Anniversary of reform that ushered in new era of giving

Twenty years ago, a small group of business people, community leaders and philanthropists convened by then Prime Minister John Howard, put the finishing touches on an initiative that was designed to encourage greater corporate and personal philanthropy in Australia.

At the time, the announcement was not major news, but it ushered in a reform that has driven a significant boost to Australian giving. Central to the innovation was John Howard’s determination to boost philanthropy through tax reform.

The group he convened was called the Prime Minister’s Business Community Partnership. It included Sydney businessman David Gonski and Philanthropy Australia’s then CEO Elizabeth Cham.

David Gonski AC (left) The Honourable John Howard (right) 

 “In 2001 the tax legislation in Australia was not conducive to giving through philanthropy – the relevant laws had been unchanged since 1948 and were based on the philosophy that the taxpayer pays taxes, and the government is responsible for distributing that money for social good,’’ David Gonski wrote in his 2015 book
I Gave A Gonski.

The then-situation was that Australia had no private foundation structure that encouraged philanthropy through providing tax incentives. An individual could establish a public foundation, using the ‘public fund’ structure, but it was not geared towards families or businesses, and a requirement of that structure was fundraising from the public.

So, if an individual or a family wanted to set up a private foundation, they could do so, but wouldn’t get a tax deduction for what they donated into it – and that was a barrier to increased giving.

Former Prime Minister John Howard explained to the Philanthropy Australia National Conference 2021 that he wanted to bring government, business and the national welfare organisations together to drive change. “I wanted to enlist the natural generosity and decency of the Australian community and it's there at all levels of society. I particularly wanted to enlist people of wealth and I understood the contribution they could make and the example they could set,’’ he said.

David Gonski had got to know John Howard in 1999 and in August of that year, found himself joining the Prime Minister’s Business Community Partnership. He recalled during a session at the Philanthropy Australia National Conference that he was probably the only member of the partnership who flew to Canberra for the first meeting on a commercial flight – the rest arrived on private jets.

“It was the drive of this PM - that he was prepared to not only start something but also to monitor it on a regular basis,’’ David said.

Mr Howard acknowledged that he might have spent some political capital in securing the reforms.

 “There are all sorts of reasons why people want their generosity kept private. I felt this (reform) was a way of engaging them,’’ he said.

David wrote six years ago that he suggested the Business Community Partnership include a Taxation Working Group to look at the legislative changes necessary to promote philanthropy.

“I became a chair of the sub-committee and we did extensive research on what was happening to giving in Australia and overseas. Working closely with the [Australian] Tax Office, we came up with the idea of Prescribed Private Fund (PPF), a not-for-profit entity which was effectively a private charitable trust, with a number of distinctive features.

“The first PPFs were established in June 2001…Essentially PPFs were intended to be private vehicles for family charitable giving. They could not engage in any activity other than giving…this was clearly a step in the right direction and PPFs became very popular.’’

A review was done in 2007-8, which led to PPFs being converted into Private Ancillary Funds. The reform, since 2001, has made a significant difference to the nation’s giving.

As stated in Philanthropy Australia’s Blueprint to Grow Structured Giving, PAFs have distributed $3.6 billion to charities in the years from 2001 to 2017-18, supporting a wide variety of impactful causes. There are now more than 1,800 PAFs with total assets of over $7 billion. PAFs granted almost $400 million to charities in 2017-18 and their popularity has only grown, with yearly increases in new PAFs, and 155 new PAFs approved in 2017-18 alone.

Twenty years on, Mr Howard urged Australians to build on what had been achieved.

“There are literally millions of generous Australians of modest means and they should be respected,’’ Mr Howard said. “They shouldn't be forgotten in this because they are the heart and soul of any generous community. [And] we should always be ready to recognise the contribution of successful people...maybe we should hear more about the Bill Gates of Australia.’’

On 5-6 May, after time to reflect and refresh, we will come back together online for two days of interactive, inspiring workshops. Participants will actively discuss, collaborate and think strategically as we collectively explore what the future needs from us, now. Register here.

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