Following up on the federal government’s election promise to provide a roadmap to double philanthropy by 2030, the Treasurer has given the Productivity Commission a reference to undertake an inquiry into philanthropy.

It is proposed to identify and assess opportunities and obstacles to increasing philanthropic giving and volunteering to provide a roadmap to achieving this objective.

The Commission is tasked with reviewing the success of other giving programs overseas and examining tax and other incentives for promoting giving.

Some of the more controversial areas will be its work on:

  • the effectiveness of, foundations in encouraging philanthropic giving and supporting the charitable sector;
    • perhaps it may include an examination of the establishment and management fees of Trustee companies and remuneration of trustees or related parties?
  • the potential to increase philanthropy by enhancing the effectiveness and efficiency of the use of donations;
    • perhaps it might also examine the cost of applying and reporting for grants from foundations?
  • the ability of donors to assess and compare charities based on evidence of effectiveness, including through impact evaluations and making comparisons across charities. In doing so, the Commission should consider the work of overseas impact evaluation comparison sites;
    • perhaps it will examine the shortfallings of such sites and the promotion of the so-called ‘starvation cycle’ where nonprofit applicants understate or under-invest in administrative expenses critical to their operation to make the metrics?
  • to assess the effectiveness and fairness of the deductible gift recipient framework and how it aligns with public policy objectives and the priorities of the broader community.
    • perhaps it will consider the present 52 categories of DGRs being overly complex and administratively cumbersome, and as the previous Productivity Commission pointed out, they should be reformed to cut government administration costs and boost giving (see below). The OCED in 2020, in a forty-country review of philanthropic tax incentives, drew attention to the need to reform DGR status.

The terms of reference specifically refer to the Productivity Commission’s previous 2010 inquiry, Contribution of the Not-for-Profit Sector, for ideas. Some of the unimplemented recommendations from that report include:

  1. the regulation of volunteers (such as police checks) is imposing a growing compliance burden and should be addressed on a national basis;
  2. current DGR arrangements are distortionary and out of date, and it was suggested that government progressively expand DGR status to all charitable institutions and funds that are endorsed;
  3. Australian governments should take the lead in the adoption of payroll giving; and
  4. building the capacity of NFPs to undertake evaluations and demonstrate impact will also assist in attracting public and business support.

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