Good evening, everyone.

Thank you, Elizabeth Cham, for inviting me to speak to you all tonight as you celebrate the Third Sector.

Let me start by acknowledging the Burramattagal People of the Darug Nation, the traditional custodians of the land on which we are meeting this evening.

I recognise and celebrate their unique cultural heritage, beliefs and enduring relationship with the land, and I pay my respects to both their current and past Elders.

I also pay my respects to any Aboriginal and Torres Strait Islander people who are gathered with us here tonight.

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Elizabeth Cham initially approached me to offer my observations on the not-for-profit and philanthropic sectors. As someone who has run a not-for-profit in the past and is now CEO of one of Australia’s oldest philanthropic foundations, I have some experience with these sectors.

As I am sure that many of you who have inhabited either of these worlds will know, there are similarities but also many differences in these Yin and Yang sectors. After all, neither exists without the other.

However, as this conference's theme is Partnering for Stronger Communities, I want to use this opportunity to reflect on what philanthropy can do to foster partnerships that lead to stronger and more resilient communities.

But first, I'd like to provide some background on the founder of The Ian Potter Foundation and its connection to the Feilman Foundation, which is commemorated by the Feilman Oration.

Sir Ian Potter was one of Australia's most visionary business leaders in the decades after the Second World War. He played a leading part in financing the growth of the Australian manufacturing industry in the 1940s and 1950s, and then the mining industry in the 1960s.

He was a confidante and advisor to state and federal governments of all political persuasions, but he didn't come from wealth or privilege.

He left school at the age of 14 to work and then, at age 22, continued his education, putting himself through university and graduating with an Honours degree in economics from the University of Sydney.

Sir Ian was a philanthropist well before his foundation came into existence. He had a lifelong interest in the arts and was instrumental in establishing several of our country's leading arts institutions: the Australian Ballet, the Australian Opera, the National Gallery of Victoria and Arts Centre Melbourne.

He also worked with Ken and Baillieu Myer—the founders of The Myer Foundation—to help establish the Howard Florey Institute in 1960. In fact, his involvement in this project played a major part in his decision to form The Ian Potter Foundation in 1964, 60 years ago this year.

This brings me to the connection with the Feilman Foundation. For those who aren't aware, Ethel Feilman – the founder of the Feilman Foundation – had two daughters, one of whom was Pat Feilman.

Pat came to Melbourne in 1956 and was employed by a stockbroking firm in its research department. That firm was Ian Potter & Co. Sir Ian quickly appreciated Pat's talents, and she began to work on tasks for both the business and his personal interests. One of these was The Ian Potter Foundation.

Pat Feilman was closely involved in the complex negotiations to establish the Foundation and became its secretary. And for its first 30 years, Pat Feilman was the sole employee of The Ian Potter Foundation. As Sir Ian's biographer, Peter Yule remarked, "Her abilities in networking and negotiations rivalled those of Ian Potter himself.'

It was Pat Feilman who realised environmental issues were becoming a matter of public concern in the early 1980s. She encouraged the Foundation's Board of Governors to fund significant conservation projects, such as the Potter Farmland Plan and the Australian Landscape Trust.

After her retirement from The Ian Potter Foundation, Pat remained an active member of Philanthropy Australia and continued her interest in conservation and general community services through the Feilman Foundation. Clearly, she was a dynamo.

This is the formidable legacy that subsequent CEOs of the Foundation must live up to. Fortunately, these days, we get a little help and currently have 16 staff, including me, to carry out the work.

I am relatively new to the Foundation, but like most people working in the philanthropic sector, I came to it after a diverse career spanning the corporate and not-for-profit sectors.

Indeed, everyone working in the philanthropy sector has come to it via a unique path. Certainly, this is the case for our team. And that is a good thing—our broad range of prior experience and skills makes us uniquely qualified to work with a diverse range of organisations.   

Immediately prior to joining The Ian Potter Foundation, I was CEO of FareShare, a charity that cooks 3 million nutritious free meals a year for people doing it tough. FareShare was certainly another world compared to my previous 25 years in the corporate sector.

Although it is never explicitly said, I know corporate types often think that people working in the not-for-profit sector are taking a ‘soft' option. They don't work as hard and, as a result, aren't paid as much. Well, that last part is true. The staff of not-for-profits sadly don't get paid enough and their jobs are, in many ways, much harder.

Let me give you three reasons why NFP jobs are harder:

1. Corporates just chase profit.

Profit is a single mission – and, in ‘evaluation language' profit is their output, their outcome and their impact all rolled into one!

As this audience will appreciate, in the NFP world, these things are all different, and your external stakeholders still want to know what they are, and they are very hard to measure.

Were the meals we were making at FareShare leading to better community health, school attendance, and an improved sense of social well-being? Yes, but that was not easy to measure.

Fortunately, this sector has incredibly capable people like yourselves to help with that!

2. NFP organisations are forced to live with a scarcity mindset. They ‘run on the smell of an oily rag'. 

Leading a charity after working in the corporate world for many years, I often felt like Dennis Denuto, the solicitor who finds the 'vibe of the thing' in the classic Aussie film The Castle. There is a short scene where we see Dennis, the suburban solicitor, who takes on the impossible case, dictating a letter into a dictaphone, only to turn around to type it himself.

