Speaker by Various Artists

In response to questions raised on Public Address and in the mainstream media about the costs incurred by KidsCan Charitable Trust -- and, consequently, the proportion of donations actually spent on its programmes -- trust chair Rick Shera undertook to answer Public Address readers' questions in writing. This is his response.

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Thank you for the opportunity to respond properly to the questions raised since Big Night In Telethon, as Chairman of KidsCan Charitable Trust. This responds in detail to questions raised on Russell Brown’s Hard News blog and to other questions raised elsewhere.

It is long but I did want to put as much effort as I could into answering questions. Particular points to note though are:

• KidsCan and its wholly owned subsidiaries, Invitation Only Events Limited and Big Night In Limited, have been subject, as part of normal operations, to review, due diligence or audit by numerous professional, Government, corporate or other independent bodies over the last 12 months. All have been entirely supportive and remain supportive of KidsCan’s activities.

• In 2008 KidsCan supplied high quality All Black raincoats, food, beanies and shoes and socks to children throughout New Zealand for about $120 per child. The retail cost of doing so would be more than $370 – over three times as much.

• All of the wages of KidsCan staff and a good proportion of other overheads for 2008 were covered by funds contributed by charitable admin grants or local community grants specifically for that purpose – no public donations went to cover those costs.

• Those admin grant “tagged funds” may not be used for delivery of KidsCan’s programmes or for any other purpose.

• After deducting tagged funds and other income not available or intended to be spent on programmes and including the value of in kind support, the value KidsCan delivered into its programmes in 2008 was 94.5% of income available to be spent on those programmes. In other words for every $1 donated to programmes, KidsCan delivered 94.5 cents of support to New Zealand children.

• Final figures are not in, but current predictions are that 85 cents in every dollar donated by the general public during Big Night In Telethon will be available for programme delivery. The balance will cover remaining Telethon costs.

• That means that if KidsCan had the same costs, programme income and in kind support as it did last year, it would be able to add about 20,000 children to its programmes and make a big dent in its 174 school waiting list. As a result, for every $1 of the $2M that the New Zealanders so generously donated, KidsCan would be able to deliver $1.23 of support to New Zealand children.

What is KidsCan Charitable Trust and what is its strategic direction?

KidsCan was established four years ago because children in New Zealand had a basic need which was not being met. The fact was and is that there are children in New Zealand - in our own back yard - who do not have the basics like food every mealtime, a raincoat and hat to keep them warm and dry, or shoes and socks to walk to school in. There are other charities who meet other needs or who operate in New Zealand to meet needs like these for children overseas but, for whatever reason, these basic needs were not being met here and still aren't. In fact, in these tougher times, the need has grown substantially. Costs of raising children in New Zealand continue to rise.

So, KidsCan was established to raise awareness of the need and to take small, positive, steps to meet it. KidsCan does not have a grandiose vision of solving child poverty in New Zealand – it saw a need and is addressing it in a way that is tangible and measurable. The focus was and is on delivery via schools, since the lack of these items has a significant adverse impact on children getting to school and once at school being in the best position to learn.

It is obvious that a child without shoes, a raincoat or a hat will not want to walk to school in the rain. Even if he or she does make it, they will be wet and cold. In that state, and without breakfast, it is obvious that that child will not learn as well. The impact KidsCan's programmes have in better enabling children to learn has been confirmed by our partner schools themselves (letters from schools are on the KidsCan website. Independent research commissioned by KidsCan from Massey University also confirms it). KidsCan hopes to update the Massey research within the next 12 months.

People may argue that that need should be met by parents or by the Government, by other charities or just by “someone else”. We will all have our own personal views on that. Until it is solved however, children in New Zealand should not be penalised for someone else’s failings.

So, for the 2008 year, in round figures, KidsCan:

• Fed 8,000 children per week with high protein/low sugar muesli bars, fruit in juice pottles and raisins

• Provided a pair of shoes and two pairs of socks to 2,000 children

• Provided adidas All Black raincoats to 10,400 children

• Supplied hand knitted woollen beanies to 24,000 children

•In all, supported 28,000 children in 102 schools.

These items were distributed via schools, from Kaitaia in the north, to Invercargill in the south. KidsCan staff and volunteers source all products, check them, store them, pack them and distribute them. They then monitor and audit delivery of the products with the schools.

The cost and overheads issues that have been raised will be discussed below, but even if we took the 2008 figures as they stand, without further explanation, that is a distribution of food, shoes, socks, beanies and All Black raincoats at an average of about $120 per child.

In addition, partner schools have the security of knowing supplies will be delivered on time when needed, plus the benefit of KidsCan sourcing the items and its quality control, logistics, storage, distribution and all the other tasks schools should not need to be engaged in.

Well-meaning individuals could not logistically accomplish such a widescale distribution, on an ad hoc basis over 39 weeks of a school year. Even if they could, the retail price of a pair of shoes, socks, a raincoat (which would not be an All Black raincoat of course), a beanie and, say, a box of high quality muesli bars every couple of weeks of the school year, would be around $370.

The value of an All Black raincoat goes well beyond the mere cost of course. Raincoats are distributed by KidsCan patron Ali Williams and other All Blacks. For a child who does not have a raincoat, receiving an All Blacks one gives that child a great deal of pride. The “agreement” between him or her and the All Blacks that they will wear it so they can go to school is taken very seriously.

KidsCan has also added the StandTall programme, which was initiated in 2008 and ran its first pilot in 2009. Based on the Capability Approach (Sen, 1979 and Nussbaum, 2000), StandTall takes Year 7 & 8 children from KidsCan partner schools on inspirational and challenging excursions, underpinned by goal setting, basic life skills and core values for children who would not otherwise have this opportunity. The programme aims to instil pride, increase confidence and give children who are less fortunate than others the tools, motivation, opportunity and will to succeed. Mentors and leaders from the worlds of business, entertainment, education, life skills and sport provide their time on a voluntary basis and KidsCan organises and covers all costs.

