Generosity in Australia

The release of the 2016 Giving Australia research deserves scrutiny, not just to better understand giving and volunteering in Australia, but also to highlight the case for meaningful policy changes that will support increased giving, writes Community Council for Australia CEO David Crosbie.

Now this is the creed from the Book of the Bush –

Should be simple and plain to a dunce:

“If a man’s in a hole you must pass round the hat –

Were he jail-bird or gentleman once.”    Henry Lawson

There are many examples of exceptional acts of generosity in Australia. We all like to think that Lawson’s bush poetry reflects an Australian cultural norm of helping a mate down on his luck.  

The data tells us that Australians can be big supporters of one-off appeals that raise large amounts to support victims of fires, floods and natural disasters. Many Australians also participate in telethons and radiothons to keep a children’s hospital at the front edge of medicine or maintain an air rescue service. But does this make Australia a generous country?

This week marks the release of the largest Australian study ever conducted into giving and volunteering, funded by the government through the Prime Minister’s Community Business Partnership and drawing on the expertise of the Australian Centre for Philanthropy and Nonprofit Studies. Its findings deserve scrutiny, not just to better understand giving and volunteering in Australia, but also to highlight the case for meaningful policy changes.

Almost two years ago, when leaders from across the charities sector came together to discuss the Australia they would like to see, one of the values that was prioritised above many others was generosity. When Community Council for Australia (CCA) was writing the Australia We Want report, our focus in measuring generosity was not so much volunteering, which is a complicated issue and worthy of a separate article, but upon actual giving or donating of money to charities.

Researching the data around giving and donations, it becomes quite clear that despite our well-publicised support for giving and philanthropy, we are not a very generous nation, certainly not in terms of giving by the wealthy or regular giving from our salaries. In fact, the Australian Taxation Office (ATO) data suggests our giving has declined as a percentage of our income by over 20 per cent since 2009. The evidence also suggests there is a direct link between consumer confidence and levels of giving.

Any fair analysis of giving in Australia should include comparisons to countries with similar levels of wealth. CCA found there is a significant disparity between our comparative level of wealth and our comparative level of giving:

• According to the World Giving Index, when it comes to giving money Australia is behind: US, UK, Canada, Ireland, Myanmar, Iceland, Malta, Netherlands and on a par with Indonesia. Australia’s median wealth is more than double most of the countries above us on this scale.
• US wealthy families contribute four times as much to charities as do wealthy families in Australia.
• Australians on average spend 12 times as much on their gambling as they do contributing to charities, and spend five times as much buying coffee.
• Most Australians do not give regularly
• One-third of our richest Australians – those earning over $1 million – made no donation to charity.

While most people see giving as a desirable activity, most do not give. How can we explain this contradiction? The starting point is considering whether there are any policy settings or other factors in Australia that act against the kind of patterns of giving we see in the US and other countries.

One of the more important policy levers in this space is estate duties. Australia currently has no estate duties although up until the reign of then-Queensland premier Joh Bjelke Petersen in the late 70s, estate duties contributed around 3 per cent of all Australian government revenue.

The benefits of an estate duty are well documented. If we are looking to increase giving, we know estate duties work. Based on analysis of giving in the US, we would expect levels of giving to increase by around 30 per cent if even a modest estate duty targeting only the very rich was applied in Australia. Estate duties also work well to raise government revenue and slow down the growth of inequality.

ATO figures now suggest around 25,000 Australian families hold assets above $10 million. If just 4 per cent of those families paid 35 per cent in estate duties, it would equate to approximately $5 billion. If an estate duty was only applied to the super-rich, it could have real benefits across the community without impacting 99 per cent of Australians. Estate duties could be applied like a capital gains tax, collected from people who no longer need it at a time when they are liquidating their assets. It would probably also grow over time as Australia gains more super-rich amongst our ageing population.

The Henry Review supported the idea of inheritance duties because it was a fair progressive tax that could raise 1 per cent of government revenue with no negative impacts on productivity. Super-rich people like Bill Gates and Warren Buffett support estate duties because they see them as fair. They also acknowledge that this form of taxation encourages more giving while people are still alive. The former editor of the UK journal Taxation, Mike Truman, says the main problem with inheritance tax is that we are not paying enough of it because it is – in principle – a perfect tax.

Of course, the stumbling block with an inheritance tax is it challenges some of the most powerful vested interests in Australia and would require political leadership to win over a sceptical Australian community.

There are lower-hanging fruit in this space. We should, for instance, make workplace giving more accessible by providing tax concessions for giving to a broader range of groups and encouraging an opt out system for signing up new employees. We should allow many smaller charities struggling to afford the time and resources to achieve DGR status better access to tax deductibility. We should also consider adopting the policy that applies within the French superannuation system where all pension fund (superannuation) providers have to offer a social impact investment stream that can only be invested in charities. These “solidarity funds” in France now manage over $8 billion of investment into their charities (solidarity organisations) sector.  

Although these funds are an investment rather than a gift, the fact that employees can direct a small percentage of their super fund to be used in this way has driven many new initiatives and allowed for capital and infrastructure renewal within many French charities.

Australia is clearly not an overly generous nation, but this should be the start of a conversation, not the end. There is much we can do to change the status quo if we want to.

The pre-GFC approach of the charities sector was to capitalise on ever-increasing consumer confidence and increasing levels of giving. This approach is no longer a sustainable strategy.  

Hopefully we can work as a sector to collectively achieve some real policy changes that will support increased giving. At the very least, we should all be trying to encourage a more generous Australia by demonstrating the value of our work and the benefits to our communities.  

About the author: David Crosbie is CEO of the Community Council for Australia. He has spent more than 20 years as CEO of significant charities including five years in his current role, four years as CEO of the Mental Health Council of Australia, seven years as CEO of the Alcohol and other Drugs Council of Australia, and seven years as CEO of Odyssey House Victoria.

David Crosbie writes exclusively for Pro Bono Australia News on a fortnightly basis, covering issues of importance to the broader not-for-profit sector.