Helping Ronald McDonald House evolve an important new source of funding
In 2018, CEO of Ronald McDonald House New Zealand Wayne Howett began exploring how the charity could break away from traditional fundraising and generate revenue themselves.
Keeping families close when a child falls ill
There are 368 Ronald McDonald Houses in 64 countries around the world, providing a caring home away from home for families travelling to access medical care for their child.
Wayne says, “One of our founders once said to me, a family with a sick child is a sick family. And nothing could be truer. Families who must travel to get medical treatment for their children are going through trauma. They pour all their energy into caring for their sick child. But who looks after them? That's where Ronald McDonald House comes in. We provide compassionate hospitality for families looking after a critically ill child.” “
Our aim is to keep families close to their child because we know their child’s recovery rate increases when they have their family close by. It’s that kiss from their parents at the end of a hard day, even their annoying little brother coming in and threatening to eat their ice cream … those things distract from the pain a child’s going through.”
Property with purpose
Wayne explains, “We need buildings to provide accommodation. But those buildings are a means to an end. Our accommodation services are outstanding, but what families remember most is our people and the care we offer. For us, property is a necessary evil. And it’s not cheap either, because we buy in expensive locations close to hospitals.”
“One question we have asked as an organisation is, how do we make sure both the new assets we develop, and our existing assets, work harder. If you look at organisations with similar property portfolios, they leverage those assets to get a return of 8-15%. We don’t.”
“In 2018, we started exploring how we could generate between 20-30% of our revenue ourselves. We started by asking, well, what are we good at? We’re really good at providing accommodation. So, we began to look at how we can use our accommodation assets better.”
New Zealand has one of the highest number of charities per capita globally. There’s one charity for every 144 people in the country. So, at Ronald McDonald House, we’re constantly looking at how we may do things differently and use what we have more effectively.”
Confidence to innovate
Wayne shared his new revenue idea with his fund manager as sounding board. “Our fund manager said to me, ‘That's a fantastic plan’. And I said, ‘This is something we’ve never done before as an organisation so I need to do a sense check. Does it make sense for us financially? Is there an appetite for it in the market and from investors?’” His fund manager said, “I know just the guy to help you.” And he introduced Wayne to James and the Gemelli team.
Wayne recalls, “Gemelli gave us a really good picture of what leveraging our accommodation assets to raise revenue might look like and whether it's feasible. And not only do the numbers suggest it’s possible, but Gemelli also socialised the idea with a few key investors who got excited. It was a very pleasant surprise when James came back with our draft report and said, ‘I hope you don't mind, but I've taken the liberty of talking to a few people in my network’.”
“That was outside Gemelli’s scope of work, but James did it because he believed we’ve a strong opportunity and he wanted to sense check it for himself. And that added huge value to me. It gave me the confidence to sit down with our property taskforce and present the new revenue idea feeling confident it would work. I could have sold our taskforce on the idea based purely on the numbers. But being able to say to them, ‘We've tested this idea with some people who’ve the capacity to invest, and they’re interested,’ was the icing on the cake.”
“Testing the idea with investors showed our taskforce that it’s not just me who thinks this is a workable model, other people are interested as well. It gave them enough comfort and certainty to give me approval to explore the idea further. Now we're looking at how we can develop a piece of land using this new model. And that's all based on the work we've done with Gemelli.”
Invest in sense checking new revenue models
We asked Wayne what advice he would have for another charity or not-for-profit organisation looking to make an innovative capital investment.
“Charities need quality advice just as much as corporates. And that’s where Gemelli come in. Gemelli offer great value, and because of their local focus, they propose concepts tried and tested in the New Zealand market.”
“It struck me straightaway how Gemelli asked very good, detailed questions. That showed me they were engaged and spoke volumes about what they stand for. Gemelli aren’t a team who come in, do a piece of work, then bugger off. They want to know your challenges and opportunities so they can add more value. They go above and beyond. So, my advice is, if you’ve got a new revenue generating idea, invest in a sense check with Gemelli first.”
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