Where there’s a will, there’s a way (to give back)

Mark Lister
Investment Director
Craigs Investment Partners
11 September 2023

For those who want to use their will to do good in a strategic and long-lasting way, the community foundation model is worth a look.

Community foundations are local, independent and not-for-profit. There are 17 across New Zealand and the network is growing. They run a model of philanthropy that is still relatively youthful in New Zealand, although the concept has existed for over 100 years elsewhere, notably Canada and the US.

Community foundations all have their own management teams, are governed by local volunteer Boards of Trustees, and engage professional investment managers to put their funds to work. People can donate at any time during their life, but many choose to leave a gift in their will, often as a percentage of their estate. That money is invested, with a portion of the return (often just the income from the portfolio) distributed each year as a grant. The balance remains in place, to keep growing (and generating income) in perpetuity. Rather than simply giving a lump sum of money to charity, donors essentially create an endowment fund that will deliver a reliable, long-term income stream to those in need, forever.

The very first personal endowment fund in the community foundations network came from Edna Brown in 2003, via the Acorn Foundation in the Western Bay of Plenty. Acorn was in its infancy at the time, although 20 years later it holds $63 million and has given away over $13m to hundreds of community groups since its inception. Edna, originally from Rotorua, could've given her $67,200 to one of many worthy causes, but her estate gifted it to Acorn in her name instead.

By 2021, the Edna Brown Endowment Fund had distributed grants of $67,922, more than the original donation. The original money was still there too, having grown to $97,913, ensuring many more years of generosity ahead.

It’s a fantastic concept.

Another important aspect of the model is that donors can choose how their donation is used in the future. This allows them to ensure funding goes to specific charities and organisations they believe are important, or where they have a passion. Edna chose to support medical research and treatment causes in the Western Bay of Plenty.

For those lucky enough to be in a position to help, community foundations offer a great way to direct donations to those who need them. They allow funds to be pooled into one structure, to create economies of scale and deliver sustainable, growing income streams that will keep on giving well into the future. If you’re able, consider including some of these fantastic causes in your will.

Mark Lister is Investment Director at Craigs Investment Partners. The information in this article is provided for information only, is intended to be general in nature, and does not take into account your financial situation, objectives, goals, or risk tolerance. Before making any investment decision Craigs Investment Partners recommends you contact an investment adviser. Craigs Investment Partners is a founding principle sponsor of the Community Foundations of Aotearoa New Zealand (CFNZ), and provides investment advisory services to some community funds.