Children from participating schools are selected to take part in the programme, which will be delivered over a twenty-four month period. Participants agree to follow the StandTall Code of Conduct.

After children have taken part in the two year structured programme, StandTall will remain as a resource they can take advantage of, offering guidance and a scholarship programme to assist participants who wish to further their education or training.

In answer to some of the more specific questions:

• KidsCan does not use telemarketers or street walkers. It is solely responsible for its own fundraising and does not use anyone else. The Big Night In Telethon used primarily technology based donation methods – BNI website, text, phone and fundraiseonline sites. Both Telecom and Vodafone waived all telecoms fees as did ASB with respect to credit card fees. ASB also provided 500 volunteers and the Big Night In phone bank at no cost.

• In terms of lobbying Government, the recent confirmation of Government funding at least shows the current Government admits there is an issue. Previously, the Government publicly refused to accept KidsCan’s assertion that child poverty existed in New Zealand or was not being addressed by Government agencies.

• With regard to the dark colour of the raincoats, we have been working with adidas to have the logos on the raincoats made out of reflective material. However, the pride with which children wear All Black raincoats has to be seen to be believed and we would not want to give that away. adidas provides the raincoats at a substantial discount, which is very much appreciated. No other company has offered to do likewise. The connection with adidas also supported KidsCan’s effort to become the official charity of the All Blacks so that was valuable as well. The relationship is one that is not based on any contract and is solely between KidsCan and adidas.

• Bringing back Telethon was KidsCan’s idea. A full report on the outcome will be made available once all funds are in and have been checked and audited.

• As shown in the accounts, KidsCan received $22,576 from Dancing With The Stars in 2008 which was much appreciated. KidsCan was not represented this year.

The staff and volunteers have been extremely busy on Big Night In Telethon so now it is time to knuckle down and deliver – KidsCan does not expect to be in the limelight just for the sake of it and the high profile achieved as a result of the Big Night In Telethon will mean it can spend less on promotion.

KidsCan's immediate strategy therefore is to address its current waiting list of 174 schools within the food, raincoats, beanies and shoes for kids programmes (adding to the 102 schools it already partners with) and to progress and develop the StandTall programme. As I write this, KidsCan senior executive staff are receiving invaluable guidance from the well respected Institute of Strategic Leadership, the donation of which is very much appreciated and will also contribute to the direction of the charity.

There are other needs that New Zealand children have that are not being met. Does the Big Night In Telethon success mean that people will be less likely to have money to donate to other charities to meet those needs or is KidsCan looking to expand into other areas?

Once KidsCan has endeavoured to address the 174 schools waiting list and the other core needs above, it may look to expand into other areas. However, it is not in the business of trying to compete with other charities or to move into areas Government agencies are targeted at. In fact, KidsCan is already talking to other charities to see if it can share the load so that it and those other charities can deliver their services more efficiently.

One idea we have is to see if we can work with other charities and the Charities Commission to create a shared services unit that could provide back office, admin and accounting functions to a number of charities.

What is Invitation Only Events Limited and what is its relationship to KidsCan?

Invitation Only Events Limited is a company which is a wholly owned subsidiary of KidsCan Charitable Trust. It was established based on professional advice and its constitution (publicly available on the Companies Office website) prevents it from being operated for anything other than the benefit of KidsCan. It is therefore registered with the Charities Commission as a charity in its own right and as part of the KidsCan charitable group.

No one employed by KidsCan receives any additional benefit from IOE (or vice versa) and all of its revenue and expenses are consolidated into the accounts of KidsCan itself.

The reasons for establishing IOE were:

• To run charity events (balls, charity auctions, etc) as a social entrepreneurship venture. KidsCan's fund raising model until mid 2008 was heavily focussed on such events. However, KidsCan did not want to have to pay another event company to run those events since that would have cost more. Running events is costly enough without having to pay an events company its margin as well. In addition, at the time, there appeared to be a possibility that IOE would be able to run events for other charities at a lower rate than traditional events companies. That would both have assisted other charities and earned business income which would also flow through to KidsCan.

• Running events oneself however is risky – commitments to venue hire, caterers, security, celebrity speakers, auction contributors and the like all have to be made in advance. High profile events can go wrong and accidents can happen. Therefore, it was decided that rather than exposing KidsCan's assets (revenues contributed by supporters and the public) to those risks, it would be better to run IOE in a limited liability company. IOE was therefore run as a business with charitable objects, with any surpluses being available for KidsCan to use. Those surpluses were generated primarily by charity auctions held at the events. Events promoted by IOE were very successful but, as 2008 progressed, it became clear the economic downturn meant it could no longer expect the same uptake, and therefore its operations were severely scaled back. A new source of funds had to be found and this is what gave rise to the idea of the Big Night In Telethon.

• The other reason for establishing IOE was to separate the revenue and expenses in running an event company from the more general revenue and expenses of KidsCan overall. Ironically, the transparency KidsCan hoped to achieve by doing so has been misinterpreted.

In addition, some events were taken on with the knowledge that they might not generate a large surplus but the longer term profile raising or relationships that might be established with corporate sponsors or other supporters made them worthwhile. Looking at one year's accounts in isolation will therefore never tell the whole story. Again, whilst this style of social entrepreneurship is not prevalent in New Zealand, it was successful and bore fruit in KidsCan's ability to obtain significant support to cover costs of putting on the Big Night In Telethon.

Big Night In Limited, the company established to run the Big Night In Telethon, was therefore formed for similar purposes – risk management and transparency in accounting. Again, it is another wholly owned subsidiary of KidsCan, which is separately registered with the Charities Commission. As with IOE, Big Night In Limited's figures will be consolidated with KidsCan's in the current year's accounts.

