Community foundations granted access to DGR

“This is a historic reform that changes the dynamic for community foundations.”

The philanthropy community is celebrating a win after the federal government’s budget announcement included long-sought reforms that will give community foundations greater scope to drive impact in local communities.

Up to 28 community foundations affiliated with Community Foundations Australia are now set to receive a specific listing as deductible gift recipients from 1 July 2022 to 30 June 2027. 

This reform will simplify the work of community foundations, enabling faster responses and greater impact, and will also allow private ancillary funds (PAFs – private foundations set up by individuals, families or businesses) to distribute funds to community foundations. 

Up until now community foundations – which are commonly place-based and community-led charities that are owned, run and supported by local people – have been cut off from this growing flow of private philanthropy.  

Under current regulations, community foundations can only receive tax deductible donations if they set up a public ancillary fund, known as an “Item 2 DGR”. As well as stopping them from receiving funding from PAFs, this also restricts how they distribute funding.

They have only been able to fund “Item 1” DGR charities, of which there are very few in regional areas, meaning that community foundations could not fund many grassroots community groups and initiatives. 

However this latest reform, which follows years of advocacy from the sector calling for DGR status to be made available for community foundations, will make it easier for listed community foundations to support local charitable activities, making donor dollars go further faster.

The move is being hailed as significant for all community foundations, particularly for the 80 per cent that operate in regional Australia.

Peak bodies Community Foundations Australia and Philanthropy Australia welcomed the news.

Community Foundations Australia Chair Ben Rodgers said it would streamline how community foundations fund local charitable groups and initiatives in their communities.

“Australia’s network of community foundations is a great national asset that has arguably been under-utilised to date,” Rodgers said.

“This reform will position our sector for greater impact in the decades ahead so that we can contribute as we should to regional community development, building resilience to natural disasters, and addressing the big challenges in our cities.”

CEO of Philanthropy Australia, Jack Heath, said the reform would enable community foundations to draw on their long-term relationships and leverage their local knowledge to deliver funding where it’s needed most – “especially in emergencies that we’re seeing with the current floods in Queensland and NSW.’’

“This is a historic reform that changes the dynamic for community foundations,” he said.

Our 2022 budget coverage is brought to you by Fifty Acres.