The trustee company – a valuable model?

Diana Leat

Your last issue on philanthropic advice was, as usual, wide-ranging and thought-provoking. One omission was the trustee company model in Australia. These mostly for-profit companies manage billions of dollars for philanthropic purposes, including some of Australia’s largest and best-known bequests. Since the early days of European settlement, they have played a significant role in the creation and management of philanthropic trusts and foundations in Australia.

Trustee companies offer a package of services to the prospective philanthropist covering investment and administration/disbursement of funds. The client may choose between types of fund, whether to name specific beneficiaries or to allow discretion, and whether to be a co-trustee or to allow the company sole trusteeship.

Credit - Dave AkinsTrustee companies facilitate and manage old and new gifts, both large ones and the numerous smaller gifts that, in most countries, form the bulk of trusts and foundations – a complex jigsaw of ‘small pieces’. In the light of philanthropy’s rising profile, it is no surprise that many trustee companies are taking a fresh look at their services in this area.

Philanthropic giving is joyfully and assertively individualistic. Because of that, the grantmaking world is like a big jigsaw made up of several different smaller jigsaws (particular spheres like arts, health, etc). No one has ever seen the completed puzzle, and we do not even have the picture on the box. Moreover, people are adding new pieces all the time, and other pieces are changing their size and shape.

An unfortunate by-product of this individualism is that the world of trusts and foundations is characterized by fragmented resources, inefficiencies of scale and overheads, potential duplication of effort for both funders and applicants, and lack of coordination of information. The actual costs of this system are high and the potential costs in loss of public benefit are incalculable.

Are there ways in which donor freedom and diversity can be combined with greater coordination of money and information at national, regional and local levels at lower costs to funders and applicants? Trustee companies not only have the communication channels and knowledge to encourage and facilitate giving, they also have the means to put small pieces of the jigsaw together for potentially greater impact. For example, a bequest that excludes buildings might be ‘teamed’ with another that can spend on buildings but not on staff. Another advantage is that even the very smallest fund can benefit from the wide knowledge and networks of the grants staff.

One problem is that the potential advantages and disadvantages of the trustee company model to philanthropy have never been documented. However, they are the subject of a research proposal in preparation by the Centre for Philanthropy and Non-profit Studies at Queensland University of Technology.

Diana Leat
Visiting professor, Centre for Charity Effectiveness, Cass Business School, London

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