On 26 to 27 June 2000 the Southern African Grantmakers' Association (SAGA - Johannesburg, South Africa) and its partner, the Synergos Institute (New York, United States) held the Innovative Endowment Building and Investment Workshop for Grantmaking Organisations in Johannesburg.
The objective of this workshop was to share resource mobilisation models and approaches with an audience of Southern African grantmaking organisational leaders with interest in establishing, building or managing endowments. Best practices in the area of endowment building and management were discussed using cases from grantmaking organisations in Africa and the Philippines.
Over 40 participants from grantmaking organisations, community foundations and new grantmaking initiatives came from Botswana, Japan, Lesotho, Mozambique, Namibia, the Philippines, Slovakia, South Africa, Swaziland, the United States and Zimbabwe. Participants included board members, executive directors, recognized advocates for civil society financing and relevant staff. Endowment-building experience ranged from organisations that had established or were in the process of creating endowments, to those that were just beginning to consider endowments as a method to mobilize sustainable financing. The peer learning process allowed participants to gain from the successes and challenges of their counterparts, as well as providing space for budding organisations to be advised and mentored from those with more experience.
The two-day workshop was separated into two major themes: How to Develop a Donor Constituency and Investment Strategies that Have Paid Off. An introduction to the subject of endowments was provided and then selected organisation leaders presented case examples on their approach to building and/or managing an endowment. Participants were separated into three small groups that met during three deepening sessions (described in a later section) to discuss and share ideas regarding the approaches and how these models could be practically applied. Lessons learned by participants were shared in a final plenary session.
This report highlights the information that was presented, lessons learned, participant feedback and a contact list of presenters and attendees so that learning can continue to be shared amongst peers.
"Financial Sustainability and the Role of Endowments" provided workshop participants with a framework for understanding endowments and set the stage for further discussion by establishing a common vocabulary. Major points included:
In an effort to share knowledge amongst peers, the workshop was designed around grantmaking organisation cases of successful endowment building or investment practices. In addition to the case presentations there were also two resource presentations that were included to expand the discussion of resource mobilisation and investment management. The four cases that were presented are summarized below - three from Southern Africa and one from Asia.
How the Foundation for Community Development of Mozambique Built an Endowment from Individual Contributions and Participation in a
Carlos Fumo, Executive Director, FDC (Mozambique)
The FDC was officially established in 1994. Its basic strategies include building an endowment, promoting local philanthropy, and raising resources from donor organisations. Endowments provide independence, while local philanthropy adds to sustainability and donor funds promote positive interdependence and international solidarity.
FDC has raised approximately US$9 million to date. The primary sources of funds are its members, corporations and commercial firms, individuals, and foreign donors. A debt swap provided about 70% of the original endowment.
FDC's endowment is invested in banking, insurance, real estate, the lottery, and bank deposits.
The FDC is a product of local philanthropy and it promotes philanthropy at the local level by stimulating a culture of giving and creating an enabling environment through raising social responsibility consciousness, recognizing community contributions, and creating the appropriate legal framework.
In order to raise its endowment, the FDC has had to overcome a series of challenges. These include the need to improve overall management capacity; raising the level of commitment and involvement of the board members, founders, and friends, i.e., individuals with "names and faces"; acquiring the capacity to manage investments; increasing its capacity to carry out an effective grantmaking programme; and establishing necessary mechanisms for accountability and transparency.
In addition, Mr. Fumo stressed the importance of engaging in networks for continuous learning to improve the organisation's performance.
How to Work with Individuals and Donors to Build Endowments
Achmat Dangor, Chief Executive Officer, Nelson Mandela Children's Fund (South Africa)
Mr. Dangor emphasized that an effective approach for raising endowments should include a clear message about the organisation's work; should also offer the prospective donor a stake in the organisation; and must look for strategic partners with whom the organisation's work will resonate quickly. In addition, he stressed that while personal entry points are acceptable for initiating discussion, collaboration should be built on institutional relationships.