At FareShare, that was me. I had many Dennis Denuto moments where I'd get the phone call: "Yep, I'll get someone on to that...'. Only to realise that someone would be me.  

Like Dennis, I had no HR, IT or OH&S Departments to call on.

3. There is competition in the NFP sector, and it is brutal.

In the corporate world, you work to beat your competition, take its market share and focus on your organisation's profit – you are expected to compete openly and directly and are financially rewarded for that.

In the NFP sector, you are expected to collaborate across your sector, when similar organisations are in direct competition with you for limited funding.

It’s hard. Each organisation is trying to retain and pay its staff but must compete against sector partners to outdo them for funding.

Consequently, there is often tension or conflict between pursuing the organisation's mission and pursuing what is in the best interests of the organisation itself and its stakeholders.

These days, I find myself sitting on the other side of the Third Sector mirror. I've had to recalibrate from being on the side of the funded to the funder. The challenge is different but, on reflection, no easier. It's no longer about elbowing out someone else to get funded but instead about how to decide who to say 'yes’ and 'no’ to.

I find that difficult. How do we make these decisions? Well, at The Ian Potter Foundation, we ask ourselves: ‘What would Sir Ian do?'.

When examining how Sir Ian made his fortune and how he chose to share that wealth for the benefit of our society, I have observed some defining characteristics:

• He was innovative.
• He understood change was inevitable, and quite often necessary
• He realised there was no fixed way to achieve something.

For example, his foundation was one of the first charitable foundations to be formed in Australia during the benefactor's life. Similar foundations had been established before, but only by a benefactor's will.

This required changes in legislation to allow Public Ancillary Funds and Private Ancillary Funds. Becoming the first public charitable fund also resulted in changes to the Income Tax Assessment Act, allowing the Foundation to receive tax-deductible donations. So, we have Sir Ian Potter to thank when we claim our personal donations at tax time.

The Ian Potter Foundation is not a family trust either. Instead, Sir Ian arranged for his Foundation to be directed by a Board of Governors made up of eminent Australians.

Rather than follow the common path of prescribing the causes or issues he wanted to see funded, he placed his trust in those Governors to determine the needs and opportunities and for them to decide which charitable organisations across a wide range of sectors and endeavours should be funded.

This was a very unusual and innovative approach at the time, perhaps, in modern terminology, the start of a form of ‘trust-based philanthropy’.

As a result, embracing change, being prepared to learn, and seeking innovation are baked into the DNA of The Ian Potter Foundation.

While we honour Sir Ian's interests when he started the Foundation—the Arts, Community Welfare, and Medical Research—we now fund in a number of other areas, including Early Childhood Development, Public Health, and the Environment……thanks to Pat Feilman.

We aim for continuous improvement. For example, we undertake periodic independent evaluations of our own performance as a funder, which allows us to benchmark ourselves against other international philanthropic organisations and adopt best practices.

Importantly, we constantly seek to evolve our approach to grant-making as the needs of the social sector change.

Australia has always had its own set of challenges.

When Sir Ian set up his foundation, the challenges weren't easier or harder, but they were different from the ones we face today. Our population is now larger, more prosperous, healthier, better educated and more socially and physically mobile than anyone could have imagined in the 1960s or even at the turn of the century.

At the same time, our society is less cohesive than it once was, and this is a global phenomenon.

In August this year, at the opening of the Philanthropy Australia conference in Adelaide, South Australian Premier Peter Malinauskas, referred to this period as The Great Fragmentation noting:

• we are living in a time where there are fewer and fewer common reference points shared across society as a whole, and
• The consequential rise of individualism has accelerated the breaking down of institutions that once tethered us to our local community.

Fewer people are joining their local clubs, attending their local church or community groups or even feeling that they have a personal stake in their local politics. Instead, people choose to seek connection elsewhere, in silos of their own curated media and news sources, consuming news from platforms that, knowingly or unknowingly, align with their own prejudices.

Yet, at the same time, we are seeing an increase in feelings of loneliness and isolation, which can only diminish the health and happiness of our communities.

Across our society, there is a prevailing sense that we are disowning the very building blocks of a successful society: respect for democratic institutions and commitment to family, friends and community.

What is the antidote to this fragmentation? I think everyone in this room tonight would agree – it is empowering and supporting communities.

Communities are already adept at building social capital: the glue that holds communities together and is embodied by local footy clubs raising money, local businesses providing labour and resources, and local people volunteering in schools.

We need to leverage communities' ability to encourage engagement and civic participation and support those closest to the problems—our communities.

If Sir Ian were still here, I think he would say that it's time for us all to try a different approach.

From a philanthropic perspective, the first and easiest thing to do is support Community Foundations, which are now being recognised as the true instruments for ensuring community ownership, independence, and long-term sustainability of programs developed by communities for communities.

By funding Community Foundations, we can empower the prime stakeholders (the community) to run community-led programs, allowing funds to be directly transferred to where they are needed on the ground.

