Tax deduction incentive not translating into more donations: research

Name: GiveNow
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Posted on 15 Jun 2023

By Greg Thom, journalist, Our Community

Despite high awareness among most Australians that they can claim charitable donations on tax, just half are donating each year, new research reveals.

The research, commissioned by humanitarian aid organisation CARE Australia, reveals one in eight Australians has never donated at all.

Developed to provide an insight into the charitable habits of Australians at tax time, the study found that while 80 per cent of people are aware they can claim donations above $2 as tax deductible, for many, that knowledge is not translating into contributions.

Other key research findings included:

Healthcare tops the list of sectors Australians would be most likely to donate to, with 61 per cent of Australians saying they would be willing to reach into their hip pocket to contribute.
At the other end of the scale, only a quarter of potential donors said they would be willing to direct their funds to charities fighting to alleviate global poverty.
Just over half of Australians plan to make a charitable contribution prior to lodging their tax return by June 30 this year.
Worryingly for the not-for-profit sector, an estimated one in three Australians say they donate less because of a perceived lack of transparency.

In a recent speech before delegates from across the sector, Australian Charities and Not-for-profits Commission Chief Sue Woodward said building public trust and confidence was key to addressing some of the challenges currently facing the sector.

She pointed to the $2.9 million allocated in the recent federal budget to boost transparency and accountability in the charity sector by enabling increased disclosure of the ACNC’s regulatory activities.

“I think if we maintain or improve public trust and confidence then you’ll get the volunteers, you’ll get the donations and that will help you be independent and sustainable.”

ACNC Commissioner Sue Woodward: — ACNC Commissioner Sue Woodward.

CARE Australia CEO Peter Walton urged Australians to take advantage of the ability to make a tax deductible donation to a cause they care about, but added it is particularly vital to do so to charities striving to alleviate global poverty.

“Tackling the global poverty crisis is only becoming more urgent as we face concurrent crises; global economic inflation, climate emergencies, the covid-19 pandemic, war, and a global hunger emergency,” he said.

“As humanitarians we deliver lifesaving and essential services on a shoestring budget, but we can’t afford to let support slip if we want to make change and support the most at-risk in these crises.”

Mr Walton urged Australians to make the most of their tax-deductible funds ahead of the end-of-financial year to donate.

“Addressing this issue isn’t something we are going to solve overnight, and this sector needs the support of many more Australians to defeat global poverty,” he said.

Mr Walton said living in poverty is already a daily struggle for survival and when disaster strikes, that struggle becomes even greater.

“Donations from Australians are vital to help those living in disaster-prone regions survive, while also providing their own financial benefit by reducing donors’ taxable income.”

GiveNow executive director Cathy Truong said it’s important for not-for-profit groups to be conspicuous in their need for funds at this time of year.

“People need to be prompted into action by a group they have been connected to or inspired by,” said Ms Truong.

“What we need to work on is the right time to ask, from community organisations that matter to individuals.”

Ms Truong also pointed out that while many people are aware of the tax benefit of donating, they may forget to submit their tax-deductible receipt in their tax returns.

“So, for organisations with Deductible Gift Recipient (DGR) status, you should be reaffirming that by providing an annual summary of all donations for the year,” she said.

“Donors need for it to be easy.”