The Australian Centre for Philanthropy and Nonprofit Studies, qut



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Australian context

Foundations


In this report we employ the definition of foundations provided by Gina Anderson (2013) in her analysis of the distributions of Australian foundations:

‘In practical terms, much of the philanthropy that happens in Australia involves gifts of money granted to not-for-profit entities by philanthropic trusts and foundations, collectively referred to as “foundations”’ (Anderson 2013: 6).

These include ‘ancillary’ funds. Ancillary funds are funds that provide a link between people who want to give ('donors') and organisations that can receive tax-deductible donations ('deductible gift recipients' or DGRs). Ancillary funds are set up for the purpose of providing money, property or benefits to DGRs. Ancillary funds can be private in that a private ancillary fund (PAF) can receive donations only from specified individuals or entities; or they can be public in that a public ancillary fund (PuAF) can receive donations from the general public. PAFs were introduced by the Australian Government in 2001 as a simplified form of a tax-effective charitable trust, a form not required to seek funds from the public or to be controlled by a committee. New guidelines for these structures came into effect in October 2009.

Meachen (2009) observed that philanthropic foundations in Australia are largely free from government control. Until the establishment of the Australian Charities and Not-for-profits Commission (ACNC) some foundations were not required to prepare audited financial accounts, and most were not legally required to report publicly. Nevertheless, all foundations were and are required to comply with regulations governing their legal structures in order to fulfil the purposes for which the foundation was originally established, and to comply with the laws governing charity in Australia, and the laws governing trustees which may vary from state to state. While the data available from the ACNC in 2013 were sufficient to enable Curtin University researchers (Knight and Gilchrist 2014) to undertake a detailed analysis of the charitable sector in Australia, Anderson (2013, 9) observed that the lack of mandatory reporting for philanthropic foundations in Australia ‘makes it impossible to give accurate data’.


Data


In 2012–13 donations from trusts and foundations equalled A$474 million, contributing A$8,614 million to total giving in Australia (McGregor-Lowndes, Flack, et al. 2014a).

In 2011–12 nearly 62% of those with a taxable income over A$1 million claimed average tax-deductible donations of A$49,678.88, being 1.47% of their taxable income (McGregor-Lowndes and Crittall 2014). By deduction, 38% of this high-income group claimed no deductions.



The American Chuck Feeney has been one of Australia’s largest donors through his Atlantic Philanthropies, giving an estimated A$500 million to Australian causes from 1998 to 2012. In addition to distributions by a range of established family foundations, large gifts from Australian HNWIs have proliferated in recent years (Strickland 2014), including:

  • A$10 million from Len Ainsworth to the University of New South Wales (2014)

  • A$10 million from Sean Howard to the Save Sight Institute (2014)

  • A$10 million x 2 from Alan Myers (QC) and wife Maria, A$10m to the University of Melbourne in 2013 and A$10m to the National Gallery of Victoria (2015)

  • A$10 million x 2 from Greg and Kay Poche to the University of New South Wales, 2013 and the University of Melbourne (2014)

  • A$20 million from John Grill to the University of Sydney (2012)

  • A$50 million from Graham and Louise Tuckwell to the Australian National University (2013)

  • A$50 million from Clive Berghofer to QIMR Berghofer Medical Research Institute (2013)

  • A$65 million from Andrew and Nicola Forrest to five Western Australian universities (2013) (the Forrests joined The Giving Pledge in 2013, pledging to give away half their wealth), and

  • A$3.0 billion estimated bequest by Paul Ramsay to the Paul Ramsay Foundation, announced in May 2015.

PAFs were introduced in 2001. The annual JB Were Australian Giving Trends series (McLeod 2011, 2012, 2013; McLeod 2014) includes entries on PAFs. Data on PAFs in the 2014 JB Were report and the 2014 analysis by The Australian Centre for Philanthropy and Nonprofit Studies (ACPNS 2014) indicate the growing scale of giving by HNWIs in Australia through PAFs:

  • in June 2014 there were 1,246 PAFs

  • new donations reached A$354 million in 2012

  • total corpus amounted to A$2.9 billion in June 2012 (suggesting a value in June 2014 of around A$4 billion)

  • distributions from PAFs reached a record A$252 million in 2012, and

  • PAFs now represent around half of the total trust and foundation giving in Australia (McLeod 2014).

