The peak body has released an official statement on the government’s proposed reforms to the regulation of public and private ancillary funds, which are to be renamed as ‘giving funds’.
These flow from the recommendations in the report of the Productivity Commission’s (PC) philanthropy inquiry, Future Foundations for Giving.
In addition to renaming ancillary funds as giving funds, the proposed changes include:
- Aligning the annual distribution rate between public and private giving funds
- Consideration of a possible increase in the distribution rate for giving funds
- Allowing for giving funds to smooth distributions across multiple years
Philanthropy Australia CEO Maree Sidey said that public and private giving funds are a vital source of philanthropy for the benefit of the community.
“Giving funds are an enabler of generosity, providing an essential flow of support for charities doing diverse work to build a more inclusive Australia,” Sidey said.
The peak body supports renaming ancillary funds as giving funds and allowing giving funds to smooth distributions across multiple years.
Regarding any changes to the minimum distribution rate, Philanthropy Australia’s Practical Policy Priorities to Grow Giving in Australia, released in April in the run-up to the federal election, conveys its starting position.
Philanthropy Australia supports having a minimum distribution, vowing to take a measured stance in response to any proposed changes to its rate. The peak body thinks the current arrangements work well, so it doesn’t see the need to increase or decrease the minimum distribution, especially given the risk of unintended consequences, such as disincentivising the establishment of new giving funds. It will be engaging further with its members and partners throughout this consultation process to finalise its position.
Sidey emphasised the need for the government to prioritise real and tangible action on the PC report’s centrepiece recommendation – reform of the ‘deductible gift recipient’ (DGR) system. The DGR system determines which charities can receive tax-deductible donations and grants from giving funds. Currently, around half of charities are ineligible. This includes community-run charities such as neighbourhood houses, those supporting LGBTQIA+ Australians and advocacy charities focused on the causes of disadvantage.
“We welcome the Australian government’s focus on responding to the Productivity Commission’s recommendations, but we would be concerned by an approach that involves cherry picking which reforms to progress, while not acting on the PC’s clear call for an overhaul of the DGR system,” Sidey explained. “The costs of inaction on DGR reform will be borne by all those charities left outside of the system, given they will continue to be cut off from sources of support, including from giving funds.”
Read also: Tax deduction is not the most important factor for Aussie donors
Geraldine is currently the Content Producer for Third Sector, an Akolade channel. Throughout her career, she has written for various industries and international audiences. Her love for writing extends beyond the corporate world, as she also works as a volunteer writer at her local church. Aside from writing, she is also fond of joining fun runs and watching musicals.
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