Too much funding going to 10 per cent of charities - The Australian

1 December 2023

Our corporate philanthropy model is unsustainable with 94 per cent of all donations going to just 10 per cent of Australian charities and the top 20 charities raking in about 25 per cent of all the money given each year. The concentration of giving is leaving many small charities struggling, according to Kristen Lark, the CEO of The Funding Network, which operates as a link between business, philanthropy and individual donors. 

She argues that both government funding and philanthropic money from corporations is unevenly distributed, with a strong bias towards well-known brands: 98 per of money provided to organisations by the federal government goes to those classified as large or extra-large. Small charities, those with less than $1 million in revenue, make up about 66 per cent of all organisations but are left scrambling for funds. 

Ms Lark said figures from the Australian Charities and Not-for-profits Commission (ACNC) showed that in 2021, some 4959 charities out of a total of just under 50,000, received $11.7 billion of the $12.5bn donated. The top 20 received $3.1bn of that total. 

Ahead of the Productivity Commission report on philanthropy released on Thursday night, Ms Lark said one reason for the concentration of donations was that it was often hard for donors to find early stage charities and vice versa because “the bigger you are, the more money you have to spend on marketing and promotion and fundraising”. 

She said the current philanthropy model was unsustainable because it overlooks grassroots organisations and puts too much emphasis on big monetary contributions, ignoring volunteering of time or skills, as well as the impact of smaller, regular giving. 

“A lot of attention is given to people who give large amounts of money, but I think that everyday Australians are generous people,” she said. 

“They’d give a lot of money away to charity, both at times of crisis but also on a consistent, regular basis. I think continuing to find opportunities to highlight giving in all of its forms and all its levels is a really important part of building a deeper culture of giving in Australia.” 

Smaller charities would benefit if more were given DGR (deductible gift recipient) status so the donations would be tax deductible and they could receive grants from structured giving vehicles. As well, simplifying fundraising regulations, which differed across the states, would be useful. 

She said leading philanthropic nations like the US and UK automatically extended the equivalent of DGR status to all charities, and New Zealand used a tax credit instead of a tax deduction. 

The existing Australian framework, where almost half of registered charities do not have DGR status, discourages the public from donating to those without DGR status as they cannot receive a tax deduction, Ms Lark argues. Affected charities also miss out on grants from structured giving vehicles like public ancillary funds and private ancillary funds. 

She said the option for people to donate some or all of their tax refund to a nominated charity would encourage more people to give; as would allowing bequests to be made directly from superannuation accounts. 

She said that while some critics argued there were too many small charities and they should merge, it was also the case that most innovation in the sector came from small, early-stage operators. 

Her organisation runs events bringing together donors and charities to help people pitch their operations. It has run 175 events across Australia in the last 10 years. 

“We’ve tried to bring together corporate philanthropists and everyday Australians into an environment that creates excitement and joy around giving,” she said. “They get in front of the right people. A lot of donors set aside a certain amount of money

a year to give to grassroots charities. So they come (to events) open to new ideas and hearing about new charities. 

“We canvass the country looking for the best ideas and then we go through a process to narrow it down to the three that will pitch into the event. That kind of process gives people a lot of confidence in our ability to pick good (charities).”


By Helen Trinca, The Deal Editor and Associate Editor

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