What proportion of the funds that KidsCan receives from the public goes to benefit New Zealand children? What proportion goes to administration and other overheads?

The Hard News blog post which initiated this debate contained a simple calculation derived from KidsCan's 2008 consolidated accounts. Spend of $357,289 on programmes against revenue of $1.95M (note that the original blog post had a slightly incorrect figure of $357,354).

The following needs to be noted:

• As already mentioned, this includes IOE's consolidated figures. In fact, it includes 15 months of figures for IOE since that was the period from the date of IOE’s formation until its first annual reporting requirement. The figures are therefore further skewed by that longer time period.

• Most of IOE's income from sponsors and ticket sales went towards covering the cost of the events themselves. People who attend such events realise that a small charity component in the ticket price and the charitable bidding at auctions is all that will go towards the charity programme. In fact, the surplus raised for programmes this way is often announced at the event itself. IOE events were well run and attended. The only reason it has scaled back this activity is because of the economic downturn. For the 15 months covered in its accounts, ticket sales and sponsorship that covered event costs and were never intended for programme delivery, amounted to $405,164.

• A significant amount of revenue KidsCan received in 2008 was contributed by way of charitable administration grants ($331,187) or from local community grants ($34,550). Those funds may only be used for administration or basic overhead costs. They are not able to be spent on the food for kids, shoes and beanies for kids or raincoats for kids programmes or on the StandTall programme, or on promotion for example, because they are tagged. Those contributors review KidsCan's expenses to ensure the funds are not being used for any other purpose and that expenses are reasonable, as does the Department of Internal Affairs. In calculating what proportion of public funds KidsCan is able to use for delivery of its programmes, those tagged funds must therefore be deducted first. Or, to put it another way, all wages and a good proportion of KidsCan's general overheads and administration costs (as opposed to costs directly related to programme delivery or profile raising) are met from those funds, not from public donations.

• So, a total of $770,901 of income recorded in KidsCan’s consolidated accounts could not be used and was never intended for programme delivery. It must be deducted before making any comparison. That leaves $1,182,155.

• If we stopped there, we would arrive at a percentage of 30% ($357,289/$1,182,155). In other words, for every dollar donated for programmes, 30 cents would be delivered into those programmes. Further analysis is needed however before that can be compared to the 78% at Oxfam that was mentioned in the on the Hard News blog. KidsCan would not usually engage in such comparisons, but since it was raised as a criticism of KidsCan, it is fair to respond.

• Before doing so, KidsCan wants to emphasise that all charities are different and while, on the face of it, it may seem attractive to compare these sorts of calculations, some care needs to be taken. How well known and well established is the charity (and therefore how much does it need to spend to highlight the issues it seeks to address)? Where does its funding come from and how much must it spend to obtain that funding? What services does it deliver and how labour, product and delivery intensive are they? Or, does it simply fundraise and then pass the funds on to someone else without any services delivered? What is the charity's annual revenue (since overheads as a percentage of total revenue should be less on a higher revenue base – some charities in New Zealand have revenues many many times higher than KidsCan’s)? Does it receive admin support from someone else (and therefore not need to pay for it)? Does the charity use telemarketers or street walkers to raise funds or does it engage in fundraising itself? (KidsCan does not use telemarketers or street walkers and never will as long as I am chairman).

[NB:: The following paragraphs regarding Oxfam have been revised from the original post after consultation with Oxfam.]

• In looking at Oxfam's figures therefore one needs to go a little deeper than the original blog post. As reported here those figures indicate:

In looking at Oxfam's figures therefore one needs to go a little deeper than the original blog post. As reported here - http://bit.ly/V1mG4. Those figures indicate:

Based on its website, Oxfam spends approximately 22% of its revenue on areas not related to its core programme delivery. Of that 22%, 4% is spent on general admin and the rest is spent on investments and getting Oxfam's message out to the public (see http://bit.ly/PjJPN)

− Of the remaining 78% that the Hard News blog post uses as a comparison, KidsCan takes a different approach to Oxfam. Different charities will take different approaches of course as mentioned above. KidsCan does not include in its programme delivery cost, its costs of raising public awareness, lobbying, research or any costs other than actual delivery of physical products to children throughout New Zealand. In contrast, Oxfam funds a specialist advocacy team and considers its advocacy and awareness raising as part of its core activity. It therefore includes these in its programme delivery percentage..

− Oxfam received about 55% of its funding from Government or its overseas affiliate sources (the cost of raising those funds would be significantly lower than KidsCan has to spend). For the 2008 year, KidsCan received little Government support other than locally administered community grants ($34,550 in total - part of its tagged funding). Such grants are not easy to obtain, since each is applied for by way of statutory declaration to a local grant board that scrutinises applications and monitors expenses with a great deal of care. The amounts are often very small (a few hundred dollars in many cases). Like other tagged funds however, they are essential to KidsCan’s operations.

− Both Oxfam and KidsCan have to bear significant costs in the delivery of their programmes because they deliver physical products and services over physical distances, compared to other charities that simply collect funds and pass them on to others.

Comparison is therefore difficult. But remember KidsCan's other major costs that were not funded by tagged funds were in fundraising and PR – something that a well known, well established and heavily Government supported charity like Oxfam does not need to spend as much on. None of this is a criticism in the slightest of Oxfam or a suggestion that the way in which it presents its figures is better or worse than the way KidsCan does. Oxfam certainly did not ask to be drawn into this comparison and is a well run charity – but, if comparisons are to be made, they need to be carefully drawn.

