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Call for nation’s wealthiest to embrace transformative power of philanthropy

September 02nd, 2022

In the wake of a new report revealing that many of Australia’s wealthiest individuals have the capacity to increase their giving, Philanthropy Australia CEO Jack Heath called on the nation’s wealthiest to harness the power of philanthropy to transform society for the better.

A new research report from the Centre of Social Impact released this week revealed that the wealthiest Australians averaged a 17.9 per cent increase in their wealth last year. Internationally, Australia gives a lower percentage of GDP (0.81 per cent) compared to the United Kingdom (0.96 per cent), New Zealand (1.84 per cent) and the USA (2.1 per cent)

“We want to encourage the wealthiest Australians to lift their giving and do it in a structured way that maximises impact,’’ Mr Heath said.  “Philanthropy is uniquely placed to back in charities focused on critical societal issues, kickstart innovations, and be catalytic - taking risks that governments won’t.”  

Daniel Petre AO, technologist, investor, philanthropist, and funder of the research, said that globally, the level of giving among the very wealthy in Australia was “…incredibly disappointing.’’

“With a very small number of notable exceptions, Australia’s wealthy have not increased their philanthropy at a rate that is within a country mile of the growth in their wealth over recent years,’’ he said. 

The research highlights the general level of Australian wealth – it has the world’s second highest median level of wealth. And one in 11 Australians have more than US$1million (A$1.4 million) in wealth. 

There has been marked growth in the wealth of the nation’s richest individuals. An analysis of The Australian Financial Review’s Top 200 Rich List shows that the total wealth of the nation’s richest individuals has almost tripled since 2015. While many Australians struggled economically during the pandemic, 167 of the 200 wealthiest Australians increased their wealth. 

The results point to the impact a small shift in generosity from wealthy individuals could have to the social and economic circumstances of many Australians.

CSI Chief Executive Officer Armine Nalbandian said: “If the top-200 wealthiest Australians donated one per cent of their wealth, it would generate $5.55 billion for the sector – around the estimates of what it could cost to provide subsidized dental care or access to affordable childcare for everyone.’’

The Labor Federal Government has committed to work towards doubling giving by 2030 in a goal that aligns with Philanthropy Australia’s approach to increase giving through structures such as private and public ancillary funds, sub-funds, and giving circles, along with testamentary and other legacy trusts.

Mr Heath said:

“At Philanthropy Australia, we’re fortunate to engage with many of Australia’s most generous donors who are already helping to transform the lives of individuals and their communities – people and foundations who are giving tens, and in some cases, hundreds of millions of dollars each year to benefit others.

“We’ve heard first-hand from them about the uplift they get from giving.  We want to infect more wealthy Australians with the joy of giving which is why we’re committed to sharing their stories to inspire their peers. Philanthropy is beneficial for all parties involved - a true opportunity to transform society for the better,” says Heath. 

To reach giving goals by 2030, Philanthropy Australia is calling on the government to: 

  1. Reform DGR: Australia has around 58,000 charities, but only approximately 30,000 have DGR status (which allows the public to donate and get a tax deduction). Broadening and simplifying access would ensure more charities access DGR, boosting funding for their important work.
  2. Encourage bequests from superannuation: With superannuation balances at death set to reach at least $130 billion by 2059, giving Australians the choice through their superannuation arrangements to leave some money to charity would unleash billions for Australian charities.
  3. Support and grow community foundations. These important place-based entities play a vital role in backing local initiatives.

The CSI research also revealed how the assets held by one of the main forms of Australian structured giving - private ancillary funds - had fallen behind the growth among the nation’s wealthiest 200 during the past five years. Michael Traill AM, Adjunct Professor at CSI UNSW and Chair of the Paul Ramsay Foundation said: “We can see that the structured mechanism of giving has failed to keep pace with the accumulation of wealth but there is huge potential for alignment with those who are continuing to increase their giving year on year. The opportunities are there and the impact would be enormous.’’

The evidence points to a heavy concentration of wealth in Australia – the top five individuals in the top 200 hold $143.28 billion, or almost one per cent of the nation’s total household wealth. Data from the Australian Taxation Office shows that among the highest income earners (not including those who donate through PAFs), almost half did not report any donations for tax-deductible giving in 2018-19.

However, it is difficult to get an accurate picture of UNHW giving in Australia. The report’s analysis of the 2022 Financial Review Philanthropy 50 List found that a large proportion of the top 50 donors are foundations associated with deceased people. “The group made up 42 per cent of the total value of the top 50 donations, with the largest donation from the Paul Ramsay Foundation ($143 million),’’ the report said.

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