Future Foundations for Giving - draft report released

1 December 2023

 The Productivity Commission has proposed an overhaul of the system that determines which charities can receive tax-deductible donations. This is part of a package of reforms proposed in the draft report of their philanthropy inquiry, Future Foundations for Giving, released yesterday.

The draft report analyses trends in giving and shows that while the overall amount donated to charities has been increasing, fewer people are donating. Volunteering is widespread in Australia, but the formal volunteering rate has declined over the past decade.

The draft report also claims that the ‘deductible gift recipient’ (DGR) system, which determines the charities that are eligible for tax-deductible donations, is not fit for purpose. The report then proposes a 'simpler, fairer and more transparent process for determining which charities can receive tax-deductible donations'.  Draft recommendation 6.1 proposes as a result -

  • extending eligibility for DGR status to most classes of charitable activities, drawing on the charity subtype classification in the Australian Charities and Not-for-profits Commission Act 2012 (Cth) to classify which charitable activities are eligible for DGR status and which are not.
  • expressly excluding the following classes of charitable activities or subtypes from having DGR status:
    • primary, secondary, religious and other informal education activities, with an exception for activities that have a specific equity objective (such as activities undertaken by a public benevolent institution)
    • the activities of childcare and aged care in the social welfare subtype (other than activities undertaken by a public benevolent institution)
    • all activities in the subtype of advancing religion

The effective of this recommendation, if adopted, will be to eliminate deductions for school building funds and the provision of religious education in government schools.

The Productivity Commission claims that “[t]his is evidence-based tax reform that will support giving to a more diverse range of causes, refocusing the system toward activities that deliver broader community benefits,”.  The inference that school building funds and the provision of religious education in government schools, the primary types of funds losing their long held status, are not providing broad community benefits is offensive.

The inquiry also recommends:

  • the Australian Government support the establishment of an Aboriginal and Torres Strait Islander philanthropic foundation.
  • reforms that "would improve the regulatory framework for charities, supporting the role of the Australian Charities and Not-for-profits Commission’s (ACNC) charity register in providing further useful information for donors".
  • that listed companies be required to publicly report information on their donations of money, goods and time to charities with DGR status.

The draft report is available on the Productivity Commission website here.

Written submissions on the draft report are invited by Friday 9 February 2024.

CSA will be making a submission on behalf of member schools.

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