[Update: the above paragraphs have been updated to correct a mis-interpretation by Rick of Oxfam’s figures at http://bit.ly/V1mG4. Rick had assumed that the “where the money goes” table added up to the 78% programme spend referred to at the bottom of the table. Oxfam advises that those figures comprise its entire expenditure and has now updated its website at http://bit.ly/V1mG4 to clarify this].

• In addition to the cash programme income received, KidsCan has established costing for approximately $760,000 worth of in kind goods and services contributed directly into the delivery of the programmes. This includes products themselves, storage, transportation and other services. Not all in kind contributions have been able to be included as KidsCan does not have figures for them all (as a charity KidsCan welcomes many contributions but many contributors are reluctant to attribute a value and many wish to remain anonymous). This value needs to be included. If it is not, then the conclusion drawn is that in 2008 KidsCan only delivered $357,289 worth of food, beanies, shoes and socks and All Black raincoats through its programmes. That is incorrect – it’s programme delivery was worth at least $1.1M.

• KidsCan has been criticised for making this “in kind” point last week, but it has had confirmation from leading accountancy firms that it is a valid approach. It is an approach based on looking at the total benefit that is being delivered rather than simply looking at the financial cost. If KidsCan can deliver quality shoes and socks, food, beanies and All Black raincoats at around a third of retail cost, with security of supply and other benefits to schools, that is the support which should be focused on. It is interesting to note that at the same time that KidsCan is being criticised, the NZ Herald has highlighted the rapidly increasing cost of bringing up children in New Zealand. It is no wonder KidsCan’s waiting list has grown to 174 schools.

• A simple example using a couple of fictitious charities may serve to highlight the issue further, again using public funds available to be spent on programmes (not tagged funds or other non-programme funding).

Charity 1

This charity simply buys its items from a wholesaler.

Total programme Income = $1M Accounting cost of programmes (A) = $300K In kind support (B) = $0 Total programme delivery value (A+B) = $300K

For every $1 donated therefore, the children get 30 cents worth of support.

Charity 2 – sources goods and services in kind

This charity secures in kind support to a value of $500K.

Total programme Income = $1M Accounting cost of programmes (A) = $300K In kind support (B) = $500k Total programme delivery value (A+B) = $800K

For every $1 donated therefore, the children get 80 cents worth of support.

The following year, this charity manages to source all of its programme needs from in kind contribution instead of having to spend cash:

Total Programme Income = $1M Accounting cost of programmes (A) = $0 In kind support (B) = $800k Total programme delivery (A+B) = $800K

The children get the same level of support – 80 cents in every dollar.

However, Its Charities Commission annual return would now show it spends $0 on programme delivery, so, for every dollar donated, it would appear that nothing goes to the children. Whereas, in fact, there is $800K of support being delivered. Of course, the charity will also still have its fundraising and other overhead costs as well so it will appear that 100% of its income is spent on overheads.

KidsCan has now been advised it may be possible to show this and, as it has indicated it will be working with the Charities Commission to do so.

Taking all of the above factors into account, KidsCan’s percentage for the 2008 year in question was 94.5%. This is calculated as per the Charity 2 example above:

KidsCan Income

Total income $1,953,056
Less income tagged or not contributed for programmes ($770,901)
Equals income available for programmes (Y) $1,182,155

Programme delivery

Cost of programmes as shown in accounts $357,289
Plus in kind support $760,000 (approximate, some not included)
Equals total programme delivery (X) $1,117,289

X/Y= 94.5%

So, on this analysis, in terms of shoes and socks, food, beanies and All Black raincoats actually delivered to children throughout New Zealand, for every dollar contributed to its programmes in the 2008 financial year, KidsCan delivered 94.5 cents worth of support.

Why can KidsCan not just tell everyone in advance what proportion of their donation will go into its programmes?

As anyone in the charitable sector will know, charitable donations, grants and other funding is notoriously difficult to predict. (In fact, as can be seen from the daily downgrades of profit forecasts by New Zealand listed companies, everyone has difficulty predicting revenue vs. costs in this environment). Like any other operation – business or not for profit/charity – KidsCan has fixed costs of rent, wages, operating expenses and the like. Ironically, as times get tougher, in order to survive and continue to deliver to a growing need, greater spending is also required on promotion and profile fund raising. There is a fine balance there of course and it is often a balance that is difficult to see until afterwards, when all the revenue and costs are in.

The changes can be dramatic from year to year. As noted above, the revenue KidsCan previously sourced from events run by IOE has collapsed this year.

So, it is just not possible to accurately predict what proportion of every dollar will go to programmes. All that can be done is to look back in hindsight over a number of years to see what a charity consistently does – taking into account all of the above factors.

It was for this reason that KidsCan decided early on to see if it could turn that on its head by funding most of the cost of the Big Night In Telethon in advance.

Why does KidsCan have to pay for anything? Why did businesses not just donate all goods and services to the Big Night In Telethon for nothing? What do KidsCan staff get paid?

Some people have asked why all goods and services were not donated. KidsCan's view is the support given was amazing in this environment. It is just not realistic to expect all businesses to give their goods and services for nothing (although many did). Many SMEs that support charities in New Zealand could not afford to give their services for free and nor, in KidsCan’s opinion, should they be expected to.

My personal view also is not always a bad thing, for charities that can afford to, to pay for services, since, if they do not, the temptation is to be inefficient in the use of those services – with the ultimate result that the service provider gets burnt out by providing an ever increasing commitment for nothing. I have seen his happen over and over again. Paying for services also enables the charity to demand more accountability and consistency of supply. That consistency is very important where, as with KidsCan, those who the charity supports are relying on regular delivery of that support.

There will always be a cost to an event like Big Night In Telethon and to running a charity like KidsCan in general. Again, different charities function differently.

