Hard times impact philanthropic giving - Perpetual
May 08, 2012 (PRLEAP.COM) Business NewsNew data from the Australian Tax Office (ATO) has revealed a significant slump in charitable giving among wealthy Australians, with the average tax-deductible gift falling by 73 per cent since before the Global Financial Crisis.
ATO statistics, released this week as part of its Taxation Statistics 2009 – 10 report, show that in financial year 2007/08, 63 per cent of people with a taxable income over $1 million claimed deductions for charitable giving, for an average of $102,000. This fell to an average of just $27,000 in 2009/10 – representing a drop of 73 per cent.
Andrew Thomas, Perpetual's General Manager, Philanthropy, said 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 hasn't. In fact, applications for funding from Perpetual's charitable trusts continue to rise each year," said Mr Thomas.
"Given the broad range of charitable organisations doing important work in the wider community, which is feeling the brunt of the economic downturn, it's unfortunate that the downturn also caused high-income earners to become more nervous about sharing their wealth," he said.
Mr Thomas believes that Australians are generous overall, but are often unsure how to go about charitable giving effectively.
"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," Mr Thomas said.
Explaining the difference between outcomes and outputs, Mr Thomas cites the example of 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?" Mr Thomas said.
Perpetual is hopeful that future statistics will show that charitable giving increased in 2010/11.
"The floods and cyclones which hit the east coast of Australia encouraged many Australians to give, via both financial contributions and donations of time, and we hope to see the effect of this in the next set of figures," said Mr Thomas.
Mr Thomas says 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 (PAF). Distributions from PAFs grew 27 per cent in the 2009/10 tax year – up to nearly $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."
Mr Thomas added that contributions to the community don't have to be financial.
"For Australians who feel they're unable to make a financial donation, there are other ways they can contribute.
"The rallies and petition we've seen in the past week in support of the National Disability Insurance Scheme are a great example of how people can support efforts and encourage long-term and sustainable change," he said.
"There are also many other ways to support your preferred charity, such as volunteering or fundraising, and I encourage all Australians to get involved."
Perpetual is one of the largest managers of private charitable foundations in Australia, with $1.1 billion in funds under management (as at 31 Dec 2011). Perpetual is trustee to more than 400 charitable trusts – including Private Ancillary Funds (PAFs) and the Perpetual Foundation - that support medical, social, environmental, religious, cultural and educational causes.
Perpetual Philanthropic Services is part of Perpetual Private, which advises clients on $8.1 billion of funds (as at 31 Dec 2011). The Perpetual Private team of experts offer tailored advice and services and can help clients fulfill their charitable intentions.