How unlocking DGR would benefit Neighbourhood Houses: case study

Every week more than 400,000 people around Australia walk through the doors of a Neighbourhood House or Centre. There are more than 1,000 across the country serving crucial roles in local communities acting as the first point of contact for people facing hardship, especially in rural and regional areas. Clare Ozich, Campaign Manager at Not-for-Profit Law at Justice Connect, explains how DGR reform would unlock giving to these charities in this case study.

Embedded in the communities they serve, each Neighbourhood House is responsive to the needs of their local community whether it is providing emergency relief, assisting people to access government supports like Centrelink or the NDIS, or providing a range of learning programs.

However, Neighbourhood Houses are also under unprecedented pressure. Increasing demand combined with rising costs are making it difficult for many houses to continue providing the necessary services and supports their communities need. Inadequate government funding is risking the closure of centres as the Victorian Neighbourhood Houses campaign – Keep Our Doors Open – makes clear.

And if that isn’t enough, our clunky Deductible Gift Recipient (DGR) system also makes it hard for Neighbourhood Houses to access philanthropic funding, with most unable to meet the requirements for DGR status.

Not only does this mean that everyday donors can’t get a tax deduction for donating to their local Neighbourhood House, it also makes it difficult to attract funding from private and public ancillary funds.

Neighbourhood Houses are a tangible example of how the DGR system is not fit for purpose. Their experience is one of the reasons that Justice Connect has launched its new Unlock DGR campaign, which calls on the Australian Government to finally act on the many inquiries and reviews that have recommended an overhaul of the DGR system.

As Liz Bonner, President of the Australian Neighbourhood Houses and Centres Association said: “Neighbourhood Centres and Houses have been doing the heavy lifting for decades, powered largely by a highly skilled but chronically undervalued female workforce.”

“Yet the DGR process continues to place unnecessary barriers in front of organisations that are already stretched. Even with pro bono legal support, many Houses cannot navigate a system that was never designed with them in mind.”

While the Australian Neighbourhood Houses and Centres Association operates a special Public Fund with DGR status that allows some philanthropic funding to flow through to individual houses via grants, properly unlocking access to DGR for Neighbourhood Houses could provide an important avenue for greater financial security.  

Justice Connect regularly receives requests from Neighbourhood Houses seeking advice on DGR status. Unfortunately, given the breadth of services and supports Neighbourhood Houses offer, they usually fall through the gaps of different DGR categories. It is difficult for organisations that provide both direct relief and individual services to people in need as well as broader social connection and inclusion programs to access DGR status.

The Phillip Island Community and Learning Centre (PICAL) is one centre that explored the possibility of accessing DGR status but has now abandoned its efforts. PICAL runs an emergency food relief program, provides welfare service referrals as well as a wide variety of programs and activities from peer-support groups, to arts and crafts, and learn local programs. It also has a community garden supplying fresh produce as well as training opportunities.

As Graeme Turner, President of PICAL, said: “We would have had to reduce our services and support to the community just to achieve DGR status, and this is not something we are willing to contemplate.”

This example illustrates the consequences of the incoherent DGR system. As Liz Bonner said: “We need a more equitable and accessible model, and the reform being sought by Justice Connect and Philanthropy Australia is vital. A fair DGR pathway is essential if we want community-led organisations to keep doing what they do best: strengthening local resilience and improving lives.”

Neighbourhood Houses undertake a range of charitable activities for the benefit of their local communities and there is no rational reason why they shouldn’t be able to access vital philanthropic funding to continue their important work.

The Productivity Commission’s Future Foundations for Giving report provides a model for reforming the DGR system, which was endorsed by the Not-for-profit Sector Development Blueprint.

It’s time to act on these recommendations, to remove a key barrier holding back Neighbourhood Houses and Centres and better support their vital social capital building role. The benefits will be felt in communities right across Australia.