Similarly, running a charity that does what KidsCan does is not something that can be left to volunteers. Paid staff are needed and this is both their passion and their occupation. They deserve to be paid just like everybody else and, to attract and retain the calibre of people needed, KidsCan pays at reasonable rates which are negotiated on an arms-length basis and benchmarked against public service and other charity sector wage rates.

So what does that mean is going to happen with the $2M raised by the Big Night in Telethon?

The intention when KidsCan decided some 12 months ago to proceed with a Telethon was to fund almost all costs of running the event up front, so people would be able to know that most, if not all, their donation would go directly to programmes and would not be eaten up by Telethon costs.

Any charity in New Zealand could have brought back a Telethon. A four year old charity with only six full-time staff and a board of mostly volunteers took a huge risk both financially and reputationally by committing to bring it back after a 15 year gap – commitments given to TV3 Mediaworks, sponsors, venues, supporters and to the New Zealand public. Those commitments were made over a year ago in some cases. KidsCan did that because it saw a need for a step change to address a rapidly increasing waiting list of New Zealand schools – now sitting at 174 schools.

Money is still coming in from Big Night In Telethon and it will be some weeks before final costs and all the figures are checked and audited. However, the expectation at this stage is that almost all of the total cost of putting it on will have been covered by sponsors and in kind contributions. If that holds true, that will mean that approximately 85 cents in every dollar that New Zealanders so generously gave will go directly to programme delivery. That would be a total of about $1.7M. The balance will go to cover the remaining costs of the Big Night In Telethon.

That $1.7M is a large sum of money for KidsCan but it is of course substantially less than some, much bigger, often Government supported, charities receive in New Zealand.

Actual programme costs of delivering to 20,000 or so extra children with those Big Night In Telethon funds will increase of course and KidsCan is working on its budgets now to try to forecast that as well. But, just for comparative purposes, if costs were to remain the same and the same in kind support were to be received for programme delivery, but no further programme income were to be received, then KidsCan would be able to deliver:

• Its programmes to approximately another 20,000 children throughout New Zealand
• Programme delivery of about $2.4M ($1.7M net proceeds of Big Night In Telethon plus $760,000 in kind support)

As a result, for every $1 donated by members of the public to Big Night In Telethon, KidsCan would be able to deliver programmes worth $1.23.

Of course, these figures will change because the Big Night In Telethon costs and contributions have not been finalised and there will be extra cost in delivery. However, on the up side, this calculation does not factor in the funds the Government has recently committed to provide for the food for kids programme (including delivery costs of that programme) and does not include ongoing sponsorship KidsCan is likely to obtain.

However, even if the figures change somewhat, KidsCan trusts that what this does show is the unfortunate perceptions which originated on the Hard News blog, and were seized on for various reasons by other media, are very far away from the reality.

That should not be surprising. In the past year, KidsCan group has been subject to review, audit or due diligence by:

• its own board, the majority of which is independent and non-executive;

• its own external accountant and separate independent auditor;

• the Charities Commission in approving Big Night In Limited as a charity in its own right;

• local community grants boards and the Department of Internal Affairs in the ordinary course of community grant administration;

• the Prime Minister's office and the Ministry of Social Development prior to the Government's recent funding announcement,

• the NZRU as part of a rigorous application process to be accorded the status of official charity of the All Blacks,

• TV3 and Mediaworks in assessing whether KidsCan could deliver on its commitment to bring back Telethon;

• KPMG in a full best practice audit of the Big Night In systems and procedures;

• other major sponsors of the Big Night In Telethon (many of whom had no prior relationship with KidsCan), prior to committing sponsorship.

Since this issue was raised last week, KidsCan has also received support from the Fundraising Institute, which is the body recognised by the Charities Commission as a source of independently assessed best practice. Sponsors, supporters and schools have also reaffirmed their absolute support.

As was promised before the Big Night In Telethon and has been promised since, KidsCan will be issuing a full report in due course once all figures are in and have been checked and audited.

Rick Shera
Chairman
KidsCan Charitable Trust
20 August 2009

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Democracy in the nineteenth century would have been unrecognisable to many of us today. In order to vote, men (just men) had to have certain qualifications – generally associated with owning property. In order to be a Member of Parliament, some form of income was required, because it was impossible to earn a living and represent your electorate. So MP’s tended to be landed gentry, or latterly successful businessmen with vested interests to protect.

In Britain, a radical movement emerged between 1838 & 1850 to further the interests of democracy, and broaden its base to cover “ordinary” people. The goal was to extend the franchise beyond the middle classes: the Chartist Movement is sometimes considered the first mass working class labour movement in the world.

In 1837 six British MP’s and six working class men formed a committee, and produced the People’s Charter of six objectives. It is useful to look at these together, to understand how many of them we take for granted… and how we should perhaps be careful with our outrage:

1. A VOTE for every man twenty-one years of age, of sound mind, and not undergoing punishment for crime.

2. THE (SECRET) BALLOT. To protect the elector in the exercise of his vote.

3. NO PROPERTY QUALIFICATION for Members of Parliament - thus enabling the constituencies to return the man of their choice, be he rich or poor.

4. PAYMENT OF MEMBERS, thus enabling an honest tradesman, working man, or other person, to serve a constituency, when taken from his business to attend to the interests of the Country.

5. EQUAL CONSTITUENCIES, securing the same amount of representation for the same number of electors, instead of allowing small constituencies to swamp the votes of large ones.

6. ANNUAL PARLIAMENTS, thus presenting the most effectual check to bribery and intimidation, since though a constituency might be bought once in seven years (even with the ballot), no purse could buy a constituency (under a system of universal suffrage) in each ensuing twelve-month; and since members, when elected for a year only, would not be able to defy and betray their constituents as now.

Remember, these were all radical demands (even if seen as too moderate by some contemporaries!) but they struck a chord. Meetings were held around the country, and a petition prepared – but Parliament voted to not even hear the petitioners.

