Before the pandemic, the social pages of newspapers, magazines and online gossip boards were full of photos of well-to-do benefactors attending glittering fundraisers and black tie dinners to raise money for deserving charities. Or we’d read about celebrities, sporting superstars and billionaire tech founders donating millions to charity.
Philanthropy, it seemed, was the realm of the rich and famous.
But philanthropy is about more than just donating money to good causes. It’s about more than a tidy tax break.
If you’ve ever wondered about how to get involved in philanthropy, or you’re just after some philanthropy advice, you might want to keep reading.
What is philanthropy?
From its origins, philanthropy is ‘the love of humanity’. The word was first used around 2500 years ago in the myth of Prometheus, the Greek God who defied Zeus to protect mankind by giving them fire (and optimism).
In our more modern times, philanthropy refers to charitable acts, such as the giving of money, time or goods to help society. And while it’s true there are some nice tax benefits to be had, the act of giving to those less fortunate still has the ability to make you feel good about yourself and the world around you.
And who among us couldn’t do with a big dose of endorphins every now and then?
Which charity should you support?
The sheer number of charitable organisations wanting a slice of the philanthropic pie can seem overwhelming to a budding philanthropist. And with some charities having problematic histories that may upset your client base should you choose to align yourself with them, careful research and sound philanthropic advice are a great place to start.
Philanthropy Australia, the NFP national peak body for philanthropy, suggests you begin by examining your reasons for giving. Their A Guide to Giving for Australians notes the four main things to consider:
Personal motivations – why do you want to give?
Assets – what do you have to give?
Constraints – what limitations might you have?
Giving focus – what and who do you want your giving to benefit?
The guide then encourages you to examine your options. Will your giving be structured or flexible? And how will you set this all up?
It’s also worth remembering that you don’t only have to give money. You can also donate your time, such as volunteering, or offer your skills, such as running a workshop, to help others. But this will depend on the charity, or charities, you wish to support.
The Australian Charities and Not-for-profits Commission (ACNC)
The ACNC is the national regulator of charities. They register and regulate Australia’s 59,522 charities and their main objectives are:
- helping charities understand and meet their obligations through information, advice and guidance, and;
- helping the public understand the work of the not-for-profit sector and provide a free searchable database of charities.
And why is the ACNC so important in the world of philanthropy? According to the ATO:
‘Charities are also subject to the rules administered by the Australian Charities and Not-for-profits Commission (ACNC) in order to maintain their entitlement to endorsement as a tax concession charity (TCC).’
Speaking of tax concessions …
Philanthropy and the Australian Taxation Office (ATO)
When it comes to philanthropy advice, the ATO tells us:
‘Private groups often choose to give back to the community through philanthropic ventures. You can either set up an entity specifically for this purpose or donate directly to established organisations.’
The ATO offers advice on:
Private Ancillary Funds (PAF)
A PAF is a charitable trust set up so individuals, families or organisations can structure their philanthropic investments. It must be set up correctly under both trust and tax law, and ‘must meet the legislative requirements and comply with the private ancillary fund guidelines.’
‘A registered charity must be endorsed by the ATO as a tax concession charity (TCC) to access the following tax concessions:
- income tax exemption,
- GST charity concessions,
- fringe benefit tax (FBT) rebate, and;
- FBT exemption.’
‘To be tax deductible, a gift must be made to an organisation that is endorsed by the ATO as a deductible gift recipient (DGR).’
You can check the endorsement status of any organisation on the Australian Business Register and, of course, you must keep all details of the gift for tax purposes.
Financial advice for philanthropists
It’s a great feeling to give to the office fundraiser or donate a few dollars when a charity comes knocking on your door. And when it’s time to submit your tax return, you get to claim it back on your tax.
However, if you want to contribute more, contribute regularly or even bequeath money to your favourite cause when you die, you’ll need more than a generous heart to make it all happen. You’ll want to make it count.
Speaking to a professional financial advisor, before you become involved in philanthropy, is important. They know all the ins and out of tax laws. They can show you how you can give back to your community in ways other than just dollars. Just as the ATO expects charitable organisations to play by the rules to access all those lovely tax concessions, they expect exactly the same from you and your business or association.