Unlock DGR: Unlocking Australia’s full giving potential

Justice Connect, the charity that delivers high-impact interventions to progress social justice has launched Unlock DGR, a campaign calling for urgent reform of Australia’s Deductible Gift Recipient (DGR) system – the system that determines which charities can receive tax-deductible donations and philanthropic funding.

Around half of all registered charities currently miss out on DGR status, locking them out of vital financial support that could help them grow their impact.

Chris Povey, CEO of Justice Connect, said: “Australia’s charity sector is being held back by a tax system that hasn’t kept up with how charities actually work. The DGR system is outdated, overly complex, and unfair. It locks out small and emerging charities that are doing critical work on the frontlines of community need.”

Supported by the Minderoo Foundation, the campaign aims to modernise and simplify DGR laws so that more charities – particularly those tackling local challenges at the grassroots – can access the support they need.

Kristen Stevenson, Executive Director, Effective Philanthropy at the Minderoo Foundation, said: “Extending DGR status across the sector is more than a technical change. It would broaden participation, strengthen community outcomes and support Australia to keep pace with global practice.”

“We encourage the Government to be bold in its continued reform of the sector. Two commissioned reports have recently recommended extending DGR status to more charities so the sector can sustainably progress its goal to double giving. We need to act on this evidence to boost national giving rates and help create the enabling environment the sector needs.

Why DGR system reform matters

With over 12 years’ experience providing legal support to tens of thousands of charities nationwide, Justice Connect’s Not-for-profit Law program has seen firsthand that access to DGR status continues to be one of the most misunderstood and resource-intensive areas of the tax system for charities.

Over the past century, the DGR system has grown into a confusing web of more than 50 categories, each with different rules. Many smaller charities can’t afford the legal or administrative support needed to navigate the process, leaving them cut off from philanthropy and grants.

Unlocking DGR would mean a broader, more inclusive landscape for giving – one that reflects the real diversity of Australia’s charity sector, and genuinely supports its role building social capital.

That’s why reforming the DGR system is one of the Philanthropy Australia’s policy priorities, with the philanthropy peak body strongly backing the Unlock DGR campaign and urging the Australian Government to act.

Philanthropy Australia CEO Maree Sidey said: “The Government has made a positive commitment to grow giving – but we need them to match this with tangible action on DGR system reform. It’s an essential change that will unlock giving towards a diverse range of charities making a real difference in the community.”

Reform would ‘unlock giving towards a diverse range of charities’

The DGR system has been identified as a key area in need of reform in successive reports over the past three decade. Charities have long called for DGR system reform to be prioritised, including more recently via the Not-for-profit Sector Development Blueprint, which noted DGR system reform was “…a high priority attracting broad agreement among those who contributed to the Blueprint’s development”.

The Productivity Commission’s Future Foundations for Giving report outlines a clear, evidence-based pathway to simplify the DGR system so that most charities are eligible for DGR endorsement.

Having served as the Associate Commissioner for the Productivity Commission’s philanthropy inquiry, Philanthropy Australia’s Executive Director for Policy and Sector Development, Krystian Seibert, identified DGR system reform as the inquiry’s key recommendation.

“Throughout the inquiry, we heard so many stories from charities that miss out on DGR status, cutting them off from sources of giving. That’s why the Future Foundations for Giving report makes a clear call for an overhaul of the DGR system, building on other reviews that have recommended action,” said Krystian.

The DGR system creates inefficient, inconsistent and unfair outcomes for donors, charities and the community. It needs reform.

Productivity Commission, Future Foundations for Giving report, 2024

Reforming the DGR system involves modest and sensible investment in the charity sector with long-term gains that the Government can’t afford to ignore. DGR system reform will:

• unlock more philanthropic support for thousands of charities building social capital in the community
• support the Government’s own goal of doubling philanthropic giving by 2030
• strengthen the sustainability of the charity sector, supporting charities to increase their impact for their communities, and
• cut red tape for both charities and regulators, saving valuable time and resources.

Subscribe to Justice Connect’s Unlock DGR campaign mailing list for further updates.

READ MORE: How the existing inequitable DGR system holds back Neighbourhood Houses and Centres in communities across Australia.