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Good times and PHILANTHROPY
Queensland University of TechnologyThe Australian Centre for Philanthropy and Nonprofit Studies
GIVING BY AUSTRALIA’S AFFLUENT
March 2008
CONTACT INFORMATION
DR KYM MADDEN DR WENDY SCAIFE
Spon so r e d b y
The Australian Centre for Philanthropy and Nonprofit Studies Queensland University of Technology
Phone 61 7 3138 1020 Email cpns@qut.edu.au Website: www.cpns.bus.qut.edu.au GPO Box 2434 BRISBANE QLD Australia 4001
CRICOS code: 00213J
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This report has been sponsored by the Petre Foundation.
The authors of this report are Senior Research Fellows at CPNS.
The Australian Centre for Philanthropy and Nonprofit Studies (CPNS) is a specialist research and teaching unit at the Queensland University of Technology
in Brisbane, Australia. Its aim is to promote the understanding of philanthropy and nonprofit issues by drawing upon academics from many disciplines and
working closely with nonprofits, practitioners, intermediaries and government departments. CPNS’s mission is to bring to the community the benefits of
teaching, research, technology and service relevant to philanthropic and nonprofit communities. Contact CPNS for a full list of publications.
The Australian Centre for Philanthropy and Nonprofit Studies
Queensland University of Technology
GPO Box 2434 BRISBANE QLD Australia 4001
Phone: 07 3138 1020
Fax: 07 3138 9131
Email: cpns@qut.edu.au
http://cpns.bus.qut.edu.au
CRICOS code: 00213J
© Queensland University of Technology 2008
Good times and PHILANTHROPYGIVING BY AUSTRALIA’S AFFLUENT
March 2008
DR KYm mADDEN DR WENDY ScAIFE
Spon so r e d b y
ExEcUTIVE SUmmARY
1InAustraliatax-deductiblegiftscanonlybereceivedbyDeductibleGiftRecipients(DGRs)whichmayormaynotbestrictlycharitable.
ThedatapresentedinthisreportaboutAustraliantax-deductiblegiftsreferstotheseDGRswhichforeaseofreferencearetermedgenerallyascharities.
ThisreportdrawsuponthelatestresearchtoexaminegivingtrendsbyaffluentindividualsinAustraliaandhowthesecomparewithoverseascounterparts.Itisdrivenbyseveralfactors.Givingbyindividualsmattersenormouslytothenonprofitsector,farexceedingbusinessdonations.Whethertherichestofthepopulationgivescommensuratewiththeirwealthisaquestionworthasking.TheassetsheldbythewealthierendofAustralia’spopulationhaveburgeonedinrecentdecadesashavethenumberconsideredaffluent.In2006,MerrillLynch/CapgeminidrewattentiontoAustralia’strendtoaffluence,describingitshighnetworthsegmentasoneofthefastestgrowingintheworldanddismissingsuggestionsthataveragewealthheldbyaffluentindividualswaswellbelowoverseascounterparts.Thenextfourdecadesarealsoexpectedtopourcontinuedwealthintothissegmentastheoldestgenerationpassesandaccumulatedassetsshifttogrownchildren.Thisintergenerationaltransferofwealthiswidelyprojectedtosurpassthatofanypreviousera.
Withincreasedpersonalwealthcomestheopportunityforacceleratedcharitablegivingandevidenceexiststhatgivingdoesincreasewithwealth.Research,inAustraliaandoverseas,showsthatagreaterproportionoftheaffluentcohortgivesthanthoseonlowerincomesand,onaverage,theygivehigherabsoluteamounts.Indeed,havingmoremoneyiscommonlycitedasthenumberonerequirementforindividualstogiveatahigherlevel.However,inAustraliaasizeableproportionofthoseinthewealthycohortgivelittle,ifanything,tocharitablecausesandsomewhodogivedosoatalowerlevelthantherestofthecommunity.Thatis,someofthosewithhighcapacitytogivedonotgivetocommunitycauses.
