National Forum

The Revolving Fund Concept - Keys to a Successful Operation
Abstract for Michael Looker
Director, Trust for Nature
Bushland for Sale
11-11:15am, Wednesday, 21 March 2001

The concept for a revolving fund to purchase significant native habitats, place a conservation covenant on the title and then on-sell the land to a caring owner has been a tool used by Trust for Nature to increase covenants over the past 10 years. The base fund was assisted enormously by a 1999 National Heritage Trust grant that provided an important boost to its activities.

The concept takes advantage of conservation land on the market for sale and for those wishing to gift land that has conservation value to permanently protect it. Money raised from the sale of the bequeathed land is recycled to buy further properties with significant conservation value. For those gifting land this means that their gift will continue to purchase and protect more conservation land over time rather than stopping with the land gifted. The revolving fund also provides an important mechanism for the purchase and exchange of land with the State government.

To be successful this fund needs to be carefully structured and monitored. A business plan is essential to identify the major cost factors and influences that need to be taken into account. All the costs associated with purchasing land, placing a covenant on title and on selling need to be realistically anticipated.

Managing this type of fund requires good knowledge of the rural real estate market. Trust for Nature employs a person with 30 years experience in the Real Estate Industry as its Revolving Fund Manager. The Revolving Fund Manager negotiates the purchase and sale of properties and monitors the structure of the fund. A separate cost analysis is maintained which indicates the valuation, purchase price, sale price and associated costs.

Land is only purchased at or less than the valuation price obtained from an independent professional valuer familiar with the area in which the property is located. The assessment undertaken of the marketability of the property in addition to the critical evaluation for conservation values is important to the success of the fund. Aspects such as good access, location to major regional centres and (especially) Melbourne, availability of areas that can be used for productive or recreational purposes and appropriate sites for a dwelling are all-important to its saleability.

Targeting markets i.e. people (individuals or organisations) who value the natural environment and see a covenant, as a seal of approval for its conservation values is essential. In addition to obtaining the right sale price for the property finding a caring owner is important for successful stewardship. If the conservation values are to be maintained in perpetuity on-going monitoring and management is critical. Having a sympathetic and knowledgeable owner greatly assists in achieving the desired conservation outcomes. Marketing to select groups and identifying real estate agents who are prepared to market bush blocks are two ways in which caring buyers can be found.

Enhancement of the capital base of the fund can be achieved through selling properties for a greater value than the purchase price, via cash and grant donations and gifts of land.

The revolving fund is an exciting and valuable new tool that is still evolving. There is still much to learn about its marketability, accountability and how to maintain cash flows. However, so far it has proved worthy of much greater expansion to become a serious mechanism for conservation on private land. A summary of the achievements of this fund is provided in Trust for Nature Conservation Bulletin, Winter 2000.