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Hard Times Impact Australia's Philanthropy Sector
Tara Loader Wilkinson
8 May 2012
Charitable giving among wealthy Australians has slumped since the onset of the global financial crisis, with the average tax-deductible gift falling by 73 per cent since pre-2007. Thomas said that while HNW individuals are generous overall, they are often unsure how to go about charitable giving effectively.
According to new data from the Australian Tax Office, released this week as part of its most recent Taxation Statistics report, in financial year 2007/08, 63 per cent of Australians with a taxable income over A$1 million ($1.01 million) claimed deductions for charitable giving, for an average of A$102,000. This fell to an average of just A$27,000 in 2009/10 – representing a drop of 73 per cent.
Experts say that the sharp decrease is a concern for charitable organisations.
“While charitable giving has plummeted as even wealthy Australians are feeling the pinch, the need for charitable funding certainly has not," said Andrew Thomas, general manager of philanthropy at Australian financial advisor Perpetual. "Applications for funding from Perpetual’s charitable trusts continue to rise each year. It’s unfortunate that the downturn caused high-income earners to become more nervous about sharing their wealth,” he said.
“When considering which charities to support, the key is to focus on organisations that deliver real outcomes and have a measurable impact. Donors should look at what their donation will achieve by addressing the root cause of a societal issue, rather than a band aid solution that will continue to need propping up,” Thomas said.
Explaining the difference between outcomes and outputs, Thomas points to training programs. “A charity can deliver an output, for example, of sending 50 people through a job skills program for the long-term unemployed. But the real outcome is the number of people who find and hold a job as a result of that training. Are they getting the support they need to genuinely change their life?” Thomas said.
Thomas said that high-income earners who are planning to donate should look at an appropriate structure to make their funds go further.
“One option for wealthy Australians who are considering structured giving is to set up a Private Ancillary Fund. Distributions from PAFs grew 27 per cent in the 2009/10 tax year – up to nearly A$200 million a year. Structured giving also provides greater certainty for not-for-profits about the financial contributions they’ll receive, which allows them to plan more effectively.”
Charitable giving among wealthy Australians has slumped since the onset of the global financial crisis, with the average tax-deductible gift falling by 73 per cent since pre-2007.
Thomas said that while HNW individuals are generous overall, they are often unsure how to go about charitable giving effectively.