Bryce Edwards: The negative social impact of taxpayer-funded partisan charities

Whenever politicians dole out taxpayer funding to groups or individuals, they must do so in a wholly transparent way with due process to ensure conflicts of interest don’t occur and that the country receives value for money.

Unfortunately, it’s not clear that this has occurred in the announcement this week that the Government is funding the “I Am Hope” charity. I Am Hope will receive $24m over four years to provide mental health services to the public under the name “Gumboot Fridays.”

It is quite possible that the “Gumboot Fridays” project is very worthy, and hence, the millions are very well spent. Yet, the usual processes for tendering such services weren’t used, which should ring alarm bells for those concerned with integrity in government. Furthermore, there are a number of disturbing connections between government funding and National Party influences.

Charity funding justified by Bill English’s business

In awarding the $24m of funding to the I Am Hope charity, the Government has justified the investment with the reference to a study carried out on Gumboot Fridays by a company founded and chaired by former National Prime Minister Bill English. His ImpactLab business works in the “social investment” industry, providing financial evidence to community groups, businesses and charities about the effectiveness of their social activities. English’s company evaluates a charity’s work, providing a monetary estimate of how much good that charity does. This can then be used as evidence when asking for funding.

In the case of the I Am Hope charity, English’s company was commissioned, and a “GoodMeasure” summary was produced that said Gumboot Fridays was making a social investment return of $16,082,265, and that this amounted to a profit of $5.70 for every dollar invested.

The methodology is not widely accepted as robust, but those in National are increasingly seeing it as the future of charity and government welfare provision. It is hoped that the state can increasingly contract out services like social housing and healthcare to charities and companies, perhaps based on Bill English’s ImpactLab evaluations.

However, the model is also controversial because of English’s close relationship with the Government. The former prime minister influences top ministers like Christoper Luxon, Nicola Willis, and Chris Bishop. His influence was demonstrated when he was recently picked to review the social housing agency Kāinga Ora.

English’s company is now run by his daughter, Maria English, and has been staffed by numerous National Party activists. For example, in last year’s election, ImpactLab’s project leader Emma Chatterton ran against Labour’s Chris Hipkins in the Remutaka electorate.

National Party connections to the I Am Hope charity

The I Am Hope charity is increasingly viewed as a National Party charity. Until recently, the CEO was Troy Elliott, whose father had been a National MP. Elliot is also active in the National Party, and he even attempted to get the National nomination to be the Botany MP in 2019 but was beaten by Christopher Luxon.

The new chair of the charity is Naomi Ballantyne, who has been a financial donor to National in recent years. During the 2020 election year, she donated $20,600 to the party; last year, she made three further donations totalling $6840. She made her fortune in the life insurance industry. For more on this, see Paula Penfold’s story, Gumboot charity’s links to National questioned after $24m funding boost

Ballantyne has responded to suggestions that National has given her charity taxpayer funding, saying, “I had absolutely no influence over that decision.” She pointed out that the decision was made before she was appointed chair of the charity earlier this year.

Mental Health Minister Matt Doocey has also claimed that the donations made to National have “had no bearing” on the decision to fund the charity. And Prime Minister Christopher Luxon has said it would be “outrageous and ridiculous” to suggest any conflict of interest has occurred. He’s complained that “Mental health is not something that you politicise” – see RNZ’s I Am Hope chair’s donations to National questioned after $24m Gumboot Friday pledge

The founder and key spokesperson for the charity, Mike King, has also pushed the same line, warning the Labour Party not to question the funding, which would be “political point-scoring and mudslinging” – see Emily Brookes’ Mike King boots Labour for ‘political point-scoring’ on youth mental health

King pointed out that Jacinda Ardern’s government had given his charity $600,000 in 2021, arguing that Labour’s questioning partisan connections would be “a classic case of the pot calling the kettle black” and “ironic and hypocritical”.

How the funding for I Am Hope came about

National campaigned at the last election about the need to direct more of the government’s welfare expenditure into the charity and community sector and has been championing Bill English’s social investment approach as a better use of taxpayer funds.

Then, in negotiating its coalition arrangements with New Zealand First after the election, National agreed to a proposal to give more money to I Am Hope without resorting to the usual procurement process. A decision was made that the funding would not be contestable.

Since then, Health Minister Matt Doocey has progressed the coalition agreement decision. In April, he spoke about this in Parliament, saying: “This Government has made a coalition agreement to fund Gumboot Friday, and, I would expect, when that decision is made, then the proper procurement approach would be taken”.

Of course, given that the money had already been agreed upon, it was always going to be impossible for the Minister to carry out a proper procurement process. It is not apparent, however, that he has sought advice from the Ministry of Health about whether the funding arrangement for I Am Hope could be justified and whether the $5.70 figure from ImpactLab is credible. The Treasury, however, advised him that providing the money to the charity would involve risks due to ignoring the procurement rules.

Questions about fairness and transparency

Labour’s health spokesperson, Ingrid Leary, has been asking questions about the funding in Parliament and putting in Official Information Act requests. But she claims she’s not been provided with clear answers about the process for delivering the $24m. She says such processes ensure decisions are made “in a fair, transparent way, giving value for money and ensuring appropriate standards of clinical care.”

Without any evidence that a fair and transparent funding process has occurred, Leary asks the following question: “Is this how NZ works now — rich people can donate a few thousand to get their charity a big contract and small community organisations don’t get a look-in?” She argues: “It’s tin-pot politics that makes a mockery of fair process and creates mistrust in our democratic systems.”

It’s not just partisan opponents who are concerned. Another charity, Changing Minds, has spoken out, saying, “Investment into mental health and addictions needs to be a fair process. It feels as if the process is stacked in favour of one organisation over the many others which also do amazing things”. Paula Penfold reported that the charity’s boss, Jodie Bennett, said, “There was concern within the sector around approving a significant amount of funding without observing an official RFP (request for proposal) process.”

Future social investment by the National-led Government

Hopefully, the decision to award $24m to I Am Hope is a coalition agreement aberration rather than a new precedent. However, in responding to the controversy this week, Matt Doocey has said: “In this government, we will be investing in services that can demonstrate a social return on investment” – see Paula Penfold’s Govt accepts charity-commissioned report of its own worth at face value, prime minister doubles down

Others in the health sector have also raised concerns that this is “not a one-off” but likely to be the first of many contracting out arrangements with very loose processes. It’s, therefore, important that the Government provide more clarity on how it came to this decision.

There will also need to be more scrutiny of the use by both the community sector and the Government of the value-for-money assessment provided by Bill English’s ImpactLab – especially when the reports are commissioned by the organisations that benefit from the evaluations. That’s simply not independent. The social impact of such opaqueness is very damaging to society and democracy.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of DTNZ.

Image credit: Unsplash+

Dr Bryce Edwards is Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington.