In response to the Australian Government’s announcement of an increase in the minimum distribution for Giving Funds, Philanthropy Australia has expressed concern that broader reforms critical to unlocking giving to charities have been sidelined.
Today the Assistant Minister for Charities, the Hon Andrew Leigh MP, announced that the minimum distribution for Public and Private Giving Funds will increase to 6 per cent per year. Currently, Public and Private Giving Funds are required to distribute 4 and 5 per cent of their net assets each year respectively as grants to eligible entities.
Giving Funds are a key enabler of generosity for Australians, providing the structure for donations to flow to charities. But Australians want more community-based groups to be eligible to receive support from Giving Funds, so that support can flow to where it’s needed most, said Philanthropy Australia CEO, Maree Sidey.
“The demands on charities are immense and Giving Funds are vital sources of funding for their work across the community. Increasing mandatory distributions for Giving Funds without addressing wider system reform is like turning up the water pressure without checking the plumbing,” Ms Sidey said.
The Deductible Gift Recipient (DGR) system determines which charities can receive tax deductible donations and grants from Giving Funds. Currently, around half of Australian charities are ineligible or face unnecessary barriers, including community-run charities such as neighbourhood houses; those supporting LGBTQIA+ Australians; First Nations organisations; rural and regional groups; new and emerging charities; and advocacy charities focused on the causes of disadvantage.
Philanthropy Australia urges the Australian Government to prioritise reform of the DGR system to expand eligibility and cut complexity for our charities, Ms Sidey said.
“The system is complex, confusing and hard to navigate for donors and charities.
“This change to Giving Funds’ minimum distribution is unlikely to significantly increase support for charities because, as the Government notes, around two-thirds of Public Giving Funds, and around half of Private Giving Funds, already distributed more than 6 per cent of net assets in recent years. It could also disincentivise giving by introducing regulatory instability.”
Five major inquiries and reviews, including the Productivity Commission’s Future Foundations for Giving and the Not-for-profit Sector Development Blueprint reports released in 2024, have recommended DGR reform as a priority, with the Productivity Commission’s report stating that the system is ‘not fit for purpose and should be reformed’.
Philanthropy Australia is a strong supporter of Justice Connect’s Unlock DGR campaign, launched in November last year, and encourages others with an interest in DGR reform to join the coalition of groups urging the Government to finally act.
“We have been assured that more reform opportunities are being considered by the Government. We urge them to move swiftly and to work with stakeholders to deliver real and tangible outcomes that will boost giving and strengthen our communities,” Ms Sidey said.
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Maree Sidey, CEO of Philanthropy Australia, is available for comment.
About Giving Funds
Giving Funds (currently referred to within the tax law as Ancillary Funds) are commonly used as structures for public or private foundations. They enable individuals, families or businesses to make tax-deductible contributions to a fund, which are then used to make grants to deductible gift recipients (DGRs).
Often, the contributions are invested to grow the amount available over time and increase the support provided to other DGRs through grants.
Private Giving Funds are established for private philanthropic giving, commonly used by families or businesses. Public Giving Funds must invite donations from the public and are typically used by community groups, corporate and community foundations, wealth advisers and other organisations.
They are subject to extensive regulation by both the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office (ATO), set out in regulatory guidelines applying specifically to them. This includes a requirement to comply with a ‘minimum distribution rate’, which is the minimum amount of funds that must be provided as grants each year. This is currently 5% of net assets for private giving funds and 4% of net assets for public giving funds.
Based on the most recent data, there are more than 3,600 Giving Funds. In 2022-23, Private Giving Funds distributed almost $800m in grants, with Public Giving Funds distributing nearly $480m.
About us:
For more than 50 years, Philanthropy Australia has been strengthening the practice of giving. As the nation’s peak body for philanthropy, we work to mobilise generosity with purpose and impact.
We collaborate with members, funders and changemakers to create a more generous, just and sustainable Australia. We do this by:
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Convening, connecting and engaging members
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Amplifying insights and knowledge exchange to enhance practice
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Influencing the use of diverse resources to create impact
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Advocating for policy outcomes that strengthen the ecosystem
Contact details:
Contact:
Joni Edson, Director Marketing and Communication | 0439 688 556
joni@philanthropy.org.au