How does Australia compare? ThegoodnewsisthatAustralia’saffluentaregivingmorethantheywereadecadeagoandahigherpercentageofthisgrouparegiving.However,thischangeneedstobesetagainstthedramaticallyincreasedwealthofthisgroup:whilethenationasawholehasbecomemoreprosperous,itistheaffluentsegmentthathasbenefitedthemost.Theavailable
dataindicatesthattherisinglevelofgivingbytheaffluentsegmentoverallhasnotkeptpacewithwealthtrends–indeed,thegapiswidening–andthatthepercentageoftheaffluentwhogivetocharitablecauseshasrisenonlymodestlyoverthepast10yearsdespiteasubstantiallyhigherlevelofpersonalwealth.WhiletheaveragehouseholdincomeinAustraliagrewby34%inrealtermsfrom1994-95to2005-06,ithasbeenthewealthierhouseholdthathasexperiencedthegreatestgainswitha36%increasecomparedtoaround31%forthoseonlowandmiddleincomes(ABS,2006a).Thisdifferenceisstrongestoflate:inthetwoyearsto2005-06,householdincomesinthehighincomesegmentjumped,onaverage,by13%comparedto8%forthoseinthelowandmiddleincomesegments.
Overall,evidencesuggeststhatAustralia’saffluentare,onaverage,givingatalowerlevelthantheircounterpartsincomparablecountriessuchastheUK,CanadaandtheUS,despitecomparablewealthlevels.Ofcourse,outstandingexamplesofgenerosityarebeingseeningrowingnumbersofwealthyAustralians;atissueistheirrelativelysmallnumber.
This report finds:
1. Approximately 6 in 10 of the wealthiest Australians (approximately 5% of Australia’s total population) claim deductions for their charitable giving. Giventhepropensityofthisgrouptobenefitfromprofessionaltaxadvisersandutilisethetaxsystem,some40%arelikelytobeengagedinminimal–ifany–giving.
2. Affluent Australians give more than the average Australian but generally not much more. Gifts,measuredbythevalueoftax-deductibledonationsexpressedasapercentageoftaxableincome,areonlymarginallyhigherforthevastmajorityoftheaffluent(withtaxableincomesofbetween$100,000and$500,000)thanforAustraliansoverall,atapproximately0.45%and0.33%,respectively.1
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i i iG I V I N G B Y A U S T R A L I A’ S A F F L U E N T
3. The level of personal wealth held by wealthier Australians has accelerated at a much faster rate than their charitable giving. Overthetenyearsto2005,meanhouseholdincomeforAustralia’saffluentpopulationhasincreasedby36%.However,itscharitablecontribution,asmeasuredbythepercentageoftaxableincomeclaimedascharitablegivingincreasedfromjustover0.36%tojustover0.45%,stillwellunder1%forthevastmajorityofwealthierAustralians.
4. Despite some superlative yet isolated examples, there is little evidence that Australia’s ultra-rich and ultra-ultra-rich are giving at the same rate as overseas counterparts.Despiteincreasinggiftlevelsinthepastdecadeto2005from0.7%to1.98%oftheirtaxableincomes,thewealthiestofAustralia’saffluent($1million-plusintaxableincome)donotappeartobeengaginginphilanthropy,asagroup,totheextentindicatedbyglobaltrends.TheWorldWealthReport(MerrillLynch/Capgemini,2007)estimatesthatthetop17%ofultrarichdonorsglobally(withassetsequivalentto$US30mplus)arenowgivingawayapproximately10%oftheirassetsannually;Italsopointstotheglobalhighnetworth(HNW)population’sgrowingpropensitytoallocatebetween3%and11.8%oftheirportfoliostophilanthropiccausesannually.WhilenodetailedfiguresexistinAustralia,taxstatisticsindicatethatmakingsubstantialdonationsstillconstitutesanexceptionratherthananormforthewealthy.
5. Tax changes support a philanthropic culture.Moretax-relatedstrategiesarecalledfor,giventheestablishmentofsome600PrescribedPrivateFunds(PPFs)byindividualsandcompaniessincebeingintroducedin2001.Inothercountries,the‘incentivising’impactofvariousmeasures,includingdeathdutiescannotbedenied.
6. The affluent is the affluent is the affluent…not so!WealthierAustralians
nowrepresentadiversegroup,withlargevariationsinfinancialcapacity.Segmentationoftheaffluentpopulationbyincome/assetlevelisessentialtounderstandareasoflowgiving(andhighgiving).
