By: Sam Rosevear, Executive Director - Policy, Government Relations and Research & Krystian Seibert, Policy and Regulatory Specialist | Philanthropy Australia | https://www.philanthropy.org.au/
On Budget night this week, the Australian Government announced long sought and historic reforms that will give community foundations greater scope to drive impact in local communities. Specifically, the Budget provides for up to 28 community foundations affiliated with Community Foundations Australia to receive so called ‘Item 1’ Deductible Gift Recipients (DGR) status by way of specific listing.
Left: Sam Rosevear
What do the reforms mean?
The Treasury will now work closely with community foundations and step through the various requirements to enable listing as an Item 1 DGR in the tax law – this requires amending the tax law to name each such community foundation.
The reforms will make it easier for listed community foundations to support local charitable activities and build ‘community capital’, making donor dollars go further faster.
Community foundations generally operate using a ‘public ancillary fund’ (PuAF) structure, which is classified as an ‘Item 2’ DGR. Therefore, until these reforms, community foundations – the majority of which operate in regional areas – have only been able fund ‘Item 1’ DGR charities. There are relatively few charities with this status in regional areas, which meant that community foundations found it harder to fund many grassroots community groups and initiatives. And this isn’t only a challenge faced by community foundations in regional areas, but has also been a barrier to community foundations in urban areas seeking a more flexible way to support a diverse range of organisations and activities.
Based on the announcement, specifically listed community foundations will now be able to fund any charitable activities carried out by groups and organisations, provided those activities are covered by one of the 52 existing DGR endorsement categories and are consistent with the community foundations own purposes and rules.
What does it mean for Private Ancillary Funds (PAFs)?
The reform will enable listed community foundations to accept donations from PAFs and other ancillary funds: Until this reform, PAFs were banned from providing support to community foundations that operate using a PuAF structure.
What are the benefits?
Community foundations – such as the Northern Rivers Community Foundation, Ballarat Foundation, and Stand Like Stone Foundation in Mount Gambier – are place-based philanthropic organisations. Local people donate to, volunteer for, and run community foundations. Through local knowledge and networks, they develop a detailed understanding of where support is needed most, and fund community organisations and initiatives best able to support the top local priorities. The reform will deliver multiple benefits for community foundations, and importantly, the communities they serve:
A great reform ‘win’ for the sector
It is sometimes said that ‘Victory has a thousand authors, but defeat is an orphan.’ While this saying is often used by a crestfallen leader in the context of defeat, it reflects well the effort that has been required over the last two decades to bring this historic reform to fruition. Many great leaders from across the sector – people like Dr Catherine Brown OAM and Dr Genevieve Timmons – and successive cohorts of Philanthropy Australia and Australian Community Philanthropy (as it was known before its recent name change to Community Foundations Australia) staff, helped to position these reforms favourably with government over many years.
Building on the work of our predecessors, Philanthropy Australia, Community Foundations Australia and legal specialist Alice MacDougall worked with the Australian Government’s Treasury department over recent months to give detailed policy advice regarding options for how the reforms could be implemented.
Our approach was always based around a clear message – that we need action on this, after so many years, but that we want to work through any barriers to ‘making it happen’ – and as part of that, we provided a number of technical solutions to the Treasury on how implementation could be secured. There has also been positive engagement with the Assistant Treasurer, the Hon. Michael Sukkar MP, and his advisers, including an excellent forum with Minister Sukkar and Philanthropy Australia’s Champions in December.
As we noted in the joint Philanthropy Australia and Community Foundations Australia press release on the Budget night, we really appreciated the open and consultative way Minister Sukkar, his advisers, and the Treasury went about developing this reform. Government working so closely and collaboratively with stakeholders is a great way to develop good policy and achieve implementation of reforms that can deliver positive and sustainable benefits for the community.
This is a great reform. It was a historic win for our sector and the Australian community.
Apr. 01, 2022
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