Originally from The Australian
Tom Forde is the head of Tanarra Philanthropic Advisors, a new not-for-profit funded by investment banker John Wylie giving free financial advice to charities.
Is Tanarra Philanthropic Advisors the first of its kind in Australia?
There are plenty of service providers in the philanthropic space but we are unique. We’re only advising charities, not philanthropists, and we’re giving our advice for free. There’s already legal advice, accounting advice out there … the deep dives into management and consulting. We’re trying to provide guidance on board-level strategy … we’re trying to bring the investment banking model to the charity sector.
How did you land this job, Tom?
I had been working with BHP for six years; I was not enjoying my work there (laughs). And John (Wylie) was speaking to a colleague of mine who suggested me. I met him and he talked me through the concept, I went through the usual interview process. I’ve taken a step back financially but it’s just such a great opportunity. I’m a pragmatist; these charities will struggle if they don’t have a commercial case, an understanding of the market mechanism. I hope I can help strike that balance.
John Wylie is best known in finance and in sports administration. Why this move?
When John sold his last investment firm (Carnegie Wylie) to Lazard, he made a fair amount of money on it and started a foundation with his wife. Through that experience, he often asked other charities about their strategies and financial plans and he was often underwhelmed by the responses. There’s a skills and capacity deficit in the sector when it comes to financial and analytic skills.
Are you going to be competing with non-profit organisations like Social Ventures Australia?
We’re not really trying to compete with anyone; we’re trying to be complementary. And we’re reaching out to other players in the sector to find out what they’re doing and maybe help with problems.
What’s the biggest struggle this venture has faced so far?
The tricky part for us is that we can’t help everyone. John is financing this out of his own pocket but there are limitations. We’ve had to say no to some requests.
You mentioned the venture is unique … how does it work?
It’s a consulting model. I’m in charge of the initiative and I have all the resources at Tanarra available to me; if it’s debt financing or strategic advice or anything, we can pull in guys in the wider Tanarra team to help.
What’s holding charities back in Australia?
There’s a little bit of a bottleneck with the increased reporting requirements charities now have and a much greater focus on results. If they don’t meet the results expectations, they don’t get the money. And that’s making donors (both individuals and corporates) a lot more structured in their giving. I think there’ll be more consolidation as naturally some of the smaller charities can’t meet these hurdles. Where we can help is with meeting those requirements.
What changes do you think donors and philanthropists want to see?
I think increasing the sophistication and analysis within charities is going to help, as well as some consolidation. This is a huge sector remember: $150 billion per annum of revenue, 3 million volunteers, 1.2 million staff. There’s a lot of duplication of effort and inefficiency because there are so many players.
What do wealthy individuals have to do to improve the return on investments in the charity sector?
There needs be a more structured shift in how donors invest in charities. They need to be making medium to long term partnerships and ensuring sustainable funding. Most charities are surviving quarter by quarter, if not month by month. Just give them a cheque year after year is fine.
But what would be much more helpful would be offering a partnership for three or five years, and we’ll try to broker those partnerships.
We’ll also be helping charities with how to use corporate and financial language so that donors feel more comfortable in creating these sorts of partnerships and making investments.
Many commentators say we don’t have a strong philanthropic culture here like in the US or Britain. What do you think?
It’s difficult to compare to those other countries by dollars per capita, because there’s so many ways to give these days. You can donate time, goods, loan out assets like office space, there’s corporate partnerships, and you can do social media. And there’s a whole new market emerging around social investment products like social bonds, impact investing, managed funds. They might be seen as classic philanthropic donations but it’s still a gift to the sector.
But charities are also asking us for advice about mentoring and capacity-building. So if people with financial or analytical skills want to donate their time, I’m sure most charities would love that.
What are your own investments?
I’ve got a pretty leveraged portfolio. I’m quite risk tolerant, my friends all make fun of me for it (laughs). I’ve got a few investment properties, a few ETFs, a few equity plays.