An American Perspective on Australian Philanthropy by Connette Blake

Connette Blake, a former co-worker of mine at Changing Our World, moved to Australia two years ago and is currently the Manager, Marketing & Communication, at Social Ventures Australia (SVA), a new and unique model of philanthropic social investment that addresses some of Australia’s most pressing community challenges (www.socialventures.com.au).

What is philanthropy like down-under? Who better to ask than an ex-pat ex-philanthropy consultant?

I have lived in Sydney for only two years so I dare say that I’m an expert on Australian philanthropy.

So when FLiP asked me to write a brief article about Australian philanthropy I thought, “what insight can offer?”

A simple Google search will give you Australian giving and nonprofit sector information:

• In a country with a population of about 20 million people (roughly the same as New York state), there are around 700,000 non-profit organizations, many of which are small and depend on voluntary commitment.
• Only around 20,000 of these organizations have Deductible Gift Recipient (DGR) status meaning that donors receive a tax benefit for their gift.
• Individual and business donations of money, goods and services total an estimated 11 billion AUD per year.

(As in the US, these statistics are only estimates; they are rarely timely or comparable across sources).

But we all know that facts, while important, don’t tell the whole story of a country’s philanthropy. Following are a few of my observations that I hope will help to complete the picture.

The Third Sector

Some say the philanthropic tradition in the US is stronger and more broadly established than Australia’s. Whether or not this is true, most would agree that Australian interest in philanthropy is growing.

I do not mean to imply that Australians were ever un-charitable. In fact, the ‘right to a fair go’ and concept of ‘mateship’ are intrinsic to the Australian culture, and those shared beliefs certainly support a tradition of helping others through charity.

However, Australians tend to expect government to address many social issues that Americans automatically consider the responsibility of the nonprofit sector. I don’t think that the idea of the third sector (as the third leg of a three-legged stool) is nearly as strong, shared or understood as it is in the US.

Australia’s relatively high income tax rate could explain this perception. A common response to a donation request is, “isn’t that something the government should do with my taxes?”

Yet there is increased acceptance that while the Australian government provides a social safety net for its most vulnerable citizens, nimble and innovative grass-roots organizations are often needed to fill service gaps that government simply isn’t able to address. 

The Economy, Wealth and PPFs

Just like in the US, economic growth influences total philanthropic giving. Certainly the sustained economic prosperity of the past decade has helped to increase Australia’s charitable giving as a whole.

There are more millionaires and their rate of growth is faster than ever before. According the latest Capgemini and Merrill Lynch survey of the world’s wealth, Australia now has a population of 160,600 high net worth individuals up from 146,000 last year. And over the next decade, 1.2 trillion AUD in intergenerational wealth will be transferred in Australia, according to Family Business Australia.

Despite this wealth, there is evidence that Australians with a taxable income of more than 1 million AUD contribute less than 2% of their income, compared to US millionaires who on average give more than 3.5%.

To encourage the aggregate giving of wealthy Australians, the government developed Prescribed Private Funds (PPF) that allow businesses, families and individuals to establish their own foundations for philanthropic and humanitarian purposes. A simpler structure for giving, PPFs successfully combine the advantages of tax concessions and private control in a trust that annually distributes funds to organizations with DGR status. Recommended seed capital for a PPF is 500,000 AUD.

PPFs have helped push private philanthropy to new levels in Australia and have the potential to be an even more powerful force for giving in perpetuity. The first PPFs were established in 2001; as of September 2006, the government had approved 440 funds with a combined corpus of 500 million AUD and grants of 52 million AUD.

Goldman Sachs JBWere (GSJBW) estimates that PPF assets will reach 2 billion AUD and donations will have passed 500 million AUD by around 2012. In fact, GSJBW credits the introduction of PPFs for the recent growth in giving from wealthy taxpayers.

Rich and Restless

A recent article in The Australian Financial Review describes a “new breed” of wealthy Australians who have made money and know how to make more, but aren’t necessarily interested in doing so. “In Australia’s greatest period of wealth creation, the rich are restless.”

These new philanthropists want to do more than just make money or give it away. They want to see the impact of their philanthropy and feel the passion and journey of the people involved in making change happen. They want to engage with the nonprofit organizations they support, and this relationship helps to increase their overall commitment to philanthropy.

The nonprofit organization I’m part of, Social Ventures Australia (SVA), addresses this desire to be involved. We call it “engaged philanthropy.” SVA aligns the interests of philanthropists with the needs of social entrepreneurs (innovative, nonprofit leaders) to combat some of Australia’s most pressing community challenges. With a focus on accountability and impact, SVA provides funding, mentoring and organisational tools to a carefully selected portfolio of nonprofit organisations.

In summary, Australian philanthropy is growing and wealthy Australians are leading the charge. Prolonged economic prosperity and government initiatives have contributed to this growth but so has the desire to personally engage with the nonprofit sector. Philanthropy is now part of the conversation – from intimate dinner parties to media coverage. Australians, who were historically quite private about their giving, seem to be more open to talking about, even promoting, their philanthropic interests. From an American perspective, the future of Australian philanthropy looks bright.