There were marches, strikes and violent protest. The establishment resisted the Charter, seeing it as an attack on entrenched interests. The Duke of Wellington deployed cavalry to deal with strikers. People died. While the movement failed, it was only temporary – by 1918, five of the six demands had been enacted.

One of the most important of these was that MP’s should be paid. The reason that MP’s are referred to as representatives is that their role is to represent us in Parliament. That doesn’t mean they should do everything we want – it means we are paying them to turn up, assess information and make decisions on our behalf, so that we don’t have to.

Running a country is very, very complicated. It needs smart people. Just like I want the surgeon about to operate on me to be an elite expert, I want the person looking after my interests to be intelligent, educated and open minded.

I am prepared to pay them for that. Being a politician today is a thankless task. There is a fine line between holding to account and holding to ransom. We have all seen in other countries what happens when we forget that the odd sexual misdemeanour between consenting adults has little bearing on ability to run a country. And dumb home-boy common sense is no qualification to judge intelligence reports (or cerate sentencing rules for that matter).

Our MPs are not highly paid by private sector standards – even our Prime-Minister earns considerably less than senior Public Servants. We must make it possible for our brightest and best to represent us without having to take a too much of a cut to their personal lifestyle.

If someone asked me to maintain a second home in Wellington, I would expect them to pay for it. And if the job was CFO of a business spending $70 Billion a year, I would expect to be spending well over $2,000 a month on accommodation. I want our Ministers to be able to do their job without asking themselves every day whether the drop in living standards is worth it.

Being a good politician is gruelling work – we must rise above our petty, penny-pinching envy and show some respect for people willing to make the commitment to serving our country. It’s too easy to snipe and whine from the sidelines. It’s time we stopped distracting ourselves with this sort of trivial noise and paid attention to real issues.

Bleak is one of those words that seem to sound like their meaning. Its utterance conjours images of leafless, deciduous winter trees, with naked, spiny branches or, if you’ve been there, memories of central Manchester, grey, concrete – a dull place still recovering from WW2.

It’s a word that springs to mind when reading the news online and finding article after article about the ongoing economic malaise, whether job losses, a worsening national credit rating, a struggling export sector or the confronting issue of whether we’re a nation living beyond our means.

But before the bleakness causes you to reach for your Prozac and lose yourself in browsing the latest holiday deals, there is actually much to celebrate. And it’s not the improving housing market and consumer confidence, though that’s good too.

It’s about Freedom. Because while many of us are feeling bleakish about winter, the economy and the death of Michael Jackson, we tend to forget to feel good about something as obvious as the incredible freedoms we enjoy relative to many other places in the world.

As but one example, it’s common for us own-your-own-home loving Kiwis to get negative about the housing market, home affordability and our ability to own and pay off a decent home. Of course it’s only natural to be concerned about something as important as our homes, but it is equally important to keep it in context.

As we hurry to take the PM up on his home insulation offer, more than one billion people around the world live in slums, without any insulation or heating other than a thin wall of corrugated iron and whatever the warmth the sun provides. That’s context.

Most of us probably don’t even consider owning a home or having decent housing to be an incredible freedom, for us it’s what we’ve grown up with, a norm, nothing special, just one of our birthrights.

But the right to adequate housing is not only our birthright; it’s every human being’s right according to Article 25 of the Universal Declaration of Human Rights, adopted by United Nations states on 10 December 1948.

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services.

Unfortunately, due to poverty and human rights violations, Article 25 is one of many rights that remain elusive for much of the world.

For instance, in Cambodia last Friday, 60 low-income families living in the central area of Phnom Penh known as Group 78 were forcibly evicted from their homes by a large security force deployed by the Municipality, without any regard for international law.

The families dismantled their homes after three years of government harassment and intimidation, with no choice but to accept inadequate compensation rather than have their homes demolished.

“We don’t want to leave, we refuse,” says retired mother of nine, Hun Bunkhen. “They keep saying we live on someone else’s land, but we don’t. And we don’t want to fight or argue with them because we can’t win.”

The Cambodian Government has consistently failed to guarantee the right to adequate housing and to protect its population against forced evictions. In 2008 alone, Amnesty International received reports of about 27 forced evictions, affecting an estimated 23,000 people.

According to the 2006 Census, that’s more people than live in the whole of the Auckland City suburbs, St Lukes and Kingsland. And that’s the tip of the iceberg when you consider there are more than 200,000 slum communities around the world.

For most of us we have more than adequate housing and the right not to be forcibly evicted; we have the freedom to live in any area we like, to up and move if we get tired of the feng-shui, to grow vegetables in the garden if we can be bothered and to redecorate, renovate and accentuate if we feel the need.

To celebrate our relative freedom and to raise funds for its human rights work, Amnesty International is urging Kiwis to come out of hibernation this August to take part in Freedom Week, its annual appeal week held from August 2-8.

Amnesty is asking people to fundraise by supporting its street appeal between the 2nd and 8th, or by hosting a Dinner for Dignity or Fundraising with a Dare anytime in the month of August. It’s easy and fun to invite a group of friends over for a pot-luck dinner, some good wine and to each donate what you would have spent if you’d gone to a restaurant.

Amnesty began in 1961, when British lawyer Peter Benenson was outraged when two Portuguese students were sentenced to seven years in prison for raising their glasses in a toast to freedom.

To continue the Amnesty tradition of toasting freedom in the 21st Century, bloggers are encouraged to write a Post for Freedom about any one of the Articles of the Universal Declaration of Human Rights and its relevance to his or her life. Those who Post for Freedom can send through their blog address to [email protected] and the blogger who writes the best post will win a Trade Aid gift basket.

So they can raise their glasses to freedom, people who register a Dinner for Dignity early will be given a complimentary bottle of wine from Waiheke Island’s Destiny Bay Wines.

