By Tim Boreham
For serial entrepreneur and problem-solver Geoff Harris, tethering social good to solid commercial principles and enabling others to unleash their full potential is all part of the playbook.
Harris says his approach to giving has evolved over time, but what has not changed is his core belief that good business principles and helping vulnerable sections of the community are intertwined.
“In the early days I thought ‘why would I give anything to the community, that’s up to the government via taxes’,” says Harris, who co-founded Flight Centre with Graham Turner and Bill James. “That was my 1980s view. But later I thought we needed to create a workforce where staff feel proud about the values of an organisation and help the community where our customers are. So it was apparent that doing something for the community was good for businesses, as well as for the community itself.”
Harris remains a 7.6 per cent shareholder in the ASX-listed travel group, which sold close to $22bn worth of trips last financial year. “Over time, we became more successful [at Flight Centre] and we had more free cash,” he says. “I took a step back after being in the management team for 20 years; I wanted to do some different things in my life and was donating directly to various causes through the 1990s.”
These days, those various causes have been supplanted by a more formal giving strategy, channelled through the Harris Family Foundation created in 2020. The foundation is very much a family affair, with son Brad overseeing day-to-day operations, daughters Alicia Bresolin and Caitlin Buerckner sitting on the board and Harris’ ex-wife Susan still involved.
“As a businessman, I believe in entrepreneurship and I believe we should do something for the community as well,” Geoff says.
The foundation is set up as a public ancillary fund (PAF), by which the money remains in the structure but earnings from investments are dispersed in perpetuity. “Hopefully we can top it up so that every year the corpus gets larger, the returns get larger and every year you can give away more and more,” he adds.
Over three decades, Geoff and Susan donated more than $35m via their own personal foundations. “The Harris Family Foundation is the next iteration of our giving structure, […] a central foundation in which all of the family members are stakeholders,” Brad explains. Current priorities are at-risk youth, homelessness, health and medical research, disability support and environmental causes.
LEVELLING THE PLAYING FIELD
A modus operandi for the foundation is helping charities with their occupancy costs, which is usually the second-biggest expense behind wages.
Harris was a board member of the Reach Foundation, the youth support charity co-founded by the late AFL footballer Jim Stynes. After a fruitless six-month search for premises for the charity, Harris bit the bullet in 2002 and bought a run-down former knitting mill—now known as The Dream Factory—on Wellington Street in Collingwood for $2.5m. He negotiated with the state government to forgive land taxes and with the local council to exempt the building from rates and other charges. “We begged, borrowed or stole the materials to do it up, then rented it to Reach for 50 years at $5 a year,” he says. “Pre-Covid we were assisting 13,000 kids a year; that’s a building for them forever and a day to do their great work.”
Similarly, in 2013 he acquired nearby Cromwell Manor for $2.3m for STREAT, a not-for-profit social enterprise that teaches hospitality skills to the homeless and at-risk youth.
“I see social enterprises as a disruptor of the charitable industry because it gives you a sustainable economic model,” Harris says.
STREAT, for example, has a café, roastery and catering operations to derive income. “STREAT was 82 per cent self-funded from its business activities in 2019 and aimed to get to 100 per cent by 2022, but Covid didn’t allow that,” he adds.
There are around 12,000 social enterprises in Australia, which together employ more than 30,000 people, according to the latest report by certifier Social Traders. By comparison, there are around 60,000 registered charities. Harris laments that Australia remains behind other countries in accepting and regulating social enterprises; “When STREAT was set up and it derived profits, the government didn’t know how to handle it. They were a charity, yet they were running a private business. [The state] just didn’t have the regulatory framework in place.”
The Harris brand of philanthropy is less about money than providing direct mentorship and business advice. “Usually the founders of charities are incredibly passionate and excellent people, but they don’t have the business structure and disciplines to ensure the organisation is running well,” he observes.
CHANGING THE GAME
Helping vulnerable youth has a particular resonance for the 72-year-old. “I had an issue when I was a teenager; I was bashed in the school yard over a six-month period,” he recalls. “As a 14-year-old that really affected me. Luckily, I had a strong father figure who helped me out. I really feel for kids who didn’t have a father figure and lose their way.”