The key prerequisite for building endowments is an inherently sustainable organisation that is involved in important work, producing an impact, and carried out with credible partners.
Resistance to creating endowments may be overcome by demonstrating concrete benefits, creating partnerships with other NGOs and beneficiary groups, and by putting in place visible value systems.
The organisational vision must contain clear definitions concerning the desired size of the organisation, its intended life span, and the way in which it will interact with client groups.
How the Foundation for a Sustainable Society of the Philippines
Invests Its Endowment in Successful Enterprises to Further Both
Its Mission and Its Endowment Growth
Eugene Gonzales, Foundation for a Sustainable Society, Inc. (The Philippines)
Mr. Eugene Gonzales presented the very successful FSSI case from the Philippines. The FSSI seeks to build local business opportunities and capacity. It does so by investing in local entrepreneurs. FSSI manages a loan portfolio funded by an endowment it received early in its history. The key to creating and managing a sustainable endowment, according to Mr. Gonzales, is to vary the investment strategy.
Mr. Gonzales offered six crucial lessons learned from the FSSI experience:
Finally, Mr. Gonzales stresses the importance of hiring good people to carry out thes lessons at all levels of the organisation including board of directors, staff, and partners.
Mr. Gonzales noted that the basic challenge to sustaining an endowment is to maintain the real value while keeping ahead of inflation. Inflation-beating strategies are available at all levels of risk.
How to Manage an Endowment with a Separate Investment
Anne Emmett, Equal Opportunity Foundation (South Africa)
The EOF was fortunate to receive an endowment from the Coca Cola Co. in the amount R$22 million. EOF trustees established a separate trust and hired an investment firm to manage the endowment. The separate entity has a distinct mission and objectives, which is to raise capital at minimal costs to sustain the mission and activities of the EOF. The Finance Sub-committee of the Board of Directors takes an active role in overseeing the fund's management.
In terms of the relationship with the portfolio managers, Ms. Emmett recommends that organisations bid the contract out and negotiate the fee with the investment firm, not accepting automatically the fee quoted by the investment firm. Furthermore, the performance of the investment firm should be reviewed periodically and foundations should not be timid in seeking new firms should performance of the existing firm slip lower than expected.
The EOF is pursuing a relatively conservative investment strategy with the largest percentage invested in safe, high-yield bonds and the remainder in equities.
Ms. Emmett points to several key strategies used to build the EOF endowment:
A major challenge to the EOF is to achieve positive growth for its investment fund in the midst of a negative economic climate.
Finally, Ms. Emmett shared critical lessons learned from the EOF experience:
The Ithuba Trust Endowment: Challenges and Opportunities
Darren Kramer, Managing Director, Moss Morris Consulting (South Africa)
The Ithuba Trust, an independent grantmaking organisation in South Africa, was faced with losing one of its main significant streams of financing - a share in proceeds from a national lottery. Toward the end of identifying and defining new opportunities for building its endowment or sustainable financing, Ithuba engaged Moss Morris Consulting.
Mr. Kramer, at the invitation of the workshop, outlined some of the new opportunities he felt were open to Ithuba for financing social development activities.
His presentation was designed to elicit constructive feedback from workshop participants. One strategy he presented is known by the acronym ROSI or "Return on Social Investment." It looks for ways Ithuba can earn income from branding or building on its reputation as a provider of social and economic development services. Mr. Kramer introduced the concept of "Econolism", which attempts to strike a balance between Capitalism and Socialism by utilizing the market to finance social development initiatives. This approach is based on champion business models and seeks to strengthen the competitiveness of poor people's enterprises.
Discussion: Why Business and Business Leaders Might Endow
Foundations - A Perspective from the United States
Walter Mickelson, Mickelson Media Foundation and Scandia Foundation (USA)
Mr. Mickelson has a lengthy history in philanthropy. He and his family have been dedicated to supporting communities in which they have had business or personal connections. In his presentation, Mr. Mickelson discussed why business and business leaders endow foundations from a United States perspective. He highlighted how businesses and/or their leaders have to be committed to wanting to support a cause in their community.