While the growth in PAFs is laudable, some note considerable further room for development given the scale of private wealth in Australia and the high number of individuals with high net wealth. Using a measure of median wealth per adult, the Credit Swisse Global Wealth Report (2014) assessed Australians to be the richest people in the world for the fifth year in a row. The competitor World Wealth Report (2015) produced by Capgemini/RBC Wealth Management recently found that Australia ranks ninth in the world for the number of HNWIs, increasing from approximately 219,000 in 2013 to 226,000 in 2014.

Insights


Since the publication of the Giving Australia 2005 report, a number of research papers and practical guides addressing HNWI giving and foundation giving in Australia have appeared, as outlined in Table 3.1.

Table 3.1 Insights into HNWIs and foundations in Australia (full source details at end of chapter)

  1. Publication: Anderson, G 2013, Where the Money Goes: Private Wealth for Public Good.

Contribution: Analysis of grants by Australia’s leading philanthropic foundations that have already made public their grants using best practice reporting:

the majority of grants are small and fragmented

it is common to combine a few very large multiyear grants with a relatively extensive small grants program

major cause areas receiving most funding were: health and medical research 23.6%, poverty and disadvantage 16.8%, Indigenous programs 10.9%, arts culture and humanities 10.7%, only 1% of funding was directed to ageing futures, and

many organisations are supported by multiple grants from different foundations; however, there was little evidence of co-funding or collaboration on projects.


  1. Publication: Baker, C and Moran, M 2011, Entrepreneurialism and Philanthropy.

Contribution: Exploration of international literature on giving by entrepreneurs:

in US studies entrepreneurs are reported to be relatively generous

there is a lack of comparable data in Australia, and

a report on several studies indicates that in general wealthy Australians are less generous than their US counterparts.



  1. Publication: Baker, C and Mascitelli, B 2011, Diaspora philanthropy and its influences: An Australian perspective and Baker, C, Battiston, S and Mascitelli, B 2013 Diaspora Philanthropy in Australia: A Preliminary Critique.

Contribution: A pair of explorations into the nature and contribution of Australia’s diverse communities:

note that current and future HNWIs with giving capacity are not confined to Judeo-Christians

find that available data are inconsistent and unreliable

distinguish between remittances and philanthropy and social investment, and

provide evidence that the giving practices of sample diaspora change in nature with time and that original ties weaken with the passing of generations.


  1. Publication: Brown, C 2010, Great foundations : a 360° guide to building resilient and effective not-for-profit organisations.

Contribution: Practical guide to the growing community foundation movement in Australia, which:

is different from private foundations as they are publicly-owned and managed, and

often engages with HNWIs in the local community for giving and leadership.


  1. Publication: Hill, R and Doyle, L 2011, Strategies for Increasing High Net Worth and Ultra High Net Worth Giving.

Contribution: Philanthropy Australia commissioned research (36 interviews) exploring strategies to encourage giving from Australia’s HNWIs and UHNWIs. Factors influencing giving and the propensity to give include:

the cultural context

personal and family values

whether they see themselves as having the financial capacity to give, and

experiences (either positive or negative) in past giving behaviour.


  1. Publication: Leat, D, Williamson, A and Scaife, W 2014, Performance Measurement in Perspective: An exploratory study of Australian foundations’ approaches to performance measurement.

Contribution: Forty interviews addressing the ‘hot topic’ of foundation performance management. Findings include:

the language of measurement is confusing

foundations are open to honest explanations of performance achieved, and

measurement should not be an end in itself but used to assist learning and guide future decisions.



  1. Publication: Madden, K and Scaife, W 2006, The challenge of encouraging more affluent Australians to give,’ Social Change in the 21st Century.

Contribution: Focus groups and in-depth interviews with affluent individuals with and without ‘foundations’:

six main themes that link giving by participants to wider community attitudes: i) perceived capacity to give, ii) personal values, iii) social networks, iv) sense of identity, v) level of attention given to philanthropy, vi) perceived need to be philanthropic, and

four main obstacles to giving for potential donors: they do not think about giving, may not perceive a need to be philanthropic, desire for privacy, and concerns about nonprofit practices.


  1. Publication: Madden, K 2006, Giving and identity: why affluent Australians give - or don't - to community causes.

Contribution: Focus groups and in-depth interviews with affluent individuals:

giving by HNWIs at lower levels may be linked to a sense of identity and responsibility within social groups, and with perceived worthiness of cause and recipient organisations, and

in contrast, major donor behaviour appeared to be linked to passion and personal commitment to social change.