7. Based on evidence about giving behaviour by affluent Australians, efforts to encourage their engagement are warranted. Tothisend,anddrawinguponthewiderphilanthropyliterature,12 standout opportunities exist:
i. Increasevisibilityofphilanthropyamongsttheaffluent(includingviathemedia);
ii. Increaseawarenessofdifferenttypesofinvolvementtosuitvaryinglevelsofwealthandpersonalcircumstances;
iii. Creategreaterpeersupportforgivinge.g.loosesupportivenetworksandgroupsprovidingopportunitiesfordiscussionandpotentialgroupfunding(e.g.givingcircles);
iv. Offermoreguidelinesforgiving,promoteaffluentgivingnormsandbuildthepracticeof‘planned’versusspontaneousgiving;
v. Thehighestechelonsofgovernment,business,theprofessionsandthecommunityneedtobepersonallyinvitingAustralia’swealthyopinionleaderstojoininvisionaryphilanthropicprojects;
vi. Promotetaxbenefitsattachedtogivingathigherlevels,andalternatives;
vii. Trainandsupportprofessionaladvisersaboutprovidingphilanthropicadvicetomatchclients’circumstancestothemostsuitablegivingvehiclesoroptions;
viii. ImproveawarenessamongstAustralia’saffluentpopulationofthebenefitsofinvolvingtheirchildreningiving,theopportunitiesavailable,andwhocanassistthemachievetheiraims;
Note.IncomparingAustralia’scharitablegivingfigureswithothercountries,justhowmuchwedonotknowemerges,thelandmarkGivingAustraliaresearchnotwithstanding.Forexample,littledataisavailableongivingbyAustralianswithassetsinexcessof$1milliondespitetherapidlyexpandingnumberofcitizensinthisgroupandtheirextremevariationsinpersonalworth.Thepictureisalsosomewhatmuddiedbecausetheuseoftax-efficientstructuressuchasfamilytrustscan‘hide’muchpersonalwealth,makingestimatesofnumbersofthewealthyandassetsheldconservative.Answerstobasicquestions–whatkindofcharitablegivingdosuchindividualsengageinandhowhasitchangedovertime?–mustbedrawnprimarilyfromaggregatedsurveydataandrarequalitativedata.Incontrast,farmoreisknownaboutphilanthropybytheaffluentintheUSandEurope,especiallytheUK.Overseasliteratureoverwhelminglysupportsthepositivelinkbetweenaffluenceandlevelofgiftbuttheevidenceaboutaffluenceandproportionofwealthgiventothenonprofitsectorismixed.ThisgeneralpatternisreflectedinAustralia,too.
Specific,directcomparisonsofgivingbetweenAustraliaandothercountriesmustbetemperedbecausemethodsusedforgatheringdataarenotalwaysclearfrompublishedfindingsandmethodsdifferwidelyacrosscountries;methodsalsomaychangewithinacountryovertime.Toovercometheseobstacles,existingstudieswereexaminedfortheindicatorstheyprovideofwhatisactuallyhappeningandtheextenttowhichfindingstellasimilarstory.Indoingso,webuildupontheearlierworkoftheAsia-PacificCentreforPhilanthropyandSocialInvestmentatSwinburneUniversityin2004and2005.
What is affluence? Definitionsofaffluenceabound.Forthepurposeofthisstudy,‘theaffluent’havebeendefinedasthosewithassetsinexcessof$1.2millionapartfromthefamilyhome,orwithannualtaxablepersonalincomesof$100,000ormore.NotethatinthisreportdollarsareAustralianunlessotherwisespecified.Section1discussesdefinitionsmorefully.
ix. ImproveawarenessoftheAustraliannonprofit(NP)sectorandtheuniqueroleofphilanthropyincreatingchangeinthecommunity:thecaseforphilanthropyneedstobestrongerandclearerthanitiscurrently;
x. Increasetransparency,efficiencyandevaluationbynonprofitorganisationstohelpovercomeexpresseddonorconcerns.However,unrealisticexpectationsthatanonprofitorganisation(NPO)canexistwithoutadministrationcostsalsoneedtobeaddressed.Theparadoxexiststhatpotentialdonorssaytheywouldgive,orgiveatahigherlevel,ifNPOsweremoretransparent,moreefficientandshowedtheimpactoftheirprogramsyettheydonotwantNPOstospendmoneyonsuchoperationalissues;
xi. ImproveunderstandingandresponsivenessbytheNPsectoroftheneedsandinterestsoftheaffluent;
xii. ImprovevolunteeringopportunitiesfortheaffluentinNPOs,drawingupontheirknowledge,connections,experienceandinterests.