This support occurs not only with money and resources, but requires following through and making an effort to get to know the project, community or beneficiaries. The Mickelsons, for example, took surveys of the Taos community in New Mexico to ensure that it fit the profile of needing a community foundation prior to giving the foundation US$30,000. They also familiarized themselves with whom the community foundation would serve -- namely Latino Americans and Native Americans.
Those non-governmental organisations (NGOs)/nonprofits that are serious about fundraising, Mr. Mickelson recommends, must also be committed to developing a rapport and reaching out to potential donors. Building relationships with donors, potential donors, local community and local government are essential. The more an organisation's stakeholders are kept informed, the higher the chances are that these stakeholders will continue their support. Mr. Mickelson also suggests that honest communication between the grantee and the donor can overturn and neutralize the top-down norm that existed between donors and grantees in the past.
The workshop deepening sessions offered the opportunity for workshop participants to explore the presented cases with presenters in a peer-learning environment. SAGA and Synergos staff facilitated the sessions to assist participants in adapting and applying the cases to their own situations. Participants attended two different sessions during the day on each of the cases covered in the presentations.
Each session began with a short introduction by the facilitator, who then invited the participants to express issues and questions they wanted to cover in the following hour and a half. The facilitator left five minutes at the end of the session to summarize the lessons learned during the sessions. Facilitators recorded these lessons learned and compiled them at the end of the day for a presentation and discussion with the full group. Lessons learned appear in the next section.
Some of the lessons learned during the workshop as cited by participants included:
Participant evaluations assessed the effectiveness of the workshop's organisation and activities and also learned about aspects that might be improved in the future. A substantial majority of participants (96%) felt that the workshop was well-organized and achieved the stated objectives. A similarly large percentage (97%) judged that the workshop met their expectations. All participants stated that they were satisfied with the opportunities provided for their participation. While largely positive, the results of the survey also indicate that there is room for improvement in the area of participant support.
While the survey was designed to gauge the immediate perception of participants regarding the workshop, the significant test is to assess whether the information provided over the course of the workshop has an impact on the individual and his/her organisation over the longer term. To make this determination, Synergos is planning follow-up evaluations to determine the degree to which workshop lessons learned are increasing organisational capacity to build and manage permanent investment funds.
Thirty-three evaluations were returned from workshop participants.
About the Southern African Grantmakers' Association
SAGA is an independent, voluntary and non-profit association of individuals and organisations involved in the funding of development in southern Africa. It was conceived as a result of the common vision of its founding members to meet the needs of a diverse membership of southern African grantmakers through value-added services and support.
SAGA was launched in May 1995 to service the grantmaking community, both corporate and private; promote professionalism in grantmaking; facilitate networking and the building of effective and credible development partnerships; encourage a commitment to the rebuilding of South Africa and the development of its people. Its mission is to optimize the relevance, efficiency and impact of grantmaking in Southern Africa. Its management and staff are comprised of six dedicated people and the SAGA office is based in Johannesburg.
SAGA's strengths include its strategic partnerships and its leadership capability of not only being responsive to the expressed needs of the grantmaking community, but in proactively paving the way for its members. It is deepening the understanding of the role that independent grantmaking organisations are playing and can eventually play in the southern African region.
2nd Floor Braamfontein Centre, Jorissen Street, Braamfontein, South Africa
Tel +27 (11) 403-1610 Fax +27 (11) 403-1689
Synergos is an independent nonprofit institute that brings together diverse sectors of society to find new, more effective ways of narrowing the gap between rich and poor. With particular emphasis on countries in Africa, Asia and Latin America, Synergos strengthens the role of philanthropy and citizen leadership in social development.
