The Centre for Social Impact’s Australian-first report investigating trends in Australian income, wealth and philanthropic giving has found that, while top-end wealth has risen significantly in recent years, giving – with some notable exceptions – has not and, moreover, lags behind international peers.
The wealth held by the Top 200 Australian Financial Review (AFR) Rich List for 2022 grew by 15.7% on the previous year providing significant scope to increase giving among high net wealth people. At the same time, the Centre for Social Impact research, which uses the best available data, also showed giving by those in the Financial Review Philanthropy 50 List for 2022 had decreased 2.3% on the previous year.
ATO data analysed in the report, High Net Watlh Giving: A Review of the Evidence, showed only 2% of top income earners gave a higher proportion of their income than people in lower income groups; 5% of top income earners give 1% or more of their income and more than half of top income earners in 2018-2019 did not report any tax-deductible donations or gifts at all.
In terms of international comparisons, Australia gives at a lower percentage of GDP (0.81%) compared to the United Kingdom (0.96%), Canada (1%), New Zealand (1.84%), and the United States (2.1%).
Even a slight increase in giving by Australia’s wealthiest would dramatically boost the Australian charitable sector and improve social and environmental outcomes across the country.
Australia’s charity sector is facing increased demand but has lacked the resources to meet them; CSI’s latest Pulse survey of the for-purpose sector found 80% of service providers were receiving requests for support they could not meet, and 75% reported being financially strained during the COVID-19 pandemic.
Arminé Nalbandian, CEO of CSI, said: “Charities play a critical role in society, and this has been particularly evident through recent natural disasters and the global COVID-19 pandemic. Encouraging Australians who are vastly wealthy to donate more of their wealth would transform social outcomes in this country.
“If the top-200 wealthiest Australians donated one per cent of their wealth, it would generate $5.55 billion for the sector – around the estimates of what it would cost to provide subsidised dental care or access to affordable childcare for everyone.”
Daniel Petre AO, tech leader, philanthropist, and funder of the research said: “With a very small number of notable exceptions, Australia’s wealthy have not increased their philanthropy at a rate that is within a country mile of the growth in their wealth over recent years.
“On a global level – and for such a wealthy country – the level of giving among the very wealthy is incredibly disappointing. Australian society, and the Australians helping to build wealth for these individuals, deserve more.”
Michael Traill AM, Adjunct Professor at CSI UNSW and Chair of the Paul Ramsay Foundation, expanded on another insight from the research relating to private ancillary funds (PAF), one of the main forms of structured giving used by wealthier Australians.
“Over the last five years, growth in the overall assets held by PAFs has been significantly outpaced by growth in the wealth of the top-200 Australians. We can see that the structured mechanism of giving has failed to keep pace with the accumulation of wealth but there is huge potential for alignment with those who are continuing to increase their giving year on year. The opportunities are there and the impact would be enormous.”
The report also suggests that as high net wealth grows, more ideas for compulsory giving (for example, an inheritance tax) could be put forward to add considerable resources to the charitable sector.
The Centre for Social Impact will be holding an online event to discuss the research on Monday 29 August at 1pm AEST. Register at https://events.humanitix.com/high-net-wealth-giving-in-australia.