I want to acknowledge the Commonwealth Government in enabling this shift by changing DGR rules, making it easy for Community Foundations to obtain the necessary tax status to accept philanthropic funding. This is a significant development in our sector.

In addition to this fundamental shift, I also believe there are five practices or mindsets that philanthropic funders need to adopt.

First, supporting communities means philanthropy needs to ‘let go’ and trust communities to articulate their challenges and be actively involved in designing the actions they feel will address them.

It was probably relatively easy for Sir Ian to ‘let go’ of his money and trust a group of prominent and well-connected individuals to manage his giving but it's much harder to trust people and environments you are not familiar with.

Nonetheless, philanthropy needs to trust communities more and listen more. Lived experience is invaluable but not often adequately represented on the funder side.

Philanthropic funders have the flexibility to support pilot projects that explore new ideas without the constraints of entrenched structures, potentially leading to more innovative and effective solutions.

As part of letting go, philanthropic funders need to do some due diligence on the communities and organisations they will fund. However, in the process, they need to ensure they do not become too focused on risk management, that classic corporate ‘hand-brake to happiness’.

The Productivity Commission report into philanthropic giving, released this year, noted that while philanthropy can play an important role in providing risk and patient capital, there is sometimes a stark contrast between what philanthropy says about funding innovation and what it does in practice, referring to the fact that the rigour and due diligence in assessing grant applications sometimes leads to only funding safe or conservative opportunities.

Secondly, we must be prepared to fund all the activities needed to deliver programs, including the boring but necessary stuff: administration, research and impact measurement, not just service delivery.

As I mentioned earlier, not-for-profits operate believing that a scarcity mindset is the norm. They are reluctant to allocate precious funding to core operations, which leads – and I can attest to this – to an over-reliance on Google searches to solve problems. This is not the most effective way to resource an organisation.

Or, without a realistic budget, they may embark on the difficult task of finding pro bono or low-bono support. Even if you do find a provider, it's sometimes great, and sometimes, they don't get it. Often, you don't need comprehensive advice, you just need someone to help you navigate a particular problem. But because it's pro bono, you can't say 'no'. It can be hit-and-miss and very inefficient.

It is far better to provide not-for-profits with the resources and training they need to be successful. Apart from improving efficiency, it improves organisational resilience. The good news is that there are innovative and efficient ways to fund these resources for charities, such as Benefolk's Community Well and Expert Bar.

Apart from this, philanthropy can also provide much more than money. At The Ian Potter Foundation, we refer to this valuable non-financial support as the Five C's:

• Communicating – disseminating our grantee's successes
• Championing – providing introductions and letters of support to government and other funders.
• Connecting – introductions, networking with similar cohorts/organisations
• Convening – providing spaces for events and meetings, bringing people together
• Coaching – offering guidance on identified opportunity areas.

Thirdly, we need to take a longer view. Committing to long-term funding allows initiatives to develop and mature over time. It may not involve huge sums, but sustained support is often crucial for initiatives to achieve lasting change.

For communities tackling difficult and entrenched disadvantage, sometimes the duration of the support is more important than its size. This means NFPs can move away from the typical short-term outlook when designing programs and can recruit and develop staff and volunteers to implement them.

Fourthly, we need to back good people. Whether in the corporate or community sector, we know that people with passion, energy, and resilience who take ownership of a challenge will ultimately conquer it.

Yes, philanthropic funders should do their due diligence on the problem and the people, but then get out of the way.

Finally, we need to double down on collaboration. Funders often expect to see collaboration between not-for-profit organisations, but it is just as important that there is collaboration between funders and also with government.

The good news is that philanthropy is more aligned than ever to collaborate on this front.

As the African proverb goes: 'If you want to go fast, go alone; if you want to go further, go together'.

The Investment Dialogue for Australia's Children, announced last year, is a positive start and perhaps a good note for me to wrap up on.

The Dialogue is a 10-year collaboration between government and philanthropy to improve the well-being of children, young people, and their families by working with communities to make a long-term, intergenerational change. 

Recently, I attended an all-day Investment Dialogue roundtable in Adelaide, which was attended by 70 people from philanthropy, community organisations, and government – including the Federal Minister for Social Services Amanda Rishworth herself – to discuss this very topic.

The underlying ethos of the Dialogue is that:

• Investment in local communities helps build trust within them, a crucial component of social capital. When people trust each other and their institutions, they are more likely to engage in civic activities and collaborate on community projects.
• Community-driven projects lead to a stronger sense of ownership among its members and inspire a greater willingness to work together to find solutions to challenges.
• This investment in social capital helps bridge gaps between different groups within a community. Marginalised voices are more likely to be heard, and their specific needs met, leading to more equitable outcomes.

In the end, it all boils down to trust.

Just as Sir Ian trusted his Governors to identify the best organisations, projects and people to fund to ensure impact, we must likewise trust the organisations working on the ground to know what they need and how to apply funds.

To quote the American social researcher – Robert Putnam – who has researched the factors that influence social stability all over the world for five decades:

"When we trust others, we feel more secure and are more willing to cooperate with them.'

So, let’s do that.

Fund them.

Support them.

Trust them.