Good governance for fundraisers
Andrew Bascand, Managing Director, Harbour Asset Management
What is the great risk to the success of your fundraising organisation?
It is easy to focus on the day to day practical challenges of identifying, acquiring and retaining donors, and all the technology and human effort required to manage a fundraising organisation. These things can all be challenging and time consuming for management. They are all important.
However, it may be that poor governance is the greatest risk. With good governance, success right across the organisation comes easier.
The reason we decided to sponsor that Fundraising Institute of New Zealand is that we see this sector becoming even more important to the way that our economy and indeed our society functions. The government is clearly eager to make charities a centrepiece of their broader policies to improve and enhance our society.
Traditionally Harbour Asset Management has had large wholesale clients, like community trusts, company superannuation schemes and Kiwisaver providers. But in past 12 months, we have increasingly been approached by smaller entities in the philanthropic sector – iwi groups or fundraisers – with new settlements or new responsibilities, guardians of funds for the first time.
The advice we have given to all these groups has been the same: having strong governance is the most important step for any fundraiser. Not only does it maximise the chance that you make good choices over time; it provides your funders with added confidence that their contributions are being appropriately managed and safeguarded.
By some estimates, the fundraising industry in New Zealand is managing around $3bn.
Good governance has many aspects, but when it comes to investment management, we believe there are five must haves.
Investment beliefs and mission statement. What are your investment beliefs? Do you believe that fund managers can add value over and above market returns, or do you believe in taking a passive approach? Do you believe that investors are rewarded over time for investing some of their portfolio in the share market rather than just sitting on cash? Do you believe that holding a combination of cash, government bonds and shares helps offset different types of risks? Do you believe that holding some overseas investments helps ensure you don’t have all your eggs in one basket? Once you are sure of your investment beliefs, formalise them as part of a mission statement.
Investment objectives aligned with spending and savings targets. What are you really trying to achieve with your investments? Are these aligned with the monetary commitments of your organisation, helping you cover targets for gifting or philanthropic objectives? Would building up a larger perpetual fund provide more flexibility to meet regular commitments without having to feel the pressure of year to year variability in fundraising results?
Identifying what risks are important. Economic and market conditions will inevitably change through the life of your investments. What investment risks pose the greatest danger to achieving your overall objectives? Which market scenarios do you worry the most about? How can you guard against these? Identifying the risks that are most important allows you to plan ahead and design your strategy with these in mind.
Clear delegation and accountability for decision making. Once you have clarified your high level decisions on beliefs, objectives, and risks, is it clear who has day to day responsibility for making investment decisions? Are there well specified Investment Guidelines for a manager to work within? Clear delegation and accountability enables management to push ahead and implement the strategy without unnecessary distraction or confusion.
Timetable for regular monitoring and review. It takes time to achieve your investment objectives. There will inevitably be bumps along the way. Reviewing constantly could create unnecessary distraction and undermine the confidence of management. What is a sensible timetable to monitor and review progress?
Last of all, don’t forget to be practical when applying 1 to 5!
While these governance must haves are specific to investment management, in many respects they read across to the big picture questions that every organisation should ask itself.
It is easy to focus on the daily challenges of being a fundraiser. Identifying, acquiring and retaining donors can be tough work. Keeping up with technology needs and motivating staff is not easy. However, by placing more focus on good governance, achieving your goal can become that bit easier.