Tansy Harcourt, Senior Reporter at The Australian.
Philanthropic funds management company Future Generation has called on the government to change up the way it thinks about how to reach its goal of doubling giving by 2030, by coming up with better tax incentives.
The National Productivity Commission on Thursday released its draft report into how turn the $13bn donated to charities in 2021 into $26bn by the end of this decade, and has focused on the need to change which charities are able to receive tax-deductible donations, describing the current system as “not fit for purpose”.
Future Generation chief executive Caroline Gurney said the draft NPC report was a good start in what needs to be a “much longer consultation” with a greater focus on incentives for people to donate, rather than on which causes they can donate to.
“That is why we are calling on the government to attach tax incentives to models such as Future Generation, similar to Individual Savings Accounts (ISAs) in the United Kingdom or Roth Individual Retirement Accounts in the United States,” Ms Gurney said.
Future Generation, which has donated $75.9m to Australian charities over the past eight years, has made a submission to the NCP that recommends introducing an ISA-type policy, so that people can set money aside tax-free to help ease the burden of saving for a home, and the money could also be distributed to Australian not-for-profits.
“We are keen on a system that creates a nation of savers and also benefits philanthropy,” said Ms Gurney. “This would revolutionise philanthropy in this country – and give the nation its best shot at addressing the pressing social and environmental issues of our time.”
Future Generation believes the ISA system could be tweaked so that not only can a tax-free portion be set aside each year for locked-down savings funds, but also for existing philanthropic groups, such as its own.
The listed Future Generation funds are the brainchild of veteran fund manager Geoff Wilson. They rely on many of the nation’s top stock pickers donating their time. A set portion of profits are donated to charitable causes, with a focus on mental health.
In its draft submission, Future Generation said that people were likely to be more inclined to donate money if the price of giving (or the cost of donating an extra dollar) was lowered.
The funds management firm has suggested more work needs to be done on estimating the ‘‘price elasticity of giving’’ and to factor in that a policy of people being able to set aside funds that are not taxed – in Britain the figure is currently £20,000.
“There is no free lunch,” said the Future Generation draft report.
When releasing their report NPC deputy chair Dr Alex Robson said that the dollar figure being donated had been increasing but it was coming from fewer people, and while volunteering is widespread, the formal volunteering rate has dropped over the past decade.
The draft report says that the ‘‘deductible gift recipient’’ (DGR) system is not working as it should, with examples given of charities preventing illnesses in children fitting the criteria but not one that tries to prevent injuries in children. “Australia is a generous nation,” Dr Robson said in his report.
“We donated more than $13bn to charities in 2021 and more than six million of us volunteered in 2022. Our draft recommendations would strengthen the foundations for philanthropy so that the benefits of giving can be realised into the future.”
Future Generation believes it’s a good first step but warned that a business-as-usual approach won’t be enough.
“We need a collaborative and innovative effort from government, corporates and the community,” said Ms Gurney. “We look forward to continuing to be part of the consultation process.”
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