Report from the Trustees of the Foundation of Graduates in Early Childhood Studies Year ended June 30 2019
2020 will represent 25 years since the Foundation was established, initially on the Forest Hill side in March 1995, and 15 years since the additional $2 Million was added to the Foundation on the Warrawong side in September 2005. In the past year we have given thought to the progress of the Foundation over this period and areas where there could be improvements. As a part of this, and reported elsewhere, the Graduates Association have agreed to some minor modifications in our trust deed in relation to the rules around granting which we believe will enable us to be more responsive to changes in the areas of identified need over time. No organisation can remain static in this fast-changing world, and while there have been some changes to the rules under which we operate, the last significant one was now almost 15 years ago with the creation of the Warrawong part of the Foundation.
This report recognises those two milestones in addition to commentary on the activities for the past year by updating some of our historical information.
Firstly, however we want acknowledge another “milestone”. David Thwaites has stepped down from being a trustee after being involved with both the Graduates Association since the early 2000’s, including being an integral part of the team who grafted the Warrawong part onto the then existing Forest Hill Foundation to make it the entity we have today, and being a trustee on the Foundation for almost 16 years. We are also very pleased to have Marina Paleologoudias join as a trustee replacing David. Her legal background has already proved very useful in helping with the updating of our trust deed.
The Foundation’s investments have had an excellent year despite quite volatile investment markets, especially in the latter part of 2018. The Foundation was sitting at just under $8.5M as at June 30 2019, up from just over $8M at June 30 2018, and after paying out just over $455,000 in grants and other expenses over the year.
The Foundation’s portfolio earned a total of $455,827 on a cash received basis and with cash expenses of only $17,285, earned a net amount of almost $440,000 available for granting in the 2019 year. Over the 2018/19 year as a whole we actually granted a total of just over $440,000: $222,441 on the Forest Hill side and $217,716 on the Warrawong side.
The reason for the extremely low operating cost of the Foundation is that all trustees and all committee members voluntarily give their time to ensure the valuable work of the Foundation continues. One of the challenges facing trustees, and anyone reading the official audited accounts prepared each year, is to reconcile the income shown in those accounts to the excellent set of cash flow figures prepared by our book keeper Dianne Burgess. Dianne’s figures are produced to show trustees how much income we earn from interest, rents and dividends on a cash flow basis, which is how we work out what to grant each year. The figures in the accounts are based on global accounting standards which are not really that relevant to how we operate but we must use them to achieve a “clean” audit. For example, the accounting standards deem that all changes in market value (from the inception of the Foundation) on a year to year basis are “income”. One reason we don’t use this measure is that if the market value of our assets fell temporarily from one year to the next by not much more than 5% the accounts would show we had no income to distribute. This would mean that we could never be confident of how much we could grant in any year and in some years, we would not be able to make any grants.
Due to the changes in timing of the grant rounds we are now deciding the amounts to give (for all except some grants like the AGECS Fellowship grants or some one-off grants the trustees make directly during the year) either just before or just after the financial year begins, using estimates of the income we expect to earn. Therefore, we have already decided and distributed most of the grants for the current year. These total, at this stage, $191,832 on the Forest Hill side and $251,568 on the Warrawong side.
The trustees are very grateful for the time and diligence that both advisory committees put into this important task. The trustees’ decisions on the direct grants, where made, also are informed by members of the appropriate advisory committee where relevant.
In recognition of the impending 25th anniversary of the Forrest Hill side and the 15th anniversary of the Warrawong side, it is timely to update the report on the history of the Foundation given to the Association of Graduates’ Council Meeting, in July 2004 prior to the Warrawong part joining the Foundation, and updated in 2015 in our annual report.
In 2004 we reported that the Forest Hill Foundation (as it was then) was established in March 1995 with a capital sum of $1,600,000. In the 9 years to July 2004 it made 342 grants totalling $1,166,843 and at that time had a market value of $2,101,059.
In September 2005 the Foundation received the $2M from the Warrawong side. From its inception, to June 2015, the time of our last report like this, the Warrawong side had granted $925,000. Currently, taking into account the 2020-year grants that we have made to date, we have now distributed just under $2.1M from this side of the Foundation – YES: more than the whole amount initially put into the Foundation on the Warrawong side.
The total amount granted on the Forest Hill side from inception to June 2015 was $3,190,987, DOUBLE the initial sum invested in the Foundation in 1995. However, that amount distributed on the Forest Hill side has now grown to $4,229,310 – over $1Million more than it had granted 5 years ago reflecting our aim to grant at least $200,000 per year on the Forest Hill side.
