An opportunity for leveraging volunteering and philanthropy to help address our biggest social and environmental challenges … has been missed. So far.

What we got from the Productivity Commission’s draft Future foundations for giving report was some obvious steps to reform arcane DGR categories (see image, above), create better (and more timely, please) public datasets and the obligatory call for less red tape … such as abolishing the $2 threshold for tax deductible donations.

Suddenly, the Australian Government’s commitment to double philanthropic giving by 2030 looks on shaky ground. As Philanthropy Australia noted: “the final report will need to recommend a stronger suite of high-impact reforms if Australia is to achieve a step-change lift in our culture and practice of giving.”

The inquiry’s narrow focus is partly to blame for the lack of meaningful findings. Regardless, it is hard to square the draft report with the Commission’s own 5-year productivity review. Advancing Prosperity found labour productivity growth of government-funded services – such as health, aged care, disability and education – has been close to zero.

Many Australia’s charities and nonprofits deliver those services, often using blended finance models to subsidise under-funded programs. Advancing Prosperity found much-needed innovation is stymied by government funding rules which focus on inputs (activities) and outputs (deliverables) rather than measurable outcomes.

Surely, a greater focus on impact, workforce skills, knowledge sharing and digital technology in the nonprofit sector will help grow philanthropic giving? Funders will co-invest more money in programs if they are run by talented people who collaborate and use new tech to scale and evaluate their social impact.

Submissions from Save the Children Australia (SCA), Social Ventures Australia and Philanthropy Australia tried hard to lift the inquiry’s ambition. SCA proposed measures to attract workforce talent, address government underfunding, facilitate superannuation bequests, incentivise volunteering and a fund to support innovation.

The inquiry report acknowledges that government programs are under-funded (i.e. cross-subsidised by fundraising). Chronic underfunding limits the ability of nonprofits to innovate, recruit talent and use technology. Yet, potential solutions to develop staff capability – such as increasing the eligibility of salary packaging – were dismissed by the Commission as “distorting the market”.

Philanthropy Australia highlights culture as a critical driver of change. It believes the Australian Government should initiate a National Giving Campaign to help create a more generous and giving Australia (such as in the United States). The Commission counters by saying the proposal lacks evidence of any net benefits for the Australian community.

Similarly, proposals to grow bequests, using tax concessions on funds drawn from large superannuation balances, were rejected. Super is concessionally taxed throughout its life cycle, so a further tax break would “result in a significant loss of government revenue”.

Many submissions proposed the extension of DGR to all 600,000+ nonprofits; a recommendation acknowledged but roundly ignored (although, maybe the governance and compliance issues were too obvious to publish?!)

Calls for professional financial advisors to offer wider advice on structured giving, PAFs and Wills for social and environment benefit – not just financial returns – “lacked evidence”. The Commission argues that mandating standards or training “would appear to a be a disproportionate response that is unlikely to result in net benefits”.

The draft report generally calls for more evidence and information, so it’s up to the sector to respond. In the meantime, there is still hope for meaningful growth in philanthropic giving and sector reform through the Blueprint Expert Reference Group (BERG) review.

• Twitter
• LinkedIn
• Facebook