Insum,thisreportcontributestounderstandinggivingbehaviourbyaffluentAustraliansandprovidesguidelinesforfosteringphilanthropyforthegoodofthecommunityasawhole.ThechallengeofencouragingAustralianswithmeanstogiveatahigherleveliscomplex.Givingbehaviourisdeeplyembeddedin,andreflectiveof,oursocial,politicalandeconomicinfrastructureaswellasournationalandindividualpsyche.Nevertheless,asacountry,weareevolvingandthereispotentialforleadersinbusiness,theprofessionsandthenonprofitsectortocollaborateinwaysthattiltthecountrytowardsamorephilanthropicorientation.Therearealsospecificleversavailabletothoseinpolicyareasthatcanfacilitateandsupportsuchchange.
ExEcUTIVE SUmmARY
iv
vG I V I N G B Y A U S T R A L I A’ S A F F L U E N T
Executive Summary ii
Table of Contents v
Index of Charts, Tables, Figures vi
1 Introduction 1
1.1 MeasurementIssuesaroundAffluence 21.2 MeasurementIssuesaroundGiving 4
2 Charitable Giving in Australia 6
2.1 RisingPersonalWealth 62.2 CurrentCharitableGiving 72.2.1 Charitable Giving by State 8
2.3 GivingTrends 92.4 GivingbyAffluentAustralians 112.5 TaxationInitiativesIntroducedSince1999 14
3 International Comparisons 16
3.1 GlobalWealthTrends 163.2 GivinginOECDCountries 183.2.1 USA 18
3.2.2 Canada 19
3.2.3 Europe 20
3.2.4 South Africa 21
3.2.5 Turkey 21
3.2.6 Asia 21
3.2.7 Elsewhere 22
3.3 GivingComparisonsacross 22 OECDCountries3.4 HowDoesGivingbytheAffluentCompare? 26
4 Dynamics Underpinning Giving by the 30
Affluent
4.1 WhoGives? 304.2 WhyPeopleGive 314.3 MotivationsforGivingbytheAffluent 344.4 BarrierstoGivingfortheAffluent 364.5 TheDonorDecision-makingProcess 394.6 ChangingDynamicsinGivingbytheAffluent41
5 Efforts to Encourage Giving 43
5.1 ReadinesstobemorePhilanthropic 435.2 TriggerstoActonthisReadiness 45
6 Summary of Findings and 50
Recommendations
TABLE oF coNTENTS
Appendix 1: Terms used in this report 53
Appendix 2: Total donations by individuals 54
in 2005, by cause area
Appendix 3: More on personal giving in Australia 55
Appendix 4: Relationship between personal 58
income and total donations In Australia
Appendix 5: Profile of affluent respondents In 59
the Giving Australia householder survey
Appendix 6: New philanthropic taxation initiatives 60
by the Australian Government
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INDEx oF chARTS,TABLES,FIGURES
Chart 1: SizeofAnnualDonationsby 7IndividualsinAustraliain2004
Chart 2: DeductionCategoriesasa 8PercentageofTotalDeductionsinAustralia(2004-5)
Chart 3: Tax-DeductibleDonationsby 8StateofResidencein2004-05
Chart 4: TotalTax-DeductibleDonationsto 9Inflation-AdjustedTotalTax-DeductibleDonationsSince1978-79
Chart 5:AverageTax-DeductibleDonation 10toInflation-AdjustedAverageTax-DeductibleDonationSince1978-79
Chart 6: Tax-DeductibleDonationsasa 10PercentageofTaxableIncome
Chart 7: PercentageofDonatingTaxpayers 10toTotalTaxpayers
Chart 8: PercentageofDonatingTaxpayers 11toTotalTaxpayersbyIncomeBandinAustralia2004-05
Chart 9: AverageTax-DeductibleDonation 12byIncomeBandinAustralia2004-05
Chart 10:Tax-DeductibleDonationsasa 12PercentageofTaxableIncomebyIncomeBandinAustralia2004-05
Chart 11:AverageClaimedDonationby 13AffluentDonorsasaPercentageofIncome
Chart 12:Donorparticipationrateby 13affluentAustralians1996-2005
