Charitable giving in Australia not wasted

In a call aimed at getting rich Australians to donate more on the basis of improved return for the philanthropic investment, the CEO of JBWere Australia has called for consolidation in the sector. But the report is based on a series of incorrect assumptions. At a time when the charity sector needs support, due to decreases in government funding while governments simultaneously outsource more services to the sector, the misleading report provides an inaccurate picture of the charity sector that is not helpful for those considering donating.

JBWere CEO, Justin Greiner, who manages $20 billion for 45,000 clients at National Australia Bank's broking and private client arm, issued a report noting that the wealthiest Australians could be donating billions of dollars more to charity, but that because 10 new charities are established every day, the sector is undermining charitable giving. The report references the Australian Charities and Not-for-profits Commission (ACNC) data when quoting the numbers.

However, the report is silent on the fact that the ACNC data also shows that a similar number of charities voluntarily deregister. As noted by ACNC Commissioner Susan Pascoe AM in her regular ACNC column, since the ACNC was created in December 2012, some 8,500 charities have been registered, and over 13,500 charities have had their status revoked during this period.

‘Australia actually has fewer charities per capita than Canada, England and Wales, the USA, Scotland, and New Zealand,’ the Commissioner stated in her column on the issue. ‘When one considers the vast size of Australia’s continent, the distribution of population and breadth of services provided by the sector, the headline figures about the number of charities makes sense.’

The JBWere report favourably quotes data on the number of US charities, but fails to mention that while religious bodies are registered as charities in Australia, they are not included as charities in the USA, which distorts the comparison.

The sector itself has been discussing for some time the implications of consolidation. Questions have been raised as to whether numerous charities providing the same service should continue or merge to enhance effectiveness of service delivery. But the discussion has been nuanced, noting that while there are valid questions as to whether numerous charities are required that provide, for example, services in relation to cancer, there are equally valid reasons for supporting multiple charities providing similar services at the local level. For example, a national body cannot provide the local services offered by a Lions Club in a rural or regional area.

The Australian Charities Report 2014, produced by the ACNC in collaboration with the Centre for Social Impact and the Social Policy Research Centre at UNSW, shows that Australia’s charity sector has a combined income of $103 billion. Of this combined income, nearly $7 billion comes from donations and bequests, with the largest five per cent of charities receiving 80 per cent of the sector's total income. Over the same period, charities spent $95 billion pursuing their charitable purposes, with the remaining $8 billion set aside for future charitable investment.

As noted at the launch of the report, those figures suggest most charities operate a balanced budget. Some charities were even able to achieve a surplus, highlighting that the sector as a whole is healthy and sustainable.

While utilising the ACNC data, the JBWere report — which calls for more transparency and increased governance in charities — seems unaware of the positive impact that the ACNC has had on lifting governance standards in the sector. With the establishment of the ACNC and the introduction of the governance standards, a significant number of charities have reviewed and renewed their governance frameworks over the past few years, while board members have sought out professional development to enhance their governance understanding.

Furthermore, the Charities Register, which is freely available to search, provides a wealth of information about Australia’s 54,000 charities, including that date that it started operating and when it was registered; the beneficiaries of its services; the size of the charity (small, medium or large, based on annual revenue and the financial information it must report); operating states and countries; registration status (active or cancelled or voluntarily deregistered); responsible persons (names and positions of all people who are responsible for directing a charity — all the members of the governing body); the Annual Information Statement (with a link to the ACNC form a charity must complete and submit each year, including information on a charity’s activities for that past year); annual/ financial reports; the governing documents (for example, the constitution); and any enforcement outcomes (for example; if a charity has not submitted a report or statement on time or if the ACNC has taken any enforcement actions against it).

The charities sector can find itself subjected to advice based on misunderstandings — misunderstanding that is harder to accept given the wealth of data that the Charities Register is now revealing. With Greiner acknowledging that JBWere’s focus on philanthropy is part of a strategy to offer bespoke wealth management services that differentiate JBWere from the bank's wealth management arms, the advice it offers on consolidation to enhance charitable giving needs to be taken with a grain of salt.

Return to News Update