Investing forever

Investing in your community forever

Liz Koh
Deputy Chair
Nikau Foundation
13 June 2018

New Zealanders have always been good at giving to others. Whether it is selling sausages, baking for a cake stall or running errands for elderly neighbours, most Kiwis pitch in at some stage in their lives to lend a helping hand. Our generosity is also to be seen on collection days for charities and in the regular donations made to favourite organisations. Some people are lucky enough to have more money than they will ever spend in their lifetime. For the super-rich, establishing a trust or foundation to make charitable distributions is a way of using surplus wealth to benefit others. The Tindall Foundation, JR McKenzie Trust and Todd Foundation are examples of such organisations which will continue to do good things beyond the lifespan of their founder donors.

Setting up your own charitable trust is an expensive and complex business. It involves preparing the trust deed, administration of the trust, making charitable donations and compliance with regulations for charitable organisations. Smaller trusts often struggle to find trustees once the founder donor has passed away, and poor management often results in funds diminishing over time to a point where meaningful donations can no longer be made.

A simple solution for those with a philanthropic bent but without a massive fortune is to establish a donor-advised endowment fund where funds are invested and the returns distributed in accordance with directives from the donor.  Endowment funds are cheaper to administer, more tax efficient and flexible to operate. They can be established with modest amounts of money, making them accessible to everyone. Community Foundations of New Zealand is a network of sixteen local community foundations which offer donor-advised endowment funds. They provide an easy and inexpensive way for people to invest part of their wealth forever, for the benefit of their local community.

Liz Koh is an Authorised Financial Adviser (www.moneymax.co.nz ) and Deputy Chair at Wellington’s Nikau Foundation. 

An example of Endowment Fund growth since 2003:

* Image example from Acorn Foundation

We all have a role to play

We all have a role to play in the prosperity of our region

Amy Carter
CEO
The Christchurch Foundation
1 June 2018

 

Recently New Zealand was named as the second most prosperous country in the world by The Legatum Institute.  The London based think tank released its annual global Prosperity Index, a huge survey that ranks the most prosperous nations.

New Zealand now outranks Finland – a country we are often highlighted as performing poorly against. Since the index was founded in 2007 our lowest place was fourth and we have taken out top spot seven times.

Given recent newspaper headlines outlining our childhood poverty statistics, the housing crisis and rivers we can’t swim in, this came as a surprise to me. So, I did a little more research and thinking.

The Legatum Institute doesn’t view prosperity as being just the amount of money that a country has.  It compared 104 variables in developing the rankings including personal freedom, natural environment and social capital.

Further reading on their website provides more detail.  It is worth investing some time in, over a cup of tea.

When reviewing these results, it seems to me that all of us have a role to play to ensure that our collective prosperity is spread more.  We are doing ok but can do better. Smart central government policy and investment are obviously key, but these wheels take time to turn.

In contrary a nimble, grassroots engaged, fact-based charity or social enterprise can make an impact quickly, if it is well supported.

That is why we have established The Christchurch Foundation as a vehicle for our region’s generosity. We can connect people who have the means to alter the course of the issues our regions faces. We have the ability to be flexible and to take risks and be responsive to our community needs in a way that is difficult or slow for central and local government.

Christchurch in time could become even more prosperous if we can channel the region’s wealth in a meaningful way.