Chart 13: IncomeBandsasapercentageof 14TotalDonationsinAustralia2000-2005
Chart 14:TheGrowthofPrescribed 15PrivateFunds(PPFs)inAustralia
Table 1: USTaxpayerswith 19Income>$200,000,1995-2004
Figure 1: Percentageofhouseholdincome 20spentondonations,bylevelofhouseholdincome,donorsaged15andolder,Canada,2004
Figure 2: Percentageofpeople 20giving,byannualincome,UK
Table 2:Charitablegivingin12OECD 24countriesin2005
Table 3: OECDDonorCountriesTotal 25AssistancetoDevelopingCountriesNetODA,PrivateGiving,andRemittances,2005(asa%ofGNI)
Table 4:BlackspotsingivingbyAustralia’s 27AffluentPopulation
Table 5 :RevenueStructureoftheNonprofit 28Sectorin1995(expressedas%ofTotalRevenue)
Table 6: Aframeworktoclassifymotivations 32togive,ornot
Table 7: Factorsthatinfluencecharitable 40givingbehaviour,bystages
Table 8: TotalDonationsbyIndividualsin 542005,byCauseArea
Table 9: Tax-DeductibleDonationasa 55percentageofTaxableIncomebyStateofResidence2006
Table 10: PercentageofDonatingTaxpayers 56toTotalTaxpayersbyStateofResidencein2004-05
Table 11: Tax-DeductibleDonationsasa 56PercentageofTaxableIncomeforSoletraderBusinessTaxpayersacrossIndustryTypes(ANZSIC)
Table 12: RelationshipbetweenPersonal 58Income andTotalDonationsinAustralia
�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
INDEx oF chARTS,TABLES,FIGURES
ThecentralaimsofthisreportaretoassesstherobustnessofgivingbytheaffluentinAustraliaandtoidentifyareasofgreatestopportunitytoliftphilanthropybythisgroup.Inparticular,itasksthequestion,‘TowhatextentareaffluentAustraliansgivingtocommunitycauses,andhowdotheycomparewithothercountries?’Thistopiciscriticaltothenonprofitsector,whichisunderpainstomeetalargersetofsocialneedsinanexpandingandincreasinglydiverseandagingpopulation.Thisisnottosuggestthatgovernmentsdonothaveacontinuingroletoplay.However,theyfaceincreasingpressurestofocusonessentialservices,leavingunder-exploredmanyopportunitiestoaddressproblemsbeforetheygrowlarge.Themanagingofpublicmoniesdoesnotreadilylenditselftotakingthekindofriskassociatedwiththinking‘outsidethesquare’,todevelopinnovativeapproachestobothwell-entrenchedandemergingsocialissues.Thequalityoflifewewillenjoyinourcommunitiesinthefutureislinked,inlargemeasure,tothewillingnessofthosewithresourcesattheirdisposal–talent,money,experience,connections,andvision–toparticipateinwhathappensatthecommunitylevel.
Thetopicissignificantformanyreasons.Ifmorepeoplewithmeanswereinspiredtoengageincommunityprojectsinwaysthattappedtheirexperience,talentsandwherewithal,thenonprofitsectorcouldfacethefutureknowingthatcommunityissuescouldbeaddressedmoreeffectivelyandinnovatively.Thewholecommunitywouldbenefitfromsuchasituation,includingthoseindirestraitsandthosewiththepotentialtocontributemuchmoretothecommunity.Moreover,thereisgrowingevidencethatsubstantialcharitablegiving–philanthropy–canbeenormouslypersonallysatisfyingandbringarangeofbenefitsintofamiliessoengaged.Beyondthisargument,however,isconcernfortherolethatthemostsuccessfulandmostprivilegedplayinoursociety,notonlyasopinionleadersbutintheirunequalledcapacitytocontributetothegreatergood.Itisoutsidetheparametersofthisreporttomakethecaseforsupportbutforsuchwide-rangingreasons,thereporthasbeenfundedand,inturn,undertaken.
