When John Wylie’s investment banker instincts told him the charities sector needed some hard-headed strategic, financial and governance skills, he set up an advisory service to do just that.
Originally from The Australian
When John Wylie sold his share of investment bank Carnegie Wylie to Lazard in 2007, he and wife Myriam decided they would use some of the funds generated to support some of their favourite causes.
The Brisbane-born Rhodes Scholar turned investment banker and his wife, who was born in Monaco, have quietly invested a rumoured $20 million or so in more than 50 different organisations and charities through their John and Myriam Wylie Foundation.
But as he got a closer look at the world of philanthropy, Wylie’s investment banker instincts kicked in. He could see charities and foundations set up for all sorts of worthy causes but lacking in the hard-headed strategic, financial and governance skills used in the business world.
This year he set up Tanarra Philanthropic Advisors to provide business-like analysis for charities to help them achieve their goals with more management efficiency and the governance frameworks increasingly demanded by modern donors.
Wylie, whose roles include running his family office investment company, Tanarra Capital, and chairing the Australian Sports Commission, says Tanarra Philanthropic Advisors will bring a “holistic approach” to advising charities.
“We want to provide advice on how charities can become more effective in achieving their goals,” he says.
One concern he has is the proliferation of a large number of small charities.
“The digital media has given everyone a voice now,” he says. “There has been an increasing fragmentation of charities in Australia. There are more than 60,000 – a large number of relatively small organisations targeting particular niches and micro-niches. It is possible some of these organisations could come together to create a more powerful platform.”
‘He’s not trying to turn charities into businesses.’
Wylie says he sees Tanarra Philanthropic Advisors as having parallels with investment bankers hired by companies to provide independent financial and strategic advice to chief executives.
“Directors and management teams of public companies have a whole series of advisers they can turn to for trusted advice,” he says, “but it doesn’t exist in the charity sector these days. What we are trying to do is bring that same set of capacities to the charity sector without the hard edge of investment banking.”
Tanarra will work with charities that have revenues between $1.5 million and $100 million. Wylie says bigger ones are probably well run already, while Tanarra would not be able to have the impact in smaller charities it would like for its time investment.
“Our aim is to support about 15 to 20 charities in the first year of operation,” he says. “We are looking to help those who have a focus on education, social welfare, health and indigenous activities. It is about leveraging philanthropy. We are trying to provide more than money – we are trying to provide skills and advice to help people to be more effective.”
He’s not trying to turn charities into businesses: “They are not businesses, they are not-for-profit organisations trying to serve good causes. But they will benefit from having the fresh pair of eyes that an external, business perspective can bring.”
Tanarra has just hired former BHP Billiton executive Tom Forde to run the new advisory business. From October 2014, Forde was manager of sustainability performance for BHP, a role that saw him prepare a report on the impact of climate change for the mining giant, and engage with investors, proxy advisers, ratings agencies and other stakeholders on social, environment and governance issues.
A mechanical engineer, Forde worked with CSIRO and Pricewaterhouse Coopers as a consultant on sustainability and climate change. He joined BHP’s iron ore division in November 2013 before moving to focus on its sustainability performance.
He says Tanarra will fill a very specific niche in the not-for-profit consulting market: “We don’t want to help charities with their fundraising or their social return on investment. There are other people doing that, as well as those providing legal and accounting advice.”
Charities need to be ready to cope with increasing demands from donors and governments that want more transparency in the way their money is invested, he says, and higher levels of financial controls and reporting. “They are expecting an increasing level of sophisticated commercial and analytical skills from charities, and we are helping them to fill that gap.”
‘Forde has already had discussions with more than 50 different charities wanting Tanarra’s help.’
He says the philanthropic advisory company is being set up as an arm of Wylie’s private investment company, Tanarra, which allows it to draw on skills of people working in the firm.
“We will have access to everyone in Tanarra, including John himself,” says Forde.
Forde says he has already had meetings or discussions with more than 50 different charities wanting Tanarra’s help and is now whittling that down to a shortlist. “We can’t help everyone,” he says. “We need to make sure we are working with the charities whose needs fit the skills we have.”
Longer term, he says, the consulting company plans to expand its input beyond Wylie’s company and charities supported by his foundation, appealing to other philanthropists who might also want to support the idea.
Wylie says the old days when being on the board of a charity was all about turning up for a few meetings and feeling good are long gone. These days directors can find they are at significant reputational risk if the charity whose board they are on is found to be badly managed.
“If a place is not well run – if it comes out that it is administratively inefficient or that it is not devoting enough money to the end goals – it is not only bad for what the organisation is trying to achieve, it can be really bad for the reputation of the directors,” he says.
Wylie’s own philanthropic experience has been very diverse. He and his wife gave $5 million to the University of Melbourne to help establish a professorship of Australian literature, and have also been involved in fundraising for the $90 million redevelopment of the State Library of Victoria.
“We are pretty proud of the fact we raised $30 million from philanthropic donations for the redevelopment,” he said. “We got the Victorian Government to commit to supporting it. We asked them if they could put in two-thirds of the money and we would raise the other one-third.
“The pitch to philanthropists was pretty easy, as for every $1 they invested the government gave two dollars.”
Wylie singles out three other charities for attention. He likes Teach for Australia, which gives young graduates who want to teach fast-track training if they will teach children in underprivileged areas.
‘YMCA Bridge provides training and employment skills for young offenders out of prison.’
“It is modelled on Teach for America and Teach First in the UK,” he says. “They are having massive impacts in raising the education levels in particular communities and schools.”
He is also a supporter of the Aurora Foundation, which provides scholarships for talented indigenous students to study at top universities around the world, including Oxford and Cambridge in the UK and Ivy League universities in the US. It also provides mentoring for indigenous high school students to help with their academic performance, and internships to give them work experience. A number of big companies have partnered with the foundation to provide internship programs.
“There have already been around 25 graduates coming out of the international universities program,” Wylie says. “They are going to be 25 Noel Pearsons – it is going to have a massive impact long term for Australia.”
He also supports a small Melbourne-based organisation called YMCA Bridge, which provides training and employment skills for young offenders who have come out of prison.
“They work with the Victorian Government in the prison system, and with a group of companies large and small that provide opportunities to help juvenile offenders rebuild their lives,” he says. “It’s an extraordinary program which is run on the smell of an oily rag.”
Wylie sees these programs as also being able to fill some of the functions once seen as the job of government agencies, especially in a climate of budget-cutting.
“Governments can provide multi-year contracts to these organisations to provide community services more cheaply and more effectively – so you get a multiplier effect.”