Mandated 6% Distribution by Giving Funds Unlocks $100 Million for Charities
The Federal Government has announced that giving funds will be required to distribute 6% of assets each year, unlocking an estimated $100 million in extra funding for charities. The philanthropic industry says reform is still required.
The Government has set a new minimum annual distribution rate for giving funds, requiring them to allocate at least 6% percent of their net assets each year. This change is expected to unlock an estimated $100 million in additional funding for charities, though philanthropic industry bodies remain unimpressed.
This new rate marks an increase from the previous minimum of four to five per cent of assets distributed annually. Leigh said Treasury forecasts indicate the higher threshold will unlock over $100 million in extra funding for Australian charities. He emphasised that the adjustment strikes a careful balance, delivering more immediate support to charities while ensuring that giving funds can continue to invest for future impact.
Another change will allow giving funds to smooth distributions to a large project over three years, avoiding excessive immediate drawdowns on their capital.
“The new rate will apply from the first financial year following amendments to the giving fund guidelines, and existing giving funds will not need to meet the new distribution rate for two years,” the Minister said, adding: “These changes are a further step in responding to recommendations of the Productivity Commission’s Future Foundations for Giving report and the charity-led Not-for-profit Sector Development Blueprint.”
Philanthropy Australia CEO Maree Sidey: Deductible Gift Recipient reform is more important
The announcement was not warmly received by major philanthropy industry bodies, with Philanthropy Australia CEO Maree Sidey stating it was a lost opportunity for genuine system reform.
“The demands on charities are immense and giving funds are vital sources of funding for their work across the community. Increasing mandatory distributions for giving funds without addressing wider system reform is like turning up the water pressure without checking the plumbing,” Sidey said.
Philanthropy Australia has been among those supporting Justice Connect’s campaign for major changes to the DGR (deductible gift recipient) status system that determines which charities can receive tax deductible donations and grants from giving funds. Sidey said around half of Australian charities remained ineligible for or faced unnecessary barriers to achieving DGR status.