INTRoDUcTIoN
Aswehavealreadybeguntosee,governmentfundingforthenonprofitsectorischanging.Wearewitnessinggovernmentsshifttoafacilitating-enabling-co-ordinatingrole,brokeringpartnershipsandsupportinglinkagesacrossthepowerfulandnot-so-powerfulinoursociety.Affluentindividualswillbeinanincreasinglypowerfulpositionto shape thecommunity,forthisgenerationandthenext–aroleandapowerthathassparkedphilosophicaldebateinothercountries.
Aboveothers,theaffluentholdthekeytononprofitventuresthatreallymakeadifferenceinthewidercommunity.Theyhavethewealthtomaketransformationaldonations.However,theirinfluenceexceedsfinancialsupport.Theyareopinionleadersandtrend-settersfortherestofthecommunity.Theleveloftrust,supportandpassionthattheaverageAustraliangivestothecommunitysectorisaffectedbywhatthosein leadership positionsdo,sayandvalueandtheopportunitiestheycreateintheirneighbourhoods(realandvirtual).Thisistrueofthe‘quietachievers’aswellasthosewithhighprofiles.Importantly,theaffluentcanbringtothenonprofitsectortheenergyandinputitneedstoevolve:todomore,moreeffectively.Thechallengesfacingsocietyintheyearsaheadneedtheentrepreneurialspirithonedbytheaffluent.Inreturn,thenonprofitsectorpromisesmeaningfulreturnstothosewhogetinvolved.
Thisreportdigsintotheopportunitiesforencouraginggivingbytheaffluentunderpinnedbyresearchthatsuggeststhereisunrealisedpotentialforindividualstomorefullyengagewiththesectorinsatisfying,productiveandcreativeways(GivingAustralia,2005).
Thisreportispresentedinfivesections.
Section 1 framestheanalysis,flaggingissuesthatarisewheninvestigatingbothgivingingeneralandaffluentgivers.Italsoprovidesdefinitionsusedinthereport.
Section 2 discussesgivingbehaviourbyAustralia’saffluent.ItsetsdataintocontextbysummarisingAustralia’swealthtrendsandoverallcharitablegivingbehaviourincludingapictureofcurrentgivinginAustraliaacrossthewholepopulationandnascenttrends,recognisingthatdatasourcesarescarceanddisparate.
1
2
Section 3 examinescharitablegivingbycitizensinOECDcountries.ParticularattentionispaidtothegrowthofaffluenceacrossOECDcountriesandgivingbyaffluentsegments.AvailableAustralianandoverseasdataiscompared.
Section 4 turnstodonormotivationsandthebarriersthatconstraingiving,especiallyfortheaffluent.Itconsidersissuesinthedonordecision-makingprocessandfactorsthatarecontributingtonewgivingstyles.
Section 5 ofthereportdiscussesthemostpromisingavenuesforincreasinggivingbytheaffluent.Thissectionacknowledgesthedemandforalong-termmulti-dimensionalstrategy,andownershipofthetaskbykeystakeholders.Noonebodyorgroupisabletoorchestratethechangeprogramifitistoresultinenduringchange.Thissectiondoesnotattempttoprovidealltheanswersbutinsteadprovidesguidepostsandareminderthatinitiativesneedtobeorganic,sustainableandcollaborative.
Section 6 concludesthereport.
Itshouldbenotedthat,inreadingthisreport,theterm‘giving’isusedregularlyand‘philanthropy’lessso.Forthepurposeofthisreport,bothtermsareusedinterchangeablytorefertofinancialsupportbyindividualsfornonprofitcommunity-relatedendeavours,thatis,supportaimedatbenefitingthewidercommunitynottheindividualperse.Thetermscover alltypesoffreelygivendonationsorgifts,whetherrandom,ad-hocdonationsorplanned,consideredones.Theyembracegiftsdirectedatformal,registered,philanthropicentitiesandthosethatarenot,andbothlowandhighlevelgifts.Unlessotherwisestated,theyexcludein-kindgiftsandvolunteering.(Theextendedterm‘charitablegiving’issometimesusedasareminderthatgivingisaimedatachievingsocialgoodnotpersonalbenefit;itdoesnotmeantoimplythattherecipientorganisationisdeemeda‘charity’bylaw).