  1. Publication: Madden, K and Scaife, W 2008, Looking for the ‘Value-Add’: Private Advice Needs of High-Net-Worth Australians.

Contribution: In-depth interviews with 20 individuals with A$5 million plus in net assets:

many are active, serving on boards or otherwise active in NPOs

most had a history of community involvement of one sort or another

almost all currently made donations but the amount given was highly variable, and

identified potential demand for advisory services—many advisers do not have the necessary skills and confidence.


  1. Publication: Madden, K and Scaife, W 2008, Good Times and Philanthropy: Giving by Australia's affluent. 

Contribution: Study commissioned by the Petre Foundation. Giving by Australian HNWIs:

not keeping pace with growth in their wealth, and

lower on average than giving by HNWIs in comparable countries (Canada, the UK, the US).


  1. Publication: Scaife, WA, McDonald, K and Smyllie, S 2011, A Transformational Role : Donor and charity perspectives on major giving in Australia. 

Contribution: Research into major gifts (described as donations of A$10,000 or more) in Australia:

identified major gifts as agents of change, transforming projects, organisations and communities

most ‘under-potentialised’ and underutilised area of community support in Australia, and

potential donors need ‘role models’.



  1. Publication: Scaife, W, Williamson, A, McDonald, K and Smyllie, S 2012, Foundations for giving : why and how Australians structure their philanthropy. 

Contribution: Study accessing the views of 40 HNWIs who set up structured, formalised philanthropy:

those who set up foundations are often more engaged, they also give more and more consistently than previously

those who plan their giving donate four times as much as spontaneous givers, and

values matter.



  1. Publication: Timmons, G 2013, Savvy Giving: The Art and Science of Philanthropy.

Contribution: Commissioned by the Australian Communities Foundation:

provides guidance for individuals involved in a charitable giving program, and

emphasises engagement of both the ‘head and the heart’.


  1. Publication: Ward, D 2009, Private Ancillary Funds Trustee Handbook.

Contribution: A handbook produced by Philanthropy Australia:

a ‘plain-English’ introductory guide to the role and duties of the trustee(s) of PAFs and all directors thereof.


Transparency


The practice of foundations sharing information about their giving practices in order to show whether private wealth is serving the public good is often referred to as ‘transparency’. Informed by the wider global developments in relation to transparency and the associated lamentation about the lack of accessible foundation data in Australia, a key note speaker at the Philanthropy Australia National Conference in 2014 was Bradford Smith, President of the Foundation Center. As summarised by Krystian Seibert of Philanthropy Australia (Seibert 2014), Smith argued that transparency:

  • is a good thing and should be helped and encouraged

  • has been viewed by the sector through the paradigm of regulation and compliance, and is associated with unwanted intrusion into the privacy of donors, and

  • in Australia philanthropy should be viewed as an opportunity and not a threat.

Seibert (2014) in his blog went on to argue that the current ‘data deficit’ in Australian philanthropy stands in the way of effectively allocating limited philanthropic resources and makes it much harder to understand, measure and improve performance. This was by far not the only positive response to the advocacy for greater transparency at the Philanthropy Australia conference. A range of sectoral initiatives are currently under way. By way of example, Philanthropy Australia’s President, Alan Schwartz, subsequently visited the Foundation Center in the US to discuss data matters, and Philanthropy Australia is working with university partners to pilot the application of Foundation Center methodology in an Australian context on a thematic area. There is also a broad convergence of institutional philanthropy in Australia, with initiatives in the wider grantmaking sphere (including government and corporate grantmakers) to develop common data classification systems, drawing on established Foundation Centre protocols.

As can be seen from the examples provided earlier of significant developments in foundation data and reporting in China, Canada and the UK, Australian initiatives are not leading the pack. Nevertheless, Australia is participating in advancing some of the pragmatics involved in consistent data gathering and reporting. The International Classification of Nonprofit Organisations (ICNPO) system was developed by Johns Hopkins University (Lester Salamon) and drew on a previous Foundation Center taxonomy, the National Taxonomy of Exempt Entities (NTEE). In response to a question from CSI Swinburne as part of the Giving Australia project, the Foundation Center advised that when developing the new Philanthropy Classification System (PCS) the ICNPO was taken into account. The PCS was developed to enable greater depth and detail. The new taxonomy also differs from ICNPO in that it also accounts for strategies, populations served, transaction types and geographic areas served. The Foundation Center is in the process of developing an interface to enable users to more easily compare data between the PCS to ICNPO systems.






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