You don’t have to be wealthy to be philanthropic. Many people give little or no money but rather volunteer their time and expertise in their local community or to a charity.
What is Philanthropy? According to Philanthropy Australia, it is ‘the planned or structured giving of money, time, goods and services or other to improve the wellbeing of humanity and the community’.
Often, it is an evolutionary process that whilst structured in nature has an exploratory side to it before an individual finally gravitates towards a core charitable preference. In Australia there is still often discomfort in talking about giving and there is very little everyday discussion or press on the topic, except for the odd article on major donations (such as Andrew Forrest’s recent $400m donation).
As such Australia’s philanthropic sector is still very much in its infancy.
Philanthropy today
The latest Charities Aid Foundation 2016 World Giving Index ranks Australia third in the World, with 73% of Australians making a charitable donation. By five-year average Australia ranks fifth in the World behind Myanmar, USA, NZ and Canada. So on a per capita basis we are actually a pretty generous nation.
However, levels of structured giving here are still below those in other countries such as the United States and the UK. Many Australians share the view that they pay their taxes to the Government so it is firstly the government’s role to look after those in need. So ‘we just don’t have that psyche or culture in Australia where the individual feels they’re personally responsible’.
The statistics also show the higher your taxable income the more likely you are to give. For example, 58% of those earning over $500,000 in taxable income claimed a donation. The ATO statistics also show that of the people who could make donations via a structured workplace giving arrangement, just under 5% did so (however this has been on the rise in the last few years).
Motivators for giving are very personal and everyone has different motivators, moulded by their personal journeys in life. Often reaching a turning point such as selling a business, receiving a large inheritance or the kids leaving home were the trigger.
Another motivator for giving in a structured manner is that it provides a platform to pass on family values from one generation to the next. It can enhance and cement family values, to be carried into the future. The Warren Buffet notion that ‘leaving children enough money so they feel they can do anything, but no so much that they could do nothing’ was a widespread value shared by respondents in the study undertaken by Queensland University of Technology. (QUT).
For some people, a sense of guilt about their level of wealth can be a motivator, as can gratitude for having been given opportunities and encouragement to succeed that are denied to many. Ways to give can be un-planned (i.e. personal donations) or planned (through a philanthropic structure). Planned giving is also called ‘structured giving’. Taking the leap to structured giving can appear daunting but there are good sources of advice available.
Structured giving via corporate entities
Examples of planned giving structures include:
- Charitable Foundation – Private Ancillary Funds (PAFs) Public Ancillary Fund or Charitable Trusts
- Community Foundations – sub-funds, giving circles; and
- Corporate Foundations – company (via board) drives decisions and staff can donate.
A private charitable trust or ‘PAF’ provides the most control over grant making decisions – and is very ‘hands on’. It can be ‘seen as a personal statement, even if only visible among a close-knit group’ [1]
To justify the ongoing administration costs, a private trust or PAF is recommended to have capital of at least $500,000. Otherwise, donating to a Public Ancillary Fund or a community sub-fund may be more effective. There are many options within Australia’s philanthropic landscape to generally meet most people’s needs and preferences. A study by the Queensland University of Technology in March 2012 concluded that in Australia structured giving is ‘a kaleidoscope – the sheer variety of structures, approaches and activities is significant’
[1] ‘Foundations for giving: Why and how Australians structure their Philanthropy’ , QUT Business School – The Australian Centre for Philanthropy and Non-profit studies.
Todd Stanford
Senior Financial Planner
Profile Financial Services
t: (02) 9131 1923
todd.stanford@profileservices.com.au
http://www.profileservices.com.au