He cites one teenage bullying survivor he met through charity work; “He was this cheeky kid who had issues going in and out of the courts, and we just clicked. He ended up being a truck driver, which was his dream job, [proving] there’s a nugget of gold in there somewhere, you just have to get it out.”
Then there is the family’s $60m Gate 8 building development, a six-level philanthropic and entrepreneurial hub taking shape in East Melbourne—a drop punt away from the Melbourne Cricket Ground. The Jolimont Street project, due for completion mid-year, is named in reference to the hallowed sporting ground’s seven entrances.
Designed by urban design firm Rothelowman, Gate 8 will devote about a third of its space to social enterprises and charities with the hope that colocation will enable these organisations to learn from one another. An entire floor will be donated to the administrative teams of not-for-profits such as STREAT’s training program and the Community Spirit Foundation (formerly the Cathy Freeman Foundation). The development marks the grandest manifestation of Harris’s real estate assistance model to date, with $550,000 of collective annual rent expected to be foregone. “If charities don’t have to pay [rent] it gives them the equivalent of an annualised ongoing donation, and these funds can go straight towards their programs,” he says.
Gate 8 will also house dozens of startups and SMEs alongside Harris Capital and the Harris Family Office, plus a ground-floor café run by STREAT that will benefit from peak foot traffic during sporting events.
As former vice-president of the Hawthorn Football Club, Harris has spent many happy hours at the MCG (especially during the club’s streak of three consecutive premierships between 2013 and 2015). But Gate 8’s proximity to the ground is about more than sentiment: the venue is well served by public transport, which also makes it easy for disadvantaged clients to access the building and its services. The sports benefactor has also integrated a 130-person auditorium into the design in order to host youth workshops when the ground is not in use.
Beyond the historic home of Australian sport, the family’s biggest donation to date is a $10m pledge towards Hawthorn FC’s new training base in south-east Melbourne, which incorporates a community centre for women’s football.
ONE-TEAM MINDSET
Then there’s Straight Bat, the family’s recently created private equity (PE) fund. Unlike traditional PE firms that tend to take control, cut costs and then divest, Straight Bat advocates a genuine partnership with existing proprietors. “We buy a substantial percentage of the business, sit with the founders and aim to pay 10 per cent dividend to investors plus grow the capital,” Harris explains.
Brad Harris says the investments range from minority to majority positions and are intended to be held for the long term (the fund has an 80-year, open-ended structure). “We are not interested in flipping them every four or five years like a traditional PE company, we work with the founder and aim to grow the business in a sustainable and structured way.”
As such, the investment strategy might span several decades, with a view to succession planning for the next generation of Harrises. With $250m under management, the fund is defined by “relatively boring, steady-Eddie investments that can perform through all cycles,” Brad says. “We are not looking for rocketships or startups that might make or lose 200 per cent. As long as they continue to be successful and we are paying annual income dividends of over 10 per cent to investors, we don’t have to sell the business to recoup the capital.”
At the time of writing Straight Bat has invested in seven companies, including the law firm Wotton + Kearney. “Law firms tend to grow consistently without shooting the lights out, and rarely go to zero either,” Brad notes. “We also have a smoke alarm manufacturer [Red]. We like them because [the product is] a legally mandated requirement for every building in Australia so there are at least 400,000 purchased every year for new buildings.”
Geoff Harris adds that Australia’s 60,000 SMEs remain the backbone of the economy. “If we can invest in these SMEs and, through the collective Straight Bat business skillset, enable the proprietors to grow them to large businesses, we are doing a good thing as well,” he says. “It’s a noble investment category because it is the engine room of Australian productivity growth.”
Harris suggests there are several transferable learnings when it comes to leadership in sports, social enterprise and traditional business. “You need a clear vision and great people in key positions,” he says. “The CEO needs no fewer than six of those ‘A-graders’ as direct reports, and must delegate and communicate well. Honesty, transparency and a humble mindset are important… as is having a bit of fun along the way.”