
Australians usually like to see immediate impact for their philanthropy. It is a big decision to contribute to an institution’s endowment, rather than get immediate impact. Enforcement of this policy has the potential to change behaviour for major donations and bequests.
It is still early days – let’s hope that the relevant ministers’ wake up to the dire ramifications this change of investment policy could have on some of our state’s most exciting and important institutions.
To learn more about the centralised treasury and investment policy, see: http://www.dtf.vic.gov.au/Publications/Victoria-Economy-publications/Centralised-treasury-and-investment-policy
If your organisation is one of those affected by this change in policy, I recommend you contact your local minister to find out what options may be available and that you begin preparing for conversations with your endowment donors.