A guide to giving: philanthropy in 2024

Australians are among the most charitable people in the world – it’s part of our longstanding tradition of mateship. As a new financial year rolls around we take a look atthe state of philanthropy in 2024, the different ways to give, and the sectors that most need our support.

The Australian spirit of mateship is alive and well, according to Charities Aid Foundation (CAF) data.

In its latest World Giving Index, CAF found Australia was the 14^th most giving country in the world – not far behind fellow antipodeans New Zealand in 10^th place.^disclaimer

Indonesia, Ukraine and Kenya were named the top three countries respectively.

David Lipari, Director – Wealth Advice at ANZ Private, says Australia’s results aren’t at all surprising.

“It’s not the first time Australians have scored in the top 20 on these lists, and I doubt it will be the last,”

“Australians, including our ANZ Private clients, often prioritise helping their communities, and we’re more than happy to support that.”

CAF’s rankings are based on the percentage of citizens in a given country who engage in three core charitable activities:

1. helping strangers in need
2. donating money, and
3. volunteering for good causes.

CAF then ranks each of the 142 countries in their report, based on the average of positive responses across all three behaviours.

The report found that 65% of Australians had helped strangers in the past year, while 56% had donated money and 31% had volunteered their time.

Australia’s high ranking is consistent with Lipari’s experience. Australians donate billions to charity each year, and Mr Lipari believes our desire to help each other out seems to grow with our wealth.

“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.”

Need for donors is growing in cost-of-living crisis

While these figures paint a promising picture of Australia’s charitable nature, many philanthropic organisations across the country are nervous about their funding.

Philanthropy Australia’s 2024 Better Philanthropy Telescope found that many not-for-profit groups are worried they may not be able to support as many people as they’d like to as the cost-of-living crisis drags on.^disclaimer

This issue is three-fold.

Survey respondents flagged that higher living costs may change the way people choose to give, leading to a lack of sustainable funding. Even as inflation eases, not-for-profits are concerned about the long-tail impact of these higher living costs.

Additionally, higher prices have put more Australian households under strain and demand for services from not-for-profits are growing.

Finally, the cost increases affecting donors and households are also placing pressure on not-for-profit organisations: operating costs are growing and investment is falling.

And as the cost-of-living crisis deepens, a number of leading Australian charities have warned they’re already seeing their support begin to dwindle.^disclaimer

Unsurprisingly, the sector now wants to see more families get involved in philanthropic endeavours.

Philanthropy at ANZ Private

Across ANZ Private’s clients, the impetus to donate to important causes is widely held, according to Mr Lipari. This generosity also seems to increase across generations, with the second or third generation often making the biggest investments into their communities.

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 adds 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.

This growing interest in philanthropy comes at a time when demand for charitable services is also growing. To meet this need, the Federal Government unveiled a plan in 2022 to double Australia’s philanthropic giving by 2030.^disclaimer

As part of this push, government is streamlining the ATO registration process for charitable organisations and tightening tax rules to ensure only legitimate groups are benefiting from the exemptions offered to these groups^disclaimer - a move the ATO says is designed to "enhance trust and confidence in the sector".^disclaimer

How can I put my money to good use?

With so many charitable organisations and worthy causes to choose from, it can sometimes be difficult to decide which is the most deserving of your support. In Australia, some of the most popular charitable causes include:

• Climate action. Donations to charities working to protect or improve the health or our climate and environment grew by 82% between 2018 and 2021 in Australia alone.^disclaimer
• Supporting women. The epidemic of violence against women has become a major talking point across Australia in recent years. Several charities are working to support survivors.
• Arts and culture. From Sidney Nolan to AC/DC, Australia has long been a hotbed for great art – but providing the spaces and time for those artists to develop often requires financial support.
• Indigenous rights. The Australian Charities and Not-for-Profits Commission specifically recognises the need for additional support for Indigenous communities.^disclaimer

Once you’ve chosen a charity to support, you’ll need to consider how you’d like to donate money and which vehicles or financial structures will be best suited to realising that ambition.

How to give giving a go

Effective philanthropy requires planning – it’s usually not enough to pick a cause and simply donate a lump sum towards it. Instead, philanthropists should think carefully about the causes that matter to them, how to best support those causes, and what financial structures are required to do so.^disclaimer

The first step is to consider your own financing and goals. Philanthropists need to think about how much they plan to give and the frequency at which  they wish to donate.

Another key consideration is how much control they’d like over the funding they provide, and how knowledgeable they are about the cause they’re supporting.

While one-off donations typically won’t require much involvement beyond the initial gift, those making regular contributions might like to join the board of the organisations they support or stipulate how their funds are to be used.

How involved a philanthropist wants to be may affect the way they contribute – from making regular donations or including charities within their will, through to establishing a structured approach providing ongoing finance.

The two most common structured techniques 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 cautions 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. Below are some of the features of popular structures, from Philanthropy Australia’s Guide to Giving^disclaimer:

Each of the different financial vehicles used by philanthropists vary greatly in how they’re deployed and the impact they have. So it’s vital the right type is used – and that they’re set up properly.

“Choosing the wrong vehicle or not setting it up properly can really undercut the effectiveness of your philanthropic efforts,” Lipari said.

“An error here could mean you’re unable to donate as much as you’d like or could trigger unwanted tax implications.”

Given the complex regulation that surrounds a lot of these vehicles, it may make sense to speak with a professional about which avenue is likely to lead to the best outcomes. Your ANZ Private banker or adviser can refer you to external specialists.