Theterm‘affluent’isalsousedthroughoutthereportandisusedinterchangeablywith‘wealthy’and‘highnetworth’(HNW)torefertothosewithincomesand/ornetassetlevelsthatarewellaboveaverage.Thespecificdollarboundariesof
thisdefinitionarediscussednext(withalldollarsAustralianunlessotherwisenoted).(SeeAppendix1:Termsusedinthisreport).
1.1 MEASUREMENT ISSUES ARoUND AFFLUENCE
What measure should there be of affluence and what are its boundaries?
Whilepersonalwealthisanimportantfactorinunderstandinggiving,collectingsuchdataistroublesome(Irvin,2007)forthreemainreasons(UKGiving,2006):
1. Widelyvaryinglevelsinexpenditureanddebtforindividuals,aswellastheneedbysomeforahighlevelofliquidreserves(forexample,tomeetcallsoncashflowinbusinessortocoverseasonaldownturnsinagriculture);
2. Familycircumstanceswherebyalargerpooloffinancesmaybe‘shared’.Measuringthewealthofindividualsoverlookstherealityofhouseholdsandwiderfamilynetworks.Individualscanshareahighlevelofassets(suchashomesandcars)orlargepersonalincomeswithspouses/partnersorotherfamilymembers.Thusaspouseorotherfamilymembermayhavelittleornoformalincomeyetenjoyanaffluentlifestyle.Conversely,anaffluentindividual’sfinancialcapacitymaybesubstantiallyreduced,dependingupontheirfamilysituation.
3. Someactions,suchastheuseoffamilytrusts,caneasilycamouflageaffluentlifestylesandanabove-averagefinancialcapacity.Indeed,savvystructuringofone’sfinancialaffairsmayresultinlowerthanaveragetaxableincomes.
Indeed,oneneedstobeextremelycautiousaboutmakingassumptionsbasedonrawfiguresalone.Contrasttheindividualwhorunsabusinesswithexpensesthatcannotreadilybechangedwithsomeonewhovoluntarilyandforashorttimedecidestolivefrugallyinordertocommitahighpercentageofgrosssalarytosuperannuation.Inthesecases,incomealoneisinsufficienttoappreciatefinancialcapacity.
INTRoDUcTIoN
�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
Usingageneralnotionofaffluence,bysay,referringtothetop10%or20%ofthepopulationishighlyappealingbecause,essentially,thisreportconcernsitselfwiththefinanciallywealthierendofourcommunityregardlessofdefinitionalboundaries.However,databythesegeneralcategoriesiscurrentlylimited,confoundinginternationalcomparisons.Tobepractical,weadoptaworkingdefinitionthattakesintoaccountbothindividualswithastrongassetbaseaswellasthoseenjoyingamuchhigherthanaverageannualincome.Somewillfallintoonecategorybutnottheother.
Specifically,‘affluent’–usedinterchangeablyinthisreportwith‘highnetworth’orHNW–isdefinedasindividualseitherwith$1.2millionininvestableassets(thatis,apartfromtheirprimaryresidenceandminusdebt)orwithanannualpersonaltaxableincome(notgrossandnothouseholdincome)of$100,000ormore.Ifgrossincomefiguresweretobeused,thisfigurewouldneedtobefarhigher,givenreadyavailabilityofassistancebyprofessionaladviserstoreducetaxableincome.
ThisdefinitiondrawsupontheWorldWealthReport’sdefinitionofhighnetworthasindividualswithinvestableassetsofatleastUS$1million2andtheATO’shighincomebandcategories.Justover1%ofAustralia’sadulttaxpayingpopulationor168,000individualsfellintotheformercategoryin2006(MerrillLynch/Capgemini,2007)and4.3%or483,870individualsinthelatterin2005(McGregor-Lowndes&Newton,2007).Giventhatsomeoverlapishighlylikely,such a definition embraces around 5% of our wealthiest Australians.(Unfortunately,someaffluentindividualswillbeexcludedduetothetaxeffectivefinancialstructurestheyuse.Suchslippage,alas,isinevitableandaffectsallstudiesoftheaffluent.)
