1958 NEW ZEALAND GAZETTE No. 83

Custodian:
Chase Manhattan Bank, Sydney.

Chairpersons Report 1999

The Community Trust of Otago has had another very good year. Our income has been very pleasing and we committed over $10 million for distribution into the community. We are starting to realise our potential—creating or adding value as well as sustaining activity—but thankfully are by no means set in our ways.

Investment Performance

Readers will see from our accounts that the trust is again able to report a good result. Our income was $17.7 million, our managed funds returning 10.3 percent before fees. When we consider the real (inflation adjusted) rate of return—which is what we are interested in, because of the need to preserve our original capital—this return is about twice what we expect to earn on average.

The result enabled us to further improve the size of our reserves. What that means is that we are well placed to maintain a consistent level of donations to the community despite an inevitable degree of volatility in investment performance.

Because of this strong financial position trustees have recently been able to modestly increase the proportion of equity investments in our portfolio. The reason for doing so is, of course, to increase our long-term average predicted income and therefore what we can distribute to the community. I emphasise that this is a decision for the long term. We would be delighted to have another good result in the current year, but we are not expecting that.

Donations Highlights

The trust committed itself to over 900 donations, totalling over $10.1 million. I mention only a few highlights to show the range of activity supported.

The number of “small” (i.e. less than $10,000) donations was 792. We continue to see this programme, which helps to sustain community activity of all types, as most important.

We committed $1.7 million to all the primary schools of Otago for the installation of technology, which we expect will invariably be information technology. This is modelled on our existing scheme for secondary schools, which is developing wonderfully well. We want Otago students to get simply the best start in the country.

We committed $300,000 to a publicity resource that will be available for Otago interests to use for the good of themselves and the province. We expect this will be useful for business (including tourism), civic, educational and events promotion. It will include a videotape and film library, a commercial 30 minute videotape and a “Southern Man” compact disc. We are excited about the way it is shaping up, and expect that individuals will also be interested in the videotape and the CD. The millions who watched the Super 12 final on Sky Television saw a 3 minutes initial compilation of this visual and audio material, and feedback from that it was so powerful.

Otago and Southland cancer patients will receive more prompt and accurate radiology treatment as a result of our $456,000 donation, together with $274,000 from the Community Trust of Southland, to the Oncology Department at the Dunedin Public Hospital to replace ageing equipment there.

We continued to heavily support sport and recreation, believing that the opportunity for active leisure and the pursuit of excellence both separately add to life fulfilment. An exciting new development is “Sportsforce”, a strategic sports support program to be managed by Sport Otago. This will involve 6 sports and more could possibly join later.

The trust has wanted to provide more encouragement to arts and cultural activity, mostly for its own sake but aware also of the positive image that will be transmitted outside the region. The most prominent this year has been to the Frances Hodgkins Fellowship and the Chinese Splendour exhibition. Next year should see some interesting new developments.

The Direction of the Trust

Our strategic plan is under continual review, as are our policies and processes. There are no competitive pressures from outside the trust and so we must generate a culture of improvement from within. Our personality is maturing and the community and operational characteristics that we value are becoming established.

I would like to provide a brief comment about economic development.

Trustees are conscious that economic good health underpins general community good health and are always conscious of this when considering donations proposals.

Merely making $10 million of donations—which becomes spending of one sort or another—directly creates economic activity, of course. For example, if we make the difference on whether a swimming pool proceeds or not, we help local builders and can provide family recreation. In this way, we earn income from outside our region and bring that back to invest in strengthening the local economy.

But trustees also support or generate projects directly intended to have an economic impact. The video project I have already mentioned is just one of many good examples. Because of the trust’s financial strength, we are uniquely placed to provide a resource that can be used by others to attract business sales or investment, tourists, students, conferences or future residents. To these direct effects can be added the intangible benefits flowing from the boost that this project might provide to provincial pride and self belief.

Trustees earlier this year made the formal decision to consider whether there are any ways in which we might make other imaginative contributions to economic good health, and this consideration is under way. But we do not expect that we will directly invest in any business, either by way of ownership or by way of being a banker, for any reason other than to meet our investment goal. Our investment goal is to obtain the best possible income at our appropriate level of risk, because that is what will allow us to maximise what we have to spend locally. Nor do trustees believe that the best way for us to assist economic development in the region is for us to attempt ourselves in some way to “pick winners”.

Trustees do not have closed minds on these matters. We want only to do the best for Otago, and we are always open to