Australia’s community foundations sector is poised for significant growth following new federal government reforms designed to make charitable giving easier and more accessible.
The changes, introduced through the new “community charity” category, give community foundations access to Deductible Gift Recipient (DGR) status, allowing donations to these organisations to be tax deductible. Sector leaders say the reform could unlock millions in additional philanthropic funding for local communities across the country.
A Major Shift for Community Philanthropy
Community foundations are locally governed charitable organisations that pool donations from individuals, businesses and institutions to fund grassroots initiatives and long-term community projects. Unlike traditional grant programs, they focus on place-based giving, investing directly into the needs and priorities of local communities.
For years, many community foundations faced barriers because they lacked DGR status, limiting their ability to attract donations from philanthropic funds and tax-conscious donors. The new reforms aim to remove those barriers and create a stronger framework for local giving.
Building a Billion-Dollar Giving Sector
The reforms arrive as community philanthropy continues to expand across Australia.
Community foundations distributed a record $70 million in grants last year, with projections suggesting the sector could manage more than $1 billion in assets within the next few years.
Federal Charities Minister Andrew Leigh said the reforms are part of the government’s broader ambition to double philanthropic giving by 2030.
“These reforms will make it easier for people to support charitable foundations in their local area,” Dr Leigh said.
He has previously described community foundations as a more “democratic” and “egalitarian” model of philanthropy that empowers communities to direct funding where it is needed most.
Why Community Foundations Matter
Unlike short-term funding models, community foundations are designed to create long-term, sustainable impact.
Funds are typically invested to build a permanent charitable corpus, with earnings distributed annually to support local organisations, social programs and community initiatives.
The model is already well established internationally, particularly in Canada and the United States, where community foundations play a major role in strengthening local social infrastructure.
In Australia, foundations are operating in communities ranging from regional towns to metropolitan centres, supporting causes including homelessness, education, mental health, environmental sustainability and community resilience.
A Step Towards Stronger Communities
Philanthropy leaders say the reforms could help unlock more grassroots giving at a time when many charities and communities are facing increasing pressure.
Philanthropy Australia's Maree Sidey welcomed the changes, saying they would “remove big roadblocks” and help direct more funding towards community initiatives.
The reforms also align with broader conversations about modernising Australia’s philanthropic and charity system. Previous reviews by the Productivity Commission described existing DGR rules as overly complex and “not fit for purpose”, recommending reforms to encourage greater giving and improve access for charities.
As Australia looks to strengthen community resilience and social connection, the expansion of community foundations could play an increasingly important role in supporting locally led solutions and long-term social impact.
Disclaimer: This does not purport to be comprehensive or to render legal advice. You should not act based on any information contained in this publication without first obtaining specific professional advice. Consult your legal advisor to determine if this applies to you.
