GFC Hit Tax Deductible Giving to Australian NFPs
6 June 2011 at 3:24 pm
Despite tax deductible giving in Australia growing strongly at 15% per year, the Global Financial Crisis saw a decrease in the amount of money Australians donated to Not for Profit organisations, especially among the very rich, according to a recent examination of tax-deductible giving data by Professor Myles McGregor-Lowndes.
Director of the Australian Centre for Philanthropy and Nonprofit Studies Professor Myles McGregor-Lowndes reported on the extent of tax-deductible donations claimed by Australian taxpayers in their 2008-09 individual income tax returns in a recent podcast.
The global financial crisis saw an increase in the number of Australian taxpayers claiming tax-deductible donations, however the size of these donations decreased for the first time in a decade, according to McGregor-Lowndes.
He says that according to the Productivity Commission report into the Not for Profit sector, philanthropy revenue for the sector in 2006-07 was about $7.2 billion – of which around $2 billion is declared by individuals as tax deductible gifts.
He says while this data is not comprehensive, it does provide an annual metric of giving.
Tax deductible giving in Australia is growing by an average of nearly 15% per annum, which McGregor-Lowndes says is due in part to the incentives to encourage philanthropy such as Private Ancillary Funds and a very strong Australian economy.
He says 2008-09 saw the amount given as tax-deductible donations to Not for Profit organisations in Australia down 10.79%, mirroring a worldwide trend with a 3.8% decrease in the United States, 11.4% decrease in the United Kingdom, and 5.4% in Canada.
Despite the decrease, the amount given as donations in 2008-09 was still $208 million (or 11.04%) higher than 2006-07 in Australia.
McGregor-Lowndes says the average tax-deductible donation made in 2008-09 was $450.05, compared to $523.10 in the previous financial year, and $440.01 in the year previous to that.
The GFC had the greatest influence on the donations of the nation’s wealthy donors, with taxpayers with an annual taxable income of over $1 million claiming an average of $48,706.38 – down 53% on the previous year’s high of $102,543.08.
He says people earning over $1 million per annum donated 1.71% of their taxable income, down on 2.89% the year before – but still far above the national average of just 0.38%.
The Black Saturday Bushfires which occurred in Victoria in early February of 2009 impacted on philanthropic giving, with the Victorian Bushfire Appeal raising $379 million. McGregor-Lowndes says compared with the previous year Victoria accounted for 7% more of all deductible gifts in Australia, and the state’s gross deductible gifts rose by 27.30% to $601 million.
He says the average gift in Victoria also rose from $433.49 to $470.08, an 8.44% increase compared to a drop of nearly 11% nationally.
McGregor-Lowndes says this probably points to giving expanding to meet the challenge of the needs created by the bushfires.
The Australian Centre for Philanthropy and Nonprofit Studies (CPNS) is based at the QUT Business School.
ACPNS has put together a database of tax-deductible giving which is searchable by postcode and occupation. Access the database here: http://www.bus.qut.edu.au/research/cpns/publications/postcode.php
If you would like a more detailed report on tax-deductible giving, download the latest ACPNS Working Paper here: http://www.bus.qut.edu.au/research/cpns/publications/.
Listen to the full podcast here: http://www.bus.qut.edu.au/research/cpns/podcast/shows/show56.jsp