Since its founding in 1986, and with a budget of $2.5 million in 1999, Synergos has been specifically dedicated to promoting multi-stakeholder partnerships in Africa, Asia and Latin America. In its early years, Synergos worked directly with nongovernmental organisations, governments and international actors to facilitate partnerships around issues such as the environment in southern Mexico and child poverty in Brazil. Additionally, with the goal of distilling principles of best practices in partnership, we studied cases of multi-sectoral partnership that were successful in addressing poverty problems and we analyzed and disseminated our results as models for others to learn from. Today, Synergos' two main programmes are:
This programme was developed with our partners to strengthen institutions that bridge the gap between rich and poor in order to reduce the power gap and the increasing economic gap. Synergos chose to work with foundations for many reasons, including the following. Foundations can:
To date, Synergos has provided critical assistance in the creation of foundations in Brazil, Ecuador, Mexico, Mozambique and Zimbabwe and as well as capacity-building support through technical assistance, workshops and publications to another five dozen foundations around the world.
Today, with a small core staff of twenty and partnerships with grantmaker associations, centres of philanthropy and leading foundations in twelve countries, Synergos provides a range of capacity-building services to strengthen these foundations and promotes organized philanthropy. Synergos assists grantmaking foundations in governance and institutional development, programme priorities and operations, mobilizing financial support, and communications, so that they can effectively respond to the needs of their communities.
The Synergos Institute believes that are leaders whose positioning and skills could enable them to overcome many of the obstacles to resolving poverty problems. We see the impediments in large part as gaps in access, understanding and awareness of common purpose. To overcome these impediments, many bridges must be built, requiring both institutions and individuals that play such a bridging role.
But for that to happen, there is a need for a leadership programme which hones the skills of those already intuitively, leading in this way and which introduces other leaders and potential leaders to this approach and the requisite skills. Synergos is developing precisely such a strategic programme in Bridging Leadership.
The programme's goal is to involve people committed to addressing poverty problems, both in nine target countries and in the United States, to deepen their collaborative problem-solving skills. This programme provides training, shares experience, documents examples of bridging leadership, and assists corporations, governments and civil society to more regularly incorporate bridging approaches into their problem solving.
Nelson Mandela Children's Fund
Achmat Dangor, Chief Executive Officer
Achmat Dangor, who joined the Nelson Mandela Children's Fund as a Chief Executive on 1 April 1999, has been involved in the social and economic development field for more than fifteen years. Prior to that he worked in the private sector, including a thirteen-year stint as a senior executive in Revlon Inc.'s South African subsidiary.
As the founding executive director of the Kagiso Trust (1986-1991) he worked alongside prominent political and church leaders, including Archbishop Desmond Tutu, to build up the largest black-led foundation in South Africa. The Kagiso Trust had an annual budget of R300 million aimed at uplifting the victims of apartheid. During 1992 he lectured South African literature and creative writing at City College's Harlem Campus in New York.
In 1993 he returned to South Africa to head up the Secretariat of the Drought Forum created by the newly unbanned liberation movements, churches and community organisations to coordinate relief efforts at the height of the severe drought of early 1990's. The Forum's brief was to ensure that government and private resources reached the neediest people and that a solid development foundation was laid.
In 1994 he joined the Independent Development Trust (IDT) as director for rural development, and later served as its acting CEO during a crucial transformation period. The IDT had been started with an endowment from the previous government. During this time he was also a member of various task groups set up by the office of then Deputy President, Thabo Mbeki, to create the Transitional National Development Trust and its successor, the National Development Agency.
Achmat Dangor is a writer who has published five works of fiction and poetry. It is a vocation that he continues to pursue as he has an active interest in the arts and culture. Random House bought his first United States publication in 1999 and this led to the translation of his last novel into five languages.
