A guide to giving: philanthropy in 2023

Australians donate billions¹ to charity each year, supporting causes close to their hearts. We explore the causes, trends and opportunities that are expected to shape giving in 2023 and discuss what this means for Australian philanthropists. 

As Australia’s wealth grows, our desire to help one another seems to be growing too, according to ANZ Private’s Director of Financial Advice, David Lipari.

“That desire to help has always been there, but people are now more likely to put their money where their desire has been,” he says.

“I’ve had a lot of conversations over time with people who like the idea of doing something but haven’t quite been ready – lately, it feels like more people are becoming ready.”

Trending causes and opportunities to drive greater impact

Five major themes are expected to dominate philanthropic giving in 2023 and beyond, according to research by Philanthropy Australia (PA)¹: 

1. solving the affordable housing shortfall,
2. integrating climate awareness into giving strategies,
3. reducing the stress experienced by groups vulnerable to economic downturn,
4. issues affecting First Nations peoples, and
5. addressing the underlying causes of economic inequality and poverty.

PA’s research also found that while Australians are generally optimistic about the state of giving, there are several opportunities to drive better outcomes for the community.

Specifically, there’s an apparent desire to shift the power imbalance between philanthropists and recipients to create a truer sense of partnership. Philanthropists also revealed a desire to collaborate with and learn from other philanthropists, and to transition from transactional to longer term relationships. 

Other changes philanthropists wish to see include a push to get the voices of beneficiaries into board and leadership structures and a growing interest in impact measurement. The research also shows a desire to make it easier for not-for-profits to meet deductible gift recipient (DGR1) restrictions.

Many philanthropists also plan to be more targeted with their donations, offering fewer grants, but with higher average values and focusing their money on specific causes. 

What’s changing in 2023?

The rules and expectations governing philanthropy and not-for-profit organisations are set to undergo several changes this year. One of the most well-documented changes is the introduction of new tax rules for not-for-profits.

From 1 July 2023, any non-charitable not-for-profit organisation with an Australian business number (ABN) must lodge an annual self-review to maintain its income tax exemption. This rule was introduced in the 2021-22 Federal Budget in a bid to “enhance trust and confidence in the sector”.

Sports clubs, community service groups, and health, education, or scientific research not-for-profits all fall under the ‘non-charitable’ banner.  

According to the ATO, this change will ensure only not-for-profits that are eligible for the tax exemption will be able to access it. Organisations that fail to lodge the self-review with their return will not only be at risk of losing tax exemptions but could also face tax penalties. 

Currently, there are no disclosure obligations regarding these organisations’ tax status, so philanthropists will need to conduct their own due diligence to get this information. 

Elsewhere, the Federal Government has signalled further changes could be in the pipeline. Last year, Charities Minister Dr Andrew Leigh pledged to double Australia’s philanthropic giving by 2030.²

More recently, Dr Leigh says the government is considering streamlining the process that charitable organisations use to register themselves with the ATO. Under the current rules, certain charities are required to make their case to the responsible minister before receiving deductible gift recipient status while others simply need to file paperwork with the tax office.

The proposed changes would allow more charities to apply directly to the ATO. However, some charities – such as those administering foreign aid – will still need to undergo ministerial reviews to ensure compliance with anti-money laundering legislation.³

Shifting attitudes towards giving

Lipari says the impetus to donate to important causes has been consistent among ANZ Private’s clients, but he noted it’s often the second or third generation that makes the biggest investment. 

In most cases, he says, this reflects an eagerness to uphold the values of their forebears.

“I think the inclination to help others is stronger, potentially, within that group because they feel an obligation to continue the legacy that's been created, and also to give back to others,” he says.

The causes ANZ Private’s clients choose to support varies, Lipari says, but typically philanthropic families will have a personal connection to the cause they’re supporting.

“People don't want to give money into a sort of charity ‘black box’ - they want their money to go to solve problems they're familiar with,” he says.

“That is also part of what we at ANZ Private try to do – help people get their money into giving structures that allow them to be more thoughtful with their grants, so money gets to the groups that they're most interested in helping”.

Lipari added that the growing interest in impact investing – investments creating beneficial social change as well as generating returns – also bodes well for the future of Australian philanthropy.

Research by the Responsible Investment Association Australasia (RIAA) found assets under management allocated to impact investing hit $30 billion in 2021 – a modest increase from the $29 billion total funds under management record in 2020.⁴

This trend suggests Australians are becoming more interested in how their money is being used and want to see their capital driving positive outcomes for their communities. 

How can I get involved?

Australians hoping to become more active in philanthropy can do so using several different vehicles and financial structures. The two most commonly used are private ancillary funds and public foundation sub funds.

A private ancillary fund is described by the Australian Charities and Not-for-profits Commission (ACNC) as a special fund linking “people who want to give … and organisations that can receive tax deductible donations as deductible gift recipients”.

This gives philanthropists greater control and flexibility over how the money they donate is used.

Public foundation sub funds, on the other hand, feed into another master fund supporting the chosen organisation – making them easier to operate but giving donors less control.

Lipari cautioned would-be philanthropists to plan their donations carefully. That’s because once money is placed into one of these structures it needs to be used for the specified charitable purpose.

Importantly, each of these structures come with certain obligations that donors, as directors of the funds, will need to comply with.

Lipari said that ANZ Private specialises in managing these obligations and can help clients   establish the fund structure that’s right for them.