For more information visit: the Freedom Week website.

Josh Gale, Media & Communication Intern, Amnesty International NZ

The Royal Commission’s report on Auckland’s governance provided some weighty reading, somewhat reminiscent of the infamous Royal Commission on Social Policy in the late 1980s. But this time round, the action has started.

The ambitions are reasonably clear : to tidy up the city’s governance and to achieve much better economic outcomes. The Royal Commission offered some answers to the question of who might be the beneficiary’s of either ambition reasonably clear. Notions such as ‘cultural well-being’ and ‘priority populations’ appeared in parts of the report. But there are some puzzling omissions and a failure to connect certain dots.

Auckland city now has one of the highest proportions of immigrants of any city, certainly in the OECD. Since 2000, the country has had the highest rate of immigration per head of population in the OECD which has put us ahead of Canada and on par with Australia. Auckland has been a major recipient of these arrivals and a little under 40% of the city’s residents were born in another country. (The same figure for Sydney is 32%). The arrival of Indian and Chinese immigrants, especially since 2000, has helped transform the feel of some suburbs and retail areas. In the case of the Chinese community, they now number more than 100,000 and about a third have arrived since 2001 – and nearly all of them have come from China.
This post-1987 migration adds new layers to the earlier and ongoing migration from the Pacific. This immigrant and ethnic diversity did not go unnoticed by the Royal Commission and those who wrote reports on various aspects of Auckland. (Phil McDermott offered some interesting insights on demographic change and future directions). But this is where it gets puzzling. These immigrants are treated as a helpful addition to the local skills pool with benefits for employers. And there are new and culturally different communities that need to be considered in various ways (the dreaded strategy of ‘consultation’ appears to be the main mechanism here) in areas such as health and housing. Diversity is nice but does not appear to be critical to the city’s economic success.

Of course, by the time the government produced its response, many of the acknowledgements made in the Royal Commission’s report were either missing or had been watered down. The response, Making Auckland Greater, was subtitled ‘greater communities, greater connections, greater value’. Diversity was still good but not central to what we do.

But to backtrack, there is a legacy apparent here. The new immigration policy began in 1987 and reflected the hallmark of its political masters. New Zealand would go out and recruit the best and brightest the world had to offer but unlike Canada and Australia, they would be on their own once the set foot in New Zealand. Weren’t most of them highly educated, well experienced and had their own financial resources? Why should the state offer anything to help in their settlement? This meshed well with local business and economic development which was not interested in ‘ethnic programmes’ except possibly as a way of helping impoverished Pacific communities.

We did come to realise that even well educated and skilled immigrants needed some help and there have been a number of developments since 2000. But there are still few in the business community or among politicians who seem to connect the fact that successful city economies are typically marked by cultural diversity and this diversity contributes directly to innovation and international business connections. Richard Florida’s latest book on cities makes this point very clearly.

If the Royal Commission had looked at Vancouver (for example), why did they not pick up on the way that the city uses what they call ‘diversity planning’ as a core part of its business? Cultural diversity is not some exotic backdrop that provides good food and the odd festival. Immigrants have some serious international connections; they know the markets we are selling into; they provide new trade links and opportunities. Locally, they grow new businesses and new business sectors. They contribute disproportionately to research and development (about half of Silicon Valley employees are immigrants).

So I am left with two omissions which puzzle me. Why hasn’t the connection been made between immigration and future economic growth? The Royal Commission discussion tends to treat cultural diversity (which they acknowledge as important) as unconnected to the economic development of the city. The second issue is the one of governance. Here the Royal Commission did spend some time discussing how ethnic communities might be represented in the new structure. But, in the end, rejected recommending any particular arrangements except to say that consultation was important. Which again is disappointing. With the exception of Maori, the sort of democratic systems of participation and representation we currently have are not particularly inclusive. (MMP has been something of a success story at a national level although this might be more by accident than design).

Things might yet change but I am not holding my breath. The government’s response tends to suggest there is limited enthusiasm for any active recognition and or the explicit involvement of ethnic and immigrant communities in the business and political systems that are now being discussed. A city like Vancouver or Toronto could teach us a lot but we seem slow to learn in terms of what works. And we struggle to even begin the process of developing an active and inclusive multiculturalism.

Professor Paul Spoonley
Regional Director (Albany)
Research Director
College of Humanities and Social Sciences
Massey University

Professor Spoonley is among speakets at this weekend's Rising Dragons, Soaring Bananas International Conference.

Henry Ford may not have been a great intellectual, and he entertained some profoundly politically incorrect opinions, but he was an accomplished engineer, a brilliant manager, and a creative inventor and businessman. He is, of course, famous for implementing assembly line production of motor vehicles, but his greatest contribution, according to Lee Iaccoca, was the $5-a-day minimum wage scheme he introduced in 1914. In performing this seemingly generous act, Ford was primarily serving his own immediate interests, and only incidentally those of his workers, but he also understood that if he were to have a market for his vehicles, workers must be able afford to buy them, hence must be well paid. This axiom of market economics seems to have been forgotten during the past 30 years. An anonymous editorial in the Guardian of April 30th 2009, about the troubles besetting Detroit, pointed this out:

... Since the 1970s the average worker's pay has barely risen at all (Detroit is an exception). He or she has had to borrow ever more to enjoy economic security. All that indebtedness eventually caused this crisis. That is the high price to be paid for economic hollowing-out. They may now seem part of the problem, but Detroit's working conditions should really be part of the solution.

The truth of this assertion is supported by comparing the historical trend of inflation-adjusted US wage rates over the past sixty years with the parallel trend in the GDP per capita. It is reasonable to assume that the two trends should show some degree of correlation -- they should certainly move in the same direction, and one would expect their rates of change to be within an order magnitude of one another.

