Merepeka Raukawa-Tait: Knowing the difference

The problem with the voluntary not-for-profit sector is it often doesn't measure well the difference it makes in communities. It should. Just think of all the organisations within the Rotorua district that rely on volunteers. What would happen if they decided to take six months' holiday?

Many of the causes and groups it assists and supports - such as social-service providers, sports codes, the arts and library, environmental projects, cultural and immigrant groups, school boards, prisoner aid, meals on wheels - would probably go into recess. Volunteers know people matter. By volunteering, they make a difference to the lives of those they give their time to.

Some countries - Britain, Scotland, Australia and now New Zealand - are looking at how to measure the social return on investment made in the not-for-profit sector. And those who have traditionally funded not-for-profit organisations by way of grants are being seen nowadays as social investment agents. Not for them, sitting around waiting for the close-off date for grant applications.

They're far more proactive than that. They're looking to engage with their communities to identify where the gaps are. They view their grants as investments and - like all investments - want to see a return. A positive social return.

Social investment agents are analysing and investigating their communities, focusing on supporting organisations working to close gaps. They believe the not-for-profit sector can transform whole communities. In Australia, they're identifying specific organisations working in areas such as positive ageing, disadvantaged youth and environmental sustainability to invest in. These will produce measurable social returns.

The investors know they can't continue to spread grants over an ever-increasing number of applicants. So they're changing their grant disbursement model to that of investing in outcomes and impact: "Knowing and showing the difference you make."

Because they know what is going on in a community, it is no longer about continuing to fund well-prepared, standout applications that get rolled over each year, supported by the who's who in town. It's about where the money is going, value gained and making a measurable difference.

The past four years haven't been easy for not-for-profit organisations and their funders. The global financial crisis (GFC) has affected both of them. Philanthropic trusts lost significant amounts of money invested in New Zealand and off shore. The return on these funds provided the grant monies to not-for-profits.

For some trusts, the grants have never returned to the amount given prior to the GFC. This has impacted severely on organisations relying on, and in some cases even expecting, this funding lifeline to continue "into the sunset". For trusts and the not-for-profit sector, this has been a big wake-up call. It is no longer business as usual.

The GFC had, and continues to have, a significant effect on governments and business the world over. Some countries are starting to claw back slowly but surely, with New Zealand ahead of many. Asian countries appear to be doing all right but there are others, mainly European countries, that could be as many as 10 years away from financial recovery.

The citizens of these countries have come to hate their governments for the austerity measures they are driving home. I watched a TV programme recently on Spain; a country that is not in good shape with unemployment at an all-time high.

The programme focused on young adults. They were mostly professionals, academics and medical staff, who were leaving Spain to work in Germany. They didn't want to, but had to, if they wanted to continue working in their specialty areas. They first had to complete a full-time three-month intensive language course, at their own expense, and were then assisted into full-time employment. Germany wanted their skills and knowledge and was pleased to have a motivated, work-ready younger generation living and working among them.

It was sad though to see this group of qualified workers exiting their own country. I'm sure Spain would have kept them if they had the jobs and could afford to pay them but, at this point, the country can't.

Like so many countries, Spain got caught out living beyond its means. The young people spoke of the impact the GFC has had on their families; apparently 30 per cent of work age Spanish adults are unemployed. Young people remain living at home.

They are finding it hard to socialise without an income and relationships between couples are becoming difficult to sustain.

It's not until you hear the personal toll the GFC has had on a sector of the population that you realise it's not just big business, government spending and banks that have taken a hit but ordinary families as well. You could probably replicate the above scenario in Greece, Ireland, Portugal and Turkey as well.

Yet sometimes an unforseen situation such as the GFC can cause governments to re-evaluate what and how well they do things. This applies to the business and not-for-profit sector as well.

Have they acted "as if people and the planet mattered"? It may be time to give serious consideration to social investment agents.

Supporting social return on investment "knowing and showing the difference you make" has the potential to be adopted by our public sector, and the business and not-for-profit sector alike. If all three "don't know and can't show" the difference they make, you have to question why they're in existence at all.