Tax Time Giving

Opinion: In the tax-time donation appeal flurry, community investment expert Phil Hayes-St Clair says all this activity begs the question: is making a donation simple?

It’s that time of year again. Charities around the country have dialled up their efforts of suggestive selling to reap as many pre-30 June donations as possible. Accountants and lawyers have finished urging their clients to find a tax deduction before the financial new year’s day.

Meanwhile, directors of Private Ancillary Funds (PAF), Australia’s most popular private benefaction vehicle, are checking to ensure their PAF has met its annual obligation to distribute five percent of its assets before the financial year-end.

All this activity begs the question – True or false: making a donation is simple?

Many Australians who are familiar with regular giving will tell you making money is far easier than giving it away. This is because the sheer number of community organisations willing to take donations is overwhelming, not to mention picking one or two.

Throw into the mix the old chestnuts of ‘low’ charity transparency and efficiency and how many cents in the dollar go to ‘administration’ and the decision becomes seemingly more complex.

There is good news and it begins with a little myth busting.

Leadership is absent in the NFP sector is the first myth.
The Not for Profit (NFP) sector maintains a contingent of high quality leaders who are making solid progress on the issues of transparency and efficiency, whilst also creating meaningful social impact. It won’t surprise you to know that we place a high degree of emphasis on this measure of NFP leadership when performing due diligence for our clients. We also examine the fundamentals of community organisations and what they could do with funding (and other resources) over a three to five year time frame – the recommended duration for families and PAFs to provide support.

The second myth is that funding programs is the answer.
People often donate to support a program without thinking about how it gets supported and delivered. Impactful programs cannot exist without a strong organisation so ask an outstanding NFP leader what they need. They will know how to build an organisation with a strong core with a capacity to deliver effective programs over the long term.

The NFP sector will never change is the third myth.
The Government’s NFP regulator will begin driving much needed improvements later this year but that’s just the beginning. Take a closer look at the emerging trends that are naturally transforming the NPF sector, in particular the emerging role of intermediaries. The Documentary Australia Foundation is one intermediary who is drawing together the efforts of filmmakers, charities and donors to harness the value and impact of storytelling. Likewise, Future Directions International, the independent think-tank in Western Australia, has gone one step further in producing strategic analysis for the public and private sectors. They have recently extended their reach by teaching university students how to analyse water, food and energy security issues, a valued but until now under-serviced area of social focus.

One final thing, find a way to include your children in your giving and instead of making a provision in your estate to give posthumously, why not join the other 1000 Australians who have established a PAF and give while you live! It will be tremendously rewarding and you might have also made 2012 the last year you just cut a last minute cheque to charity.

About the author: Phil Hayes-St Clair is the Founding Director of HSC & Company, a specialist philanthropy and community investment consulting firm that helps businesses and private foundations in Australia and internationally. HSC & Company consults to businesses to help management make decisions on the design and implementation of authentic corporate community investment strategy. HSC & Company's private philanthropy practice provides expert advice to families and clients of professional service firms.

Phil Hayes-St Clair’s blog originally featured on the HSC & Company website, republished by Pro Bono Australia with their permission.