By Sam Rosevear, Executive Director – Policy, Government Relations and Research & Krystian Seibert, Policy and Regulatory Specialist | Philanthropy Australia
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.
What do the reforms mean?
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)?
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:
- Being able to fund a broader range of local organisations and activities will enable a more rapid response to fires, floods or drought, and higher impact support in areas like health, education and homelessness. This change is significant for all community foundations and particularly important for the 80 per cent that operate in regional Australia.
- PAFs will now be able to distribute funds to community foundations, unlocking a new source of funding for both community foundations and the communities they serve. This pool of funding is significant and trending higher over time. In 2018-19, PAFs distributed $565 million to support a range of important causes.
- This will also help promote better philanthropy, by allowing PAFs to benefit from the local knowledge and networks of community foundations, so that support is provided where it is needed most. Philanthropy Australia has heard from a number of members that they want to use their PAF to donate to community foundations, especially in emergencies and as part of collaborative funding initiatives, and this significant announcement will allow that to happen.
- By bolstering the role of community foundations, and helping them to grow their presence across Australia, the reforms will hopefully encourage more Australians to get involved in local philanthropy – donating, volunteering and participating in projects to help their region or local community to thrive. This can help drive the culture and practice of community-led change in Australia. With success comes more social capital and confidence, galvanizing communities to drive change through high-impact grassroots initiatives focused on the top priorities in local communities.
- Over time, and particularly if the network grows, community foundations can form a platform for local MPs and the Government more broadly to work together to strengthen local communities. The Canadian experience points to a potential future. In Canada, Government works closely with the sector peak organisation, Community Foundations of Canada, to strengthen regional communities, mobilising public and private resources, and drawing on the network of 191 Community Foundations to support place-based initiatives across the country. This means that the vast majority of Canadians have access to funding and community leadership from a local foundation in the place they call home.
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.
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.