Fundraising in New Zealand, the country’s only monthly fundraising publication, reports that community trusts and gaming machine trusts

Above: Heather Newell, Foresee Communications

have been impacted by the current economic climate.

At the end of November Bay Trust called a temporary halt to its grant making in order to protect the Trust’s ‘community capital’ during the worldwide contraction in investment markets, and to ensure the community gains the full benefit of recovery in the market.

Shortly after Bay Trust made its announcement, the ASB Trust released information that it too was affected by the investment crunch.  While the last two years yielded a good rate of return on investments, this year had been a drop and next year would be less again. The normal average grant pool has been $45 million a year but during the last two years it had risen to around $60 million. In the 2008 year it dropped to $33 million and would probably fall again in 2009, although the Trustees had not yet determined how much they will give out next year.

Some trusts have been hit from two sides. Not only have they lost money on their investments but have been halted in their grant making by frozen funds. Other trusts are also reporting a reduced income from bank deposits as interest rates fall.

And if the news from the community trusts wasn’t bad enough, gaming machine spending is also down this year. All the gaming machine trusts are reporting lower takings from gambling over two quarters. According to figures released by the Department of Internal Affairs, total annual expenditure for the year to 30 September 2008 was $927.1 million compared with $938.3 million in the year to 30 June 2008.

Spending was also down in the final quarter of 2008. Spending dropped just under 1 per cent from $232.3m at 30 September to $230.7m at 31 December and was 6 per cent lower on the same three-month period in 2007.

Expenditure in the year to 31 December 2008 was $912.5 million compared with $927.1 million in the 12 months to 30 September 2008.

Mike Knell, CEO of New Zealand Community Trust, said that gaming across the sector had been down about $12 to $13 million on this time last year but normally the last quarter produces a higher return, perhaps because people go out more as summer approaches. This year though, he reports that the takings were flat during October and dropped in November – something unheard of. It reminds him of the uncertainty that followed after the anti smoking legislation was brought in four years ago.

By late January most gaming machine trusts had reviewed their granting strategies and instead of making grants monthly, have now fallen back to bimonthly. NZCT has instituted an online application form that is very simple to fill in and seeks only the most basic information. If the initial application is considered favourably, more information is sought.

While this news sounds grim its impact may be softened by a number of incentives around personal donations instituted by the last government. We’ve yet to see how much of an impact the tax changes have had on personal philanthropic giving and these figures probably won’t be available until the end of the first tax year. One of New Zealand’s leading capital campaign consultancies reports no impact on their campaigns as yet, and even boasts that some of their campaigns are doing better than anticipated.

But Mike Knell also commented that “Sponsorship, another major funding element, is not immune to the current economic crisis. Corporates globally are reducing/eliminating sponsorships as the free cost of the EBITDA (or earnings before interest, tax, depreciation and amortisation) is drying up (fast). We have concerns for sport in this climate as well”

According to Nick Jones and Associates Ltd, Consumers Who Care report around 1,213,000 of New Zealanders have been involved in direct donation or sponsorship to non profits which is about one third of the population. In a recent Charities Commission survey a quarter of the respondents claimed to have given more than $250 a year to charities.

Non profits in New Zealand receive around 20% of their income from philanthropic support (including gaming).

Author Heather Newell is a co-publisher (along with Tony Pilalis) of Fundraising in New Zealand, the country’s only dedicated subscriber publication for fundraisers. Heather has been writing, researching and coaching on fundraising and sponsorship for more than 15 years. To find more about this publication and other news and education related to fundraising and sponsorship, visit www.foresee.co.nz