Mending the Money Trail

Tuesday 30 August, 2011

Warrane residents were encouraged to pursue social goals in their future careers - rather than mere profits - by one of Australia’s most influential philanthropists, Mr Michael Traill AM, when he spoke in the College’s main common room August 24.

Mr Traill, an experienced investment adviser and the founding CEO of Social Ventures Australia (SVA), an independent non-profit organisation which supports the work of many charitable organisations, spoke of how he became involved in social works.

He said he had worked for 15 years at Macquarie Bank helping to build a private equity business which began with a $50 million fund in 1989 and grew to a $220 million fund. But in 2001 he experienced a midlife crisis.

“I always believed that you have to be passionate and excited about whatever you are doing with your life,” he said. “If you are not excited about it what’s the point? “In 2001 was In the middle of a big project investing in Repco. At the same time I was involved in coaching the Willoughby Wildcats under-12 footy league. I remember waking up at six in the morning thinking about a kid named Paddy. He was the most extraordinary kid with great talent, but he was having problems at school and had been a bit quiet for a few weeks and so I was thinking about promoting him to help with his confidence.

“So here I was, about to take a $20 million investment to our investment committee on Monday, and I was not thinking about that. I was thinking about positional changes in my kid’s footy team. When I reflected about what really behind that though, it was a revelation: I was most interested in what I could do to have an impact on one kid’s life. That meant more to me than what I was doing at Macquarie.” So when the opportunity came along to set up SVA in 2002, a project that was “about education and disadvantage”, Michael decided to take it. “The goal was to harness talent from across the sectors, but particularly people with business talent, to use their skills to do something constructive about social issues,” he said.

“We wanted to help people who wake up every morning thinking about how to help people like Paddy.” Michael told two stories to help Warrane residents understand what SVA was about.

The first was about the Beacon Foundation which aims to help reduce unemployment and dependence on social security.

“It all started in North Launceston in a tough High school called Brooks High school,” he said. “In another part of town there was a nice school called Riverside High and the local newspaper, the Launceston Examiner, ran a story about a very successful engineer named Bill Lawson, an Australian of the Year, who had become involved in Riverside High helping Year 9 10 11 boys with career planning.

“On the wrong side of town, the headmaster of Brooks High School called Bill and challenged him. He said if he was serious about helping this community he should consider helping out at Brooks as well.

“He said: ‘If you can change the boys at my school you can change the world. I feel like a failure as a headmaster. I say that because when kids leave this school, more than 30 per cent of them go straight on to the dole. If I talk to those kids, in many cases, they will say why not? Dad’s on the dole. Sometimes grandad’s on the dole. This is a place where the expectations are very very low.’

“Bill said: ‘I do know this community and I do know a lot of businesses in this community, and if you walk with me and we engage them with the school, I think we can help make a difference.’”

The experiment was called “No Dole” because it was based on the idea that the dole would not be an acceptable outcome of completing schooling. Instead, the kids made a commitment to stay in further education or to get a job placement.

“There were a series of programs behind that,” Michael explained. “You might have a bit of a misfit kid - he comes from a troubled background, he might be a bit of a petrol head. Well he might be given a mentor who runs the local Bob Jane T-Mart. He might give him some work experience there and that might lead to a job placement or to the kid saying to himself ‘this is really hard work’ and at the same time his maths teacher might say: ‘Yyou are actually smart mate - you could actually stick around at school and do well if you had a crack.’ The kid starts to think maybe I can.

“The data from that noble experiment in 1993 at Brooks High School was that in the first year, instead of 30 per cent of the kids dropping out, only 13 per cent went on the dole. So they thought this is working and they did it again the next year. All the kids in Year 10 signed a statement saying they would not accept the dole as an outcome of their year at the school. The number the next year was only 1 per cent – only 1 per cent of those kids were left on the scrapheap. Then zero percent.

“So in the space of just three years, that school was transformed from the sort of school where, if you were an employer, and you got a CV from one of its students it would go straight in the bin, to a school which was a school of choice for employers.

“That is social change. Why? The community is engaged, families are engaged. Fundamentally and profoundly, kids are expected to do this, and are reinforced about their potential in every possible way.”

When SVA came into contact with Bill Lawson in 2002, the program was in six schools. Mr Lawson suggested that the SVA could help with contacts to help with business planning and with funding.

These days Beacon is in 124 schools around the country. There are 14,000 kids in the No Dole program. “We know that program is working,” Michael said, “because the school retention rates in these schools, which are typically the toughest schools in the country, are typically 11 to 13 per cent better than peer-group schools.

“At SVA we connect the dots – we access funding, we access networks, we help them to be very clear and disciplined and accountable, This is all about the planning and the programming for the business students applying business disciplines to social change. Find a social entrepreneur, back them in the right way, help them to grow and they can help to change the world.”

The other example that Michael spoke about was the $165 million acquisition of 659 ABC Childcare Centres. SVA put together a capital raising and drew together support from a network of people, including leading accountants, lawyers and private equity players to support the acquisition.

In all, the project now employs 14,000 staff members and helps 70,000 children from disadvantaged backgrounds.

“We used business disciplines for a social purpose,” Michael said, “based on the simple and powerful premise that the most powerful thing we can do for kids is to look after them, and teach them and love them between the ages of 0 to 5.”

The project now generates well over $600 million a year in revenue and a profit of $50 million a year.

“All of that profit we reinvest to improve the quality of learning to do positive things in addressing need and disadvantage.

“We are addressing the question of the root causes of disadvantage and educational under-performance.

“All of the studies say that what kids absorb between the ages of 0 to 3 is profoundly a product of the environment in which they grow up. Whether they are loved nurtured cared for, and read to by their parents.

“If that doesn’t happen by the age of three, we as a society and that kid will be playing catchup for their rest of that child’s life.”

Michael said this was the basic problem that the ABC centres, with the support of SVA, were now focused on helping to solve.

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