Giving back by giving to

Companies that over-estimated their future losses during the pandemic are being encouraged to return some of the tax-payer funded JobKeeper payments they received to the government. But what if there was a better way to contribute back to our community in this time of need, a way that would generate many ongoing additional benefits, writes David Crosbie.

Prime Minister Scott Morrison was quick to commend Toyota Australia for returning $18 million of JobKeeper payments back to the Australian Taxation Office (ATO). In a radio interview with 2GB, he pointed out that while people appreciated a government offering to provide support at a time of need, there was also a general recognition that such assistance should not be taken advantage of.

We now know that in working out JobKeeper eligibility some companies had forecast anticipated losses of income above the 30 per cent threshold for payment of JobKeeper subsidies, and then found that their company had actually generated more income and profits than previously. These companies are now being asked to consider their position and to think about the possibility of returning JobKeeper subsidies to the government. 

There are three other options I believe these companies should consider before they commit to returning JobKeeper payments to the ATO; one of the best would be to invest the funds in establishing or boosting their existing workplace giving program.

Workplace giving programs operate across Australia in many workplaces. Most are employee directed meaning that it is the employees themselves that direct where their donations go. There are significant tax benefits to individuals contributing directly through an approved workplace giving program – the money is regularly deducted from their pre-tax salary. Small amounts given regularly by many employees can add up to major amounts of philanthropic funding over time, enabling workplace giving donations to have a real impact within communities. 

A number of companies have taken their employee directed workplace giving programs one step further by providing various kinds of matching contributions from the company itself. Companies may choose to match employee contributions dollar for dollar or in some other ratio, thereby increasing the potential to drive positive change in the communities they choose to support.

Imagine if instead of returning $10 million of JobKeeper subsidies to the ATO, a company chose to establish a company workplace giving program and used the $10 million as the initial investment into the workplace giving program? This kind of donation would not only improve the standing of the company and its employees, but also provide tremendous benefits to the communities that receive a donation. 

Workplace Giving Australia offers a free guide to workplaces seeking to establish a workplace giving program. It is not that difficult to get started and begin making a difference within your company and within the communities you engage with. How much better would boosting a workplace giving program be compared to giving the money back to the ATO? 

Another option is to establish a company foundation with a strong charitable purpose. Philanthropy Australia has an excellent guide to setting up the appropriate structure for giving as a company through a company ancillary fund. This fund can invest and create returns to be given to charities over time. $10 million invested in a company public ancillary fund would allow a significant investment in ethical or social impact investments, and result in $500,000 being distributed to charities every year.

Some companies may choose to give their JobKeeper payments directly to a charity they want to support. 

All of these options represent a more efficient use of money. Giving money back to government entails a transfer process; government receiving and accounting for the money, allocating it internally through budgeting systems, developing priorities for its expenditure, processes around making the money available (often through onerous tendering requirements), overseeing appropriate expenditure and accounting for the money. While all these transfer costs can vary significantly, in some cases more than 30 per cent of the money will be lost in government management and oversight of the funds. 

Another advantage of workplace giving programs and the establishment of a company supported public ancillary fund is that they promote giving, not just as a one-off exercise, but as part of the expected normal behaviour within the company.

A further benefit is how employees feel about working for a company that gives to charitable purposes within their communities. Employee loyalty and morale are both boosted by companies that take an active role in giving back to communities.

COVID-19 has highlighted our interconnectedness, as Tim Costello has pointed out, the “we” rather than the “me”. This is just as true for companies in Australia as every other group. There are now a number of companies that are in a position to give back to the communities that support them, not by giving back to the ATO, but by giving to charities that serve their communities.

Governments, companies, and industry bodies all have an exceptional opportunity to encourage giving and an investment of what was taxpayer dollars directly back into our communities to support recovery and strengthen communities. 

If we are not going to promote giving when the work of charities in rebuilding post the pandemic is so critical, when the income of so many charities has been depleted, when volunteering has been hit so hard, when will we promote giving?

Charities across Australia stand ready and willing to work with companies and governments to assist in contributing to stronger and more resilient communities across Australia. For those companies that have experienced a government windfall as a consequence of their income being higher than anticipated during the pandemic, we await the call.