Non-Profit Organisation: Reg. No. 004-638 (Provisional)
PO Box 797, Highlands North 2037
33 Scott Street, Waverley 2090
Johannesburg, South Africa
Tel: +27 (11) 786-9140 Fax: +27 (11) 786-9197
E-mail: email@example.com Web: www.mandela-children.org
Southern African Grantmakers' Association, Board Member
Cape Town, South Africa
Anne Emmett is an independent consultant and has a fifteen-year history of involvement in the non-profit sector and in her commitment to developing civil society organisations. She serves on various Boards, including the Southern African Grantmakers' Association (SAGA) as Vice-Chairperson, the Delta Women's Organisation (as Vice-Chairperson) and the Non-Profit Partnership. In her capacity as a SAGA Board member, Ms. Emmett also serves on the CSRO Sub-committee, which focuses on strengthening the grantmaking sector in Southern Africa.
Ms. Emmett is the former Executive Director of the Equal Opportunity Foundation, an independent indigenous funding agency in South Africa that develops partnerships in the area of early childhood development, income generation and women and gender sectors, in largely rural areas. She served as a Rural and Urban Field Worker at the Careers Research and Information Centre as well as a Resource Centre Coordinator at the Workplace Information Group in Johannesburg before receiving a BA, Honours Degree (History) from the University of Cape Town in 1993. From 1993 to 1995 Ms. Emmett worked as the Coordinator of the Urban Monitoring Awareness Committee after which she joined the Equal Opportunity Foundation.
Ms. Emmett is a Senior Fellow of the Synergos Institute. As a Senior Fellow, she brings strong skills and experience to grantmaking organisations in the areas of programme design and financial sustainability.
Fundação para o Desenvolvimento da Comunidade (FDC), Executive Director
Avenue Eduardo Mondlane 1160-170, Maputo, Mozambique
Tel +258 (1) 430-430 +258 (1) 422-595
Carlos Fumo, a Mozambican citizen and a development professional, is the Executive Director of the Foundation for Community Development in Mozambique (FDC) and a Southern African Grantmakers' Association (SAGA) Board Member. He is trained in Adult Education and has 12 years of working experience within the public sector in the Ministry of Education. Prior to joining the FDC, he spent seven years working exclusively within the civil society sector where he was active in undertaking capacity building initiatives and stimulating and promoting the emergence of local NGOs (nongovernmental organisations) and CBOs (community based organisations) in various parts of Mozambique. He also participated in lobbying and advocacy activities to help create more legal and social space for NGOs and CBOs to participate in the development efforts of the country.
Mr. Fumo has participated in various international forums of Civil Society Organisations. His expertise and contributions to non-profit research are widely recognized. Most recently, he played a central role in completing a comprehensive national survey and review of micro-credit programmes in Mozambique.
Mr. Fumo is a Senior Fellow of the Synergos Institute. As a Senior Fellow, he will share his expertise in financial sustainability issues with grantmaking organisations around the world.
Eugenio M. Gonzales
Foundation for a Sustainable Society, Inc., Executive Director
Unit E, No. 46 Samar Avenue corner, Sct. Albano St., South Triangle
Tel: +63 (2) 928-8422/928-8671 Fax: +63 (2) 928-8671
Eugenio Gonzales is the executive director of the Foundation for Sustainable Society, Inc, in the Philippines. Mr. Gonzales is an industrial engineer with 19 years of experience in strategic planning, project development and management, institutional development, and policy analysis as a team member, project leader, consultant, and executive officer. Mr. Gonzales has participated extensively in the design and implementation of four grantmaking mechanisms that have provided over US$18 million to more than 1,000 Philippine non-governmental organisations (NGOs) and people's organisations (POs) in the last 12 years.
Before working with NGOs and POs, Mr. Gonzales taught for six years in the Department of Industrial Engineering and Operations Research at the University of the Philippines in Diliman. Concurrent with his academic involvement, he was a consultant and lecturer in various projects and training courses at the National Engineering Center, the Institute for Small-Scale Industries, and the College of Social Work and Community Development, all at the University of the Philippines. Mr. Gonzales lectured on Project Feasibility Analysis, Methods Engineering, Industrial Organisation and Management, Industrial Quality Control, Industrial Statistics, and Rapid Rural Systems Appraisal.
