The recent inquiry report by the Productivity Commission “Future Foundation For Giving” (the Report) sheds light on the evolving landscape of philanthropy in Australia and offers comprehensive recommendations to foster a more robust philanthropic sector. This article provides an overview of the Report’s history, key findings and recommendations aimed at enhancing philanthropic activity across the nation.
A brief history of the Report
The Report was commissioned to evaluate the effectiveness of current policies and practices and propose strategies to improve the impact of charitable giving. With a focus on identifying barriers to philanthropic growth and exploring ways to encourage more Australians to contribute to charitable causes, the Report aims to promote a more giving society.
Key findings about the state of philanthropy in Australia
The Report highlights several findings about the state of philanthropy in Australia:
- Diverse giving patterns: While Australia has a strong tradition of giving, the patterns of philanthropy are highly varied, with contributions made for a range of complex and multifaceted reasons that tend to change over time.
- Barriers to giving: Various impediments, such as complex regulatory requirements, lack of awareness, and limited incentives, hinder more widespread philanthropic engagement.
- Potential for growth: There is substantial potential to increase the level of giving, particularly among individuals and businesses that currently do not engage in philanthropic activities.
Recommendations to address the barriers to giving and leverage opportunities for growth
The Report recommendations aim to address the identified barriers and leverage opportunities for growth. These recommendations are not binding and will only be implemented if and when they are adopted by the Federal Government.
Some of the key recommendations include:
- Remove the $2 threshold for tax-deductible donations: the current threshold is a product of history, and removal may serve to increase giving (without necessarily increasing administrative burden).
- Simplify and expand DGR eligibility: the Commission recommends broadening the deductible gift recipient (DGR) eligibility criteria to include most types of charitable organisations (excluding certain charitable activities, in particular education, early childhood care and advancing religion). Charities that pursue multiple eligible purposes would only need one DGR endorsement from the Australian Taxation Office, which would cover all eligible activities – this would enable many charities to significantly streamline their operating structures.
- Remove DGR for school building funds: Under this proposal, the DGR category of ‘school building fund’ would be removed. The Federal Government has already indicated that it will not implement this recommendation.
- Define ‘Public Benevolent Institution’ in legislation: the Commission recommends developing a definition in legislation of what constitutes a public benevolent institution, so that the nature and scope of the charity subtype is more clearly understood.
- Remove the concept of ‘basic religious charities’: the Commission recommends ending the concept of a ‘basic religious charity’ and its associated exemptions, to ensure that all charities registered with the Australian Charities and Not-for-profits Commission (ACNC) are regulated in a consistent manner.
- Simplify and streamline laws: achieved via harmonising State and Territory charity and fundraising laws and processes, including the definition of ‘charity’ in each State and Territory.
- Improve the effectiveness of ancillary funds: the Commission recommends a number of measures with respect to ancillary funds, including updating their names to be Private and Public Giving funds to make their philanthropic purpose clearer, increasing the required annual distribution rates, and requiring ancillary funds to develop a distribution strategy.
- Increase public information about charities and giving: including requiring listed companies to publicly report information about their donations, providing more information about bequests, and enhancing the usefulness of information published by the ACNC.
- Establish Independent Philanthropy Connections, as an independent organisation controlled by and for the benefit of Aboriginal and Torres Strait Islander people and communities, with a focus on: ensuring that organisations are more culturally safe and responsive to the needs of Aboriginal and Torres Strait Islander people and organisations; building relationships, networks and partnerships; and supporting the establishment and growth of new and existing Aboriginal and Torres Strait Islander philanthropic organisations.
The Report provides a comprehensive roadmap for enhancing charitable giving in Australia. By simplifying regulations, enhancing tax incentives, promoting a culture of philanthropy, supporting innovation, strengthening collaborations, measuring impact, improving data collection and increasing accountability, these recommendations aim to create a more vibrant and effective philanthropic sector.
While the Federal Government has already made some initial comments with respect to the Report (including notably that they do not intend to remove the school building fund DGR category), we await any formal response and indication as to whether or not any of the Report’s recommendations will be adopted.
How we can help
Our Charity and Not-for-profit Law team continue to stay up to date on the latest updates to the sector. We can can provide you with practical advice and guidance on how to navigate any changes to ensure your charity or not-for-profit organisation is meeting its obligations.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.