Not only that, but the capital value of the Foundation as a whole, as reported above, is now almost $8.5M compared to the total capital initially put into the Foundation from the two sides of $3.6M. It is a remarkable testament to those members of the Graduates Council who had the foresight to establish the Foundation from the proceeds of the Forest Hill sale and those members on the council, and their advisors, in the early 2000’s who did the same with the Warrawong proceeds.
Outlook for the investment portfolio.
The past year not only had volatile share markets but we had an election in Australia with the possibility of some investors access to franking credits being restricted if there was a change of Government. The Foundation, as a charity, was never at risk of this. However, most companies listed in the Australian share market took this into account when deciding on dividends or capital management issues. As a result, many paid higher than normal dividends to help clean out their franking credit account before the election “just in case”. Some like BHP and RIO had significant excess capital so engaged in “off market” buybacks of stock which released even more dividends and franking credits. The Foundation took advantage of all of these opportunities but one outcome is that dividends from some companies this year, and possibly the market as a whole, are likely to lower than last year – the first year this has happened in a long time. Regardless of the level of dividends, they will certainly be much higher than if we were invested in bank deposits or similar with rates there at all-time lows and falling. The Foundation’s investment portfolio is in good shape, invested in a wide range of companies with exposure to global economies and a wide range of industries. While markets don’t go up in a straight line, or always go up, we are confident that the investment portfolio will continue to perform as it has in the past – providing a steadily growing income stream to distribute as well as, over the long term, increased growth in the portfolio to generate that income growth.
Forest Hill Grants 2018/19
The following organizations were recipients of those grants totalling $222,441.31
Act For Kids Limited, Australian Childhood Foundation, Ballarat Toy Library Inc., BPA CS - Taylors Hill Kinder, Caulfield Comm.Toy Library Inc., Community Kinders Plus - Frankston, Community Kinders Plus - Somers Preschool, Community Kinders Plus Banyan Fields, Dolena Young Preschool, Greater Shepparton City Council-Leslie Gribble CC, Kew Toy Library Inc., Kinglake Ranges Children's Centre, Kingston Toy Library Inc., Knitting For The Needy Community Support Group Inc, Laverton P-12 College, Library Board of Victoria, Maroondah Toy Library Inc., Mission Australia, Northern & Inner Multiple Birth Assoc. Inc., Nunawading Toy Library Inc., Pakenham Kindergarten, Port Melbourne Toy Library, Richmond Toy Library Inc., Sunnyside Kindergarten Association Inc., Talbingo Kindergarten, The Moonee Valley Toy Library Inc., The Song Room Limited, The Young Mens Christian Assoc. of Ballarat - Lucas Kinder, Thomastown West Kindergarten Inc., Toy Libraries Australia Inc, Vision Australia Ltd, Wangaratta District Specialist School, Warrawee Park Preschool, Yarram Early Learning
Warrawong grants 2018/19
The following organizations were recipients of those grants totalling $217,716
AGECS (fellowship payments), Albert Park Preschool Centre Inc, Annie Galvin Early Learning Centre, Biala Peninsula Inc, Child and Family Care Network (Bestchance), City of Whittlesea, Coburg Children's Centre Inc, Community Kinders Plus, Corio Kindergarten, Dandenong South Preschool Centre, EEEC, Evesham Road Kindergarten, Fawkner Park Childrens Centre, Flemington Childcare Co-operative, Helen Jessen Early Learning Centre, Hughesdale Kindergarten, Kangaroo Ground Preschool, Lake Park Kindergarten, Melbourne City Mission (Braybrook), Merri Community Health Services Limited, Monash Caulfield Child Care, Monbulk Pre School, NewHope Baptist Preschool, Occasional Child Care Centre (Diamond Creek), Skye Children's Co-oprative, Sorrento Preschool, South Kingsville Community Centre, Strathmerton Preschool, Syndal Preschool, Tarralla Kindergarten Assoc Inc, The Malpa Project, The Young Mens Christian Assoc. of Ballarat, Thomastown West Kindergarten Inc, Uniting (Vic & Tas), Uniting (Gippsland), Yarram Early Learning.
Finally, I cannot end this report without recognising all of the hard work that Kevin Fell in particular does in the secretarial role for the Foundation, along with all of the other trustees, both present and past, as well as advisory committees who have contributed to this great result.
Chair of the Foundation
On behalf of the Trustees