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  • Nicole Richards

Philanthropy and the active investor

Since his appointment as Chair of the Philanthropy Australia board in August 2014, Alan Schwartz AM has overseen significant changes to the peak body including the development of a focused 2017-2020 strategic plan; a new membership model; a change in governance structure from an incorporated association in Victoria to a company limited by guarantee; the introduction of the Philanthropy Champions program and the growing embrace of advocacy as a key component within philanthropy’s toolkit.

Schwartz, it would seem, has always been a big-picture thinker who’s not afraid to challenge the status quo.

His parents were Holocaust survivors who immigrated to Australia with their young family in 1958. Alan’s entrepreneurial streak was evident in high school when he wrote an economics textbook with a friend after he’d completed Year 12.

“Growing up, I challenged lots of things, mostly because I was intellectually curious, and loved a good adventure,” Schwartz says.

“Those two traits, no doubt, kindled the entrepreneurial disposition that shaped my life.”

The textbook was a best seller, albeit a controversial one: “We thought we’d cracked the code for getting good grades and wanted to help others follow our formula.”

The economics curriculum was changed soon after.

Schwartz’s entrepreneurialism gathered pace while studying law and economics at Monash University where he started a successful business on the side, running seminars and conferences for lawyers and accountants. For the next 30 years Schwartz built, acquired and sold businesses in publishing, software and professional services.

Now, Schwartz is an “active investor” and Managing Director of the Trawalla Group, the Schwartz Family Office which he co-founded with his wife Carol. The Group encompasses Trawalla Capital, Trawalla Property and Trawalla Foundation.

Not surprisingly, Schwartz’s approach to philanthropy is consistent with his entrepreneurial disposition and includes a commitment to leveraging all assets and accepting a healthy degree of risk.

“I’m always looking for points of leverage,” Schwartz says of his philanthropic investments.

“I want to inspire others to join our initiatives and help bring projects to scale or get government to invest and that’s what we’re always looking for as social investors: How can we use our skills to maximum advantage and our passions to our advantage so that we can produce the maximum amount of value that we can then measure and demonstrate to others?”

What follows is the transcript of a recent conversation between Alan Schwartz and Nicole Richards which has been edited for length.

NR: You’ve chaired Philanthropy Australia’s board for almost five years. What stands out as highlights of your time in the role?

AS: There have been several, including the focus on policy and advocacy funded through Philanthropy Champions; the change in the membership structure to create more value for money for members and the change in the governance structure. All are strategic.  

I remember when I was reading through all the material before I joined the board, I had three simple goals: a happy membership base, government that listened and respected us and financial sustainability.

More and more organisations are entering the broader philanthropy space and we’ve done well in understanding that they’re part of the same movement we belong to, so we need to work collaboratively with them.

We’re also moving from being an organisation with a strategy for Philanthropy Australia, to being an organisation that has a strategy for philanthropy in Australia, and that’s a great maturing of the market space.

It’s also a really exciting opportunity to act as an organisation that harnesses and facilitates and supports all the things that are going on.

What have been the biggest changes to philanthropic practice you’ve noticed over the last five years?

Very much the concept of thinking about your corpus as part of your assets and seeing philanthropy as social venture capital. There’s been a growing understanding that you want to deploy 100 percent of your resources and being thoughtful about the way you deploy your corpus which has meant that impact investing has become seen as part of the same movement.

We also saw the establishment of Australia’s largest foundation, the Paul Ramsay Foundation which will have profound effects on philanthropy.

In your own philanthropy you talk about using ‘a range of levers including grants, investments, skills, networks and advocacy to deepen impact’. Why have you taken this approach?

For us it’s not only the grant making and the investments of our corpus but also seeing the capital we have as risk capital, not necessarily perpetual capital.

We’re prepared to place our corpus at risk because we’re trying to be social venture capitalists. We’ll invest in things where the prospect of failure is high enough that others won’t invest in them.

I believe as a philanthropist it’s really important to do that.

When we invest in things we’re passionate about we can bring to bear our professional networks and our commercial skills. It’s part of being an entrepreneur willing to take risks, get deeply involved in something that makes a significant difference and allows for the possibility of total failure.

We’ve had a few situations that have been a bit disappointing in terms of outcomes, but not many when compared to the terrific successes. We accept that as part of the journey.

What have been the most rewarding aspects and biggest challenges of giving as a family?

The most rewarding thing is that, in a sense, we’re not accountable to anyone. We can choose to support whatever we want. That’s the exciting part of it.

The only negative side is that there’s always more things you could do than you can afford to do. There’s always a sense of letting down the people you’d like to help.

It’s a very personal thing in a family foundation, you can’t depersonalise it therefore the rejection has to come from you effectively, and I don’t enjoy that, but you have to do it because we try to focus our giving and our capital.

We have a very proactive approach - we don’t have grant rounds, we wander around the world talking to people, identifying issues and then going for it. It’s very exciting to work with amazing people who are achieving great outcomes. One example is the Pathways to Politics Program for Women which has really helped increase the number of female parliamentarians in Australia.

Do you think ‘philanthropy’ has an image problem?

I’m always embarrassed to describe myself as a philanthropist because it sounds pompous, but I don’t think there’s a better word. If there is, I haven’t found it.

So, I grit my teeth and say I’m a philanthropist.

What would you like to see more (or less) of in philanthropy?

I’d like to see philanthropists think broadly about social issues, not necessarily the ones that are in their own narrow view but across society more broadly.

It’s completely understandable that if you’ve had a tragedy in your family you’ll fund those causes, but I’d like to see more people take a strategic view. That’s where the concept of Philanthropy Champions is so important and powerful – that our Champions see philanthropy as a cause in its own right and support Philanthropy Australia because we work to advance philanthropy.

These people are enlightened philanthropists because they’re not seeing someone getting a meal, or finding a cure for cancer, they’re seeing the systemic power of philanthropy and that’s a wonderfully abstract idea and powerful one.

To advance things that advance philanthropy has a multiplier effect.

I’d like to see a lot more risk taking and thinking broadly and strategically. The more of that we get, the better.

What’s the most important lesson you’ve learned about philanthropy?

Understanding the role of the non-profit in the whole philanthropic world and how much they need to be party to the philanthropic process. I learnt the criticality of that very much from my fellow board member, Genevieve Timmons.

I think a lot of the way Philanthropy Australia works is about recognising and respecting the importance of partnership in the philanthropic process.

What advice what you give anybody who’s thinking about getting started in philanthropy?

Go and talk to other philanthropists. They’re always happy to give you the time of day and share lessons they’ve learned. Get advice, be humble, be open and broad.

Don’t just start giving money to the local whatever. Do it rigorously like you’d do anything else in your life.

What’s next for you?

More work on the Universal Commons [‘a moral, social and economic system that will protect and enhance the Earth's bounty of Social and Natural Capital for the benefit of all’]. It’s going to be a feverish and focused next 20 years.

The Universal Commons project has helped me understand how the person holding a protest sign and the person who does impact investing and the corporate that does sincere sustainability reporting and the philanthropist are all part of the same movement that’s saying our economy doesn’t facilitate investment in social and natural assets.

The challenge is how we create a proof of concept and inspire people to believe it’s possible. It’s not that hard to put a value on the things that matter. That’s not an insane thing to say, and as long as it’s not insane, then why is it not possible?

First published by Philanthropy Australia

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