The GDP per capita of the US increased fairly consistently at about 1.8 per cent per annum from 1870 to 1995. Between 1950 and 1995 the figure was a little higher at about 2.2 per cent per annum.

The US Federal minimum wage rate provides a comparison of wage movements with this measure of wealth, albeit a rather rough one since the minimum wage is influenced by non-economic issues such as election cycles. In real terms, the mean minimum wage for the 1990s was 4 per cent lower than that for the 1950s, while the GDP per capita rose by more than 220 per cent

More revealing is the 25 per cent increase from the 1950s to the 1970s, and the subsequent 23 per cent decrease to the 90s. These were not actual wages, of course, but as any struggling employer will know, minimum wage rates are indicative of, and influence, real wages. The corresponding variations for median income were a rise of about 52 per cent from 1955 to 1970, and a fall of about 0.5 per cent from 1970 to 1995. The latter was followed by a rise of about 6 per cent in 1998, after which it remained constant through to 2007.

In the three decades since the 70s, improved productivity has both continued the trend of increasing GDP per capita, but at the same time it has displaced workers by replacing them with new technology. A few of those displaced have joined an expanded elite; most have taken lower-paid jobs; some, perhaps many, have become unemployed or make ends meet with a jumble of part-time jobs. A depressing example of the last is the proliferation of poorly-paid "adjunct" professors in North American academia -- university teachers, employed on a casual basis to front classes for minimal pay, no job security and zero prospects. The reward and status once due to these impoverished academics has been commandeered by a hoard of non-contributing "elite" university bureaucrats.

So the numbers tell us that more-or-less all of the new wealth has been appropriated by the elite, who, in spite of their best efforts, and perhaps because they still bear a remnant of the thrift of their forebears, are incapable of spending all of it. The left-over money must be recycled through the system by spending, or invested in further production. Most of it must be spent rather than invested, since the absence of market for existing products would be exacerbated by the appearance of yet more products from new investment.

The only way to spend this money is to lend it to the non-elite who have little or no disposable income. Various devices, from hire-purchase loans, to mortgages for investment, domestic dwellings and consumer finance have been used to do this. In the US, many such mortgages were predatory or downright fraudulent, implying that there were both an urgent need to get the money into circulation and substantial rewards for those who hurried it on its way.

By-products of this lending were the feeding frenzy of CDOs, short-selling and other antics of the money markets. These activities did not cause the ultimate economic problems -- it may be that financial markets are little more than bit players in the grand pageant of the economy -- although because they control large accumulations of appropriated wealth, they can cripple the economy by blocking the flow of cash, as the banks have so dramatically shown.

The outcome of all the frantic lending was, of course, what financial commentators term "economic meltdown". In fact, it was not a melting at all -- it was solidification. The flow of money froze when it dawned on at least one Wall Street financier or banker that maybe some of this money that the firm had so generously loaned might not actually be repaid, and the hard-to-sell CDOs accumulating in the strong-room might not be AA+. Even worse, perhaps the same thought might occur to other bankers, who might put on the brakes. We'd better lock up all our money, try to offload all the doubtful stuff and hope that the creditors don't come calling. But the creditors sniffed the air, smelt panic, and they went calling.

So the portcullises of the big banks lining Wall Street slid silently down, locked into place, masking the glittering atriums -- and the roller-doors fronting all the little betting shops off Wall Street clattered shut. The grand bankers and financiers clambered into their corporate jets, flew to Washington, and said to Ben Bernanke and Henry Paulson: "Money! Give us money", and the frightened little bookies crept weeping home to their wives.

It is not clear that Bernanke and Paulson had the least idea about how they should respond to the remarkable spectacle of arch-capitalists from the heart of American free enterprise begging for welfare. It has been argued that giving vast sums of money to Wall Street bankers who have efficiently demonstrated their craft by losing even vaster sums of money might be a little unwise, but it seems that the only principle guiding world-class economists is the urban myth that since the major cause of the great depression was the reluctance of governments to spend, the solution must be for governments to splash money around.

All solutions offered by economists carefully avoid mentioning the vanishing "demand side" of the economy, since the consequences, which involve paying fair (or -- gulp! -- generous) wages to the workers, are far too gruesome to contemplate. It is much better, more comforting, and less likely to cause a ruckus just to recycle all the old stuff about regulation, updated with fashionable terminology, from the last economic downturn.

If the United States economy, and by implication the global economy, more or less recover, as well they may, the cycle will repeat, since the elite will not forgo any part of what they regard as their due without an enormous fuss. The recent and continuing spectacle of British parliamentarians helping themselves to public money through a variety of rorts is testament to the sense of unlimited entitlement that infests, and paralyses the elite. The late, paralytic Parliamentary speaker's first reaction was not to address his problems, of which he, not being entirely stupid, was doubtlessly aware, but rather to seek legal means of preventing a newspaper revealing the shyster antics of his charges.

Change in societies and their economies are non-linear -- they are chaotic: long periods of stasis mingle with sudden changes of state; new departures emerge, unforeseen and surprising. It is this unpredictability that makes the art of economic prognostication so dismally erroneous and the study of history so fascinating. In spite of Ford's dismissive opinion of history, wittingly or not, he changed its course: efficient production and the application of his axiom led to the consumer society, in which goods and services, previously denied to all but the elite, became progressively accessible to the majority, at least in the developed west. What we now may be seeing, as the purchasing power of the majority fades, is the decline of consumerism and a change in the form of society.

The nature of any new order is quite uncertain, but the throttling of creativity by the deadweight make-believe managerialism observable in education, research and business; the steady formation of Kafkaesque bureaucracies in governments; the detachment of financial bodies from productive enterprise; and the absence of any means for a fairer distribution of wealth are not causes for optimism.

Ken Aldous, scientist