Fit for the future
When the community foundations network was founded in Cleveland, USA in 1914 by Frederick Harris Goff, it was with the intention of challenging philanthropic norms. At a time when many charitable gifts were trapped in wills with tight and irrevocable legal stipulations, he wanted to find a way to support the changing needs of his local community, build infrastructure to futureproof charitable giving and ensure the movement of wealth from where it was held to where it was most needed.
A year prior to the Cleveland Foundation’s establishment, Frederick Goff had said: “How fine it would be [if an individual who was] about to make a will could go to a permanently established organisation … and say, ‘Here is a large sum of money. I want to leave it to be used for the good of the community, but I have no way of knowing what will be the greatest need 50 years from now. Therefore, I place it in your hands to determine what should be done.”
Over 110 years later, 1,800 community foundations exist globally from South Africa to South Korea, each working to deliver transformative change for the communities on their doorsteps. Having just marked our 33rd birthday, Nikau is a relatively young player in the story of community foundations but, with a goal of growing generosity long into the future, we are here to stay.
Fit for the future
While existing in perpetuity offers many opportunities, as Frederick Goff identified all those years ago, it also comes with its challenges. Namely, sustainability – as a funder, as a kaitiaki of generosity and as a foundation. “The question is, how can we continue to build a reliable source of funding for the community while also ensuring we’re operationally resilient and fit for our many future chapters?” asks Nikau Foundation Chief Financial Officer Denisa Calian.
For Nikau, it starts with our investment strategy. With an endowment fund model, we invest, grow and protect every donation we receive. It is our aim that, over time, we generate enough returns to deliver sustainable grants to our communities, protect the real value of donations and invest in our own operations so we can be the best possible kaitiaki to our community. To do this, we currently have a balanced portfolio with our fund managers (Craigs Investment Partners and Harbour Asset Management), responsibly investing 40% of our assets in income/ defensive assets (such as fixed interest and cash) and 60% in growth assets (such as global and New Zealand equities). This allows us to balance the risk and return for the long term and continue to grow generosity for the people and places of Te Upoko-o-te-Ika-a-Māui, the Greater Wellington region.
A reliable source of support
Over the last few years, the for-purpose sector has been hit hard by economic uncertainty, high inflation and market fluctuations. As an investor with a long-term vision, we know that we must not only premeditate these economic conditions but actively put policies in place so we don’t pass on the pressure of low returns and economic volatility to our community. Following the introduction of our revised distribution policy in 2020, which is designed to take advantage of Nikau’s long-term focus and smooth out market peaks and troughs, we have been pleased to deliver more reliable funding. It’s just another way that, no matter the circumstances, we can stand strong and lean in when times are at their hardest.
Responsible investment With a mission to grow generosity, we sometimes get questioned as to whether investing responsibly detracts from returns (and therefore our ability to grow donations and deliver more funding). However, we are of the view that investing responsibly can provide returns that are as good as or better than those without responsible investment requirements.
The companies we invest in care about their environment, social impact, people and how they are governed. Like us, they exist to make a positive difference. After all, we are designed to deliver intergenerational impact, so it would be counterproductive to invest in a way that creates harm for future generations. Last century, Frederick Goff’s idea to divorce from traditional philanthropic mechanisms and forge a new way forward was innovative and rooted in the ideas of efficiency, flexibility and future resilience.
Although we live in a very different world to Frederick Goff now some generations down the track, we are pleased to affirm these same founding principles, ensuring we are fit for the future, fit for purpose and poised to support the resilience of our communities for generations to come.
Download our 2024 Impact Report
Featuring almost 50 voices from accross the for-purpose sector - from volunteers to donors, funders to people on the front lines, founders to for-purpose organisations - Nikau’s 2024 Impact Report shares stories of impact and generosity from accross Te Upoko-o-te-Ika-a-Māui, the Greater Wellington region, funding and philanthropy trends and key mahi to grow generosity to support the people and places of our region.