In 1992-1993, he was one of the two NGO representatives to the Steering Committee for the Medium-Term Development Plan and an alternate member of the Philippine Council for Sustainable Development. Mr. Gonzales also participates in policy discussions with the heads of bilateral and multilateral development agencies in the Philippines.
Mr. Gonzalez is a Senior Fellow of the Synergos Institute. As a Senior Fellow he will share his expertise in development, resource mobilisation and management.
Darren Kramer, Managing Director and one of the founders of Moss Morris Consulting (the corporate advisory arm of the commercial law firm Moss Morris Inc., which was established in 1903), has twelve years experience in financial services and strategic management consulting.
Moss Morris Consulting provides Strategic Management Consultancy and Financial Services together with corporate restructuring and financial planning.
After three years of research and development with almost 100 organisations, the Moss Morris STRAT-Q∓Q (Strategic Qualitative and Quantitative, a trademark of Moss Morris) methodology proved successful. Thus enabling to identify strategic weaknesses in both large and medium companies -- creating positive effects.
Ithuba and Moss Morris Consulting developed a partnership structured around the new philosophy developed by Darren Kramer "econolism -- feed those who have none, but teaches those who have none to feed themselves." The relationship that Darren Kramer developed with Ithuba has been mirrored with various other corporate clients and strategic partnerships that have developed both locally and internationally.
BA (Law) Degree
Diploma Financial Management
Lecturer: ICM Marketing SA (Conference Organisers)
Graduate Institute of Management and Technology South Africa
Mickelson Family Biographies
The Mickelson Family was rooted in a farming region of southern Minnesota, which is in the northern tier of the United States.
Hazel Mickelson is a registered nurse and graduate of the University of Minnesota. She specialized in public health as a county and school nurse. During World War II she saved lives in an army field hospital at the time of the Allied invasion of Europe.
After her marriage in 1957 to Walter Mickelson, she raised a family of a son, Thor and a daughter, Kirsten. She also volunteered her nursing skills in crises around the world, specifically Bangladesh, Guatemala, Mexico and New Mexico in the United States.
Volunteering in the United Methodist church, she served in its Minnesota Conference as lay leader. Moving to the southwestern part of the United States with her husband in 1980 to Santa Fe, capital of New Mexico, she served as a director of The Santa Fe Community Foundation. She and her husband now live in Albuquerque, the commercial centre of New Mexico.
Kirsten Mickelson graduated with a bachelor of arts degree from Stanford University studying English literature. She then earned a master of theology degree from Princeton Theological Seminary. She pursued graduate courses in literature at Yale University. There she met her future husband, Dr. Brian Kelly of Liverpool, England. They both moved to London where she received advanced degrees at the school of Oriental and African Studies in economic development and he earned a degree in patent law.
They are now living in New York City, where he develops the commercial uses of patents held by New York University and she studies creative writing. She is director of Reach and Teach, USA which promotes educational projects in South Africa.
Walter Mickelson earned a bachelor degree at DePauw University in Indiana and a master of business administration from Northwestern University of Evanston, Illinois.
He joined his father in publishing a group of seven community newspapers in southern Minnesota and operating radio stations. He sold the family's newspapers in 1980 and expanded into cable television, operating systems in New Mexico and other states. Walter was a trustee of Hamline University, located in St. Paul, Minnesota and was a director of the foundation of the United Methodist conference of New Mexico.
Upon the sale of the cable television systems in 1989, the family created two foundations, Scandia, to carry out the family's philanthropic interests, and the Mickelson Media Foundation to encourage the establishment of community foundations in those towns where the family had operated businesses. Thor heads the company foundation and Kirsten the Scandia Foundation, while Hazel and Walter are directors.
Currently, Walter and Hazel work with their son in operating a cable television business that distributes programming by microwave in six of the larger cities of New Mexico.