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Australians are giving less to charity. Here’s why

October 19, 2017

Australians are giving less to charity. Here’s why

Matt Wade, The Sydney Morning Herald, 18 October 2017

Each year the taxman delivers a revealing appraisal of Australia’s generosity. Deep within a report titled Taxation Statistics are details of the deductions individual taxpayers claim for charitable donations. It doesn’t cover every contribution made to good causes, of course. But its a rigorous insight into the nation’s altruism.

Here are fivetrends inAustralia’s giving to charity revealed by the ATO’s latest assessment.

1) Individuals don’t give away a very big share of income

Analysis of the latest tax data by Queensland University of Technology’s Centre for Philanthropy and Nonprofit Studies shows tax-deductible donations made by individuals climbed to a record high of $3.1 billion in 2014-15. But the share of income being donated is less impressive. On average, individual taxpayers who made tax-deductible donations gave just 0.4 per cent of their taxable income. That share was up a little on the previous year but still lower than before the 2008-09 global financial crisis.

And even that figure has probably been boosted by improved record keeping rather than generosity, said the QUT report author, Professor Myles McGregor-Lowndes. “I’ve got a strong suspicion that people are becoming better at retaining tax deductible receipts so they can claim them on tax,” he said.

A trend for employees to make donations through their workplace payroll and for big charities to email donors end of year statements has made is it much easier to claim deductions. Even so, only about a third of the taxpaying population claimed a tax-deductible donation according to a study in 2014-15.

2) Charities depend heavily on the super rich

An elite group of just 6600 taxpayers with taxable incomes above the $1 million mark made more than a fifth of all tax-deductible donations in 2014-15. “Wealthier people have more discretion to give,” says McGregor-Lowndes.

But giving by those on high incomes – $180,000 a year or more – is much more sensitive to stock market gyrations and economic shocks than for others. Tax-deductible claims by the wealthy slumped during in the wake of the global financial crisis and took some years to recover. The Melbourne suburb of Toorak-Hawksburn made tax-deductible gifts worth more than $100 million in 2014-15, the highest in the country. Although taxpayers in NSW made the largest average donations of $836.

3) Even so, the rich don’t necessarily donate the biggest share of their incomes

When it comes to the proportion of income that people give away, middle- and low-income neighbourhoods often outshine wealthy ones. The National Australia Bank’s charitable giving index, which tracks donations made electronically, shows those donating the biggest share of their income tend to come from suburbs with modest incomes. The South Australian suburb of Sturt, with an average income of just over $47,000, gave the highest proportion of income on average in year to February, NAB’s data shows.

One mystery in the latest tax figures is that about 40 per cent of those with a taxable income over $1 million claimed no tax deduction donations whatsoever in 2014-15. “Its gob smacking to me that you’d have an income of a million dollars and you don’t claim anything,” said McGregor-Lowndes. “These are sorts of people who tend to keep their receipts or have someone to keep them for them.”

4) Some occupations stand out

Ministers of religion claimed an average of 2.2 per cent of their taxable income as gifts – the highest rank proportion of any occupation. Mcgregor-Lowndes puts this down to the need for them to set an example to others. “It is very difficult to tell your congregation to tithe or to make a periodic donation if you are not doing so yourself,” he said.

The occupation with the biggest share claiming charitable tax deductions were police and other emergency service workers (73 per cent). The tax data shows that women gave away slightly bigger proportion of their taxable income than men, although men gave more overall. It also shows those aged over 65 years donate much more than all other age groups.

Even though the share of Australians who claim no religious affiliation is on the rise, giving to religious organisations remains popular. The 2016 Giving Australia Project, which surveyed Australians about all charitable giving (not just tax deductible donations), found more was donated to religious organisations than any other cause.

5) There are signs we are finding it harder to be generous

The increase in tax deductible donations revealed in the 2014-15 tax figures was driven by the contributions of high-income earners. The difference between the average donation and the median donation tells the story. The average individual tax deduction jumped 17 per cent to $674 but the median, or middle, donation rose just 5 per cent to $105.

This suggests sluggish wages growth and subdued consumer confidence are taking a toll on charitable giving. NAB’s charitable giving index showed giving in Australia fell by 1 per cent in the year to February. That compares with an increase of 6 per cent in the previous year and growth of about 10 per cent back in 2013.

Australia also slipped several rankings in the 2017 World Giving Index, published last month by the UK-based Charities Aid Foundation. Australia still ranks among the top 10 countries on the index, which compares nations according to the share of population that help strangers, donate money, and volunteer time. But the research revealed a sharp drop in the proportion of Australians donating money to charity.