Thisdefinitionisfairlytightlydrawninthatitreliesuponstatisticsforindividualsnothouseholds(seecommentaboveaboutfamilycircumstances)andexcludesthevalueofthefamilyhome.Forexample,ifhousehold wealthwasusedandallownedpropertywasincluded,ABSfiguressuggestthatoneinten(9.8%)ofAustralia’s7.7millionhouseholdshadanetworth(assetsexceedingliabilities)of$1millionormore(InvestAustralia/AxissAustralia,2007).
Inthisreport,theterms‘ultraHNW’and‘rich’areusedinterchangeablyandrefertoindividualswithinvestablepersonalassetsbetween$30millionand$1billion;theterm‘ultraultraHNW’(or‘superrich’)isreservedforthoseattheapexofwealth($1billionplus).
Afundamentalissueforresearchersisgainingaccesstoreliableinformationaboutindividuallevelsofpersonalwealthstrippedofdebt.Suchinformationonindividualsisoutsidethecurrentscopeofgovernmentandbankingsystemdatacollectionsandtheindividualsthemselves,understandably,arenotnecessarilywillingtodivulgetheirfinancialsituation(andindeedmaynothavethisinformation‘topofmind’evenifmotivated).Commonly,theaffluentaredifficulttoaccessbythenormalresearchmethodsoftelephoneandmailcontactduetoincreasedmobilityandscreeningmethodssuchasprivatenumbers.Moreover,ifcontact is made,theopt-outrateinvoluntarysurveysishigh.Suchindividualsmaystronglydesireprivacyandanonymity:whyshouldtheyagreetosharewhatisarguablyhighlysensitiveinformationwithstrangers?Forexample,inseekingtoexaminecharitablebehaviourbytheaffluent,theCentreonPhilanthropyatIndianaUniversitywiththeassistanceofBankofAmericamailedsome30,000surveystoindividualsinthemostaffluentzipcodeareasacrosstheUStoreceivefewerthan1,000replies(withnocheckfeasiblefortheaccuracyorcomprehensivenessoftheirresponses).
Alternatively,datamaybecollectedfromthosewhoadvisetheaffluentbutwhilesomehaveaccesstoaclient’sentirefinancialsituation,othersmaynot.Further,adviserscanbereluctanttoreleaseclientdataforahostofreasons.Thewishtoprotectclients’interestsandtopreservetheclientrelationshipisparamountforadviserswithwealthyclients(Madden,2007).
Whiletheissuesraisedinthissectionareinsufficientreasons not topursueunderstandingofaffluentgivingbehaviour,theyunderscorethenecessitytotreatfindingsofanystudyasindicativeonly.
2WhiletheexchangeratehasfavouredAustraliamostrecently,rateshavefluctuated.Inthisreport,themoreconservative$1.2millionequivalencyisused.
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1.2 MEASUREMENT ISSUES ARoUND GIVING
Whilecomparisonsaredifficultbecausecountriesvaryinwhattheycountasgiving,howtheymeasureit,andtheextenttheydoso,suchcomparisonsarevital.Theyhelpcountriestodetermineparticularareaswheregivingfallsbelowsimilarcountriesandhoweffortsmightbestbedirectedtoencourageit.
Inconsideringstudiesthathavebeenconducted,andmaybeinthefuture,itmustbeappreciatedthatnosingleapproachisfoolproof(CAF,2007;Roodman&Standley,2006).Estimatesofprivatedonationsgenerallyrelyupononeofthefollowingthreedatasources,eachwiththeirownlimitations:
1. Individual and household surveys. Whilethesehavetheadvantageofbeingabletorecognizebothdonationsclaimedfortaxdeductionsand thosethatarenot,surveysarecommonlylimitedinscope(samplesizeandquestionsasked)duetocost.Findingsalsodependuponimperfecthumanmemoryaswellastruthfulnessbyindividualsaboutcharitablegivingwhich,asasociallydesirablebehaviour,encourages over-reporting.Theconsensusintheliteratureappearstobethatrecallisthemoreseriousproblemasdonationsmaynotbeimportanttodonorsandresearcherscommonlyaskthemtoaccountfordonationsoveralongperiodsuchastheyearpriortointerview(Wilhelm,2007).
Also,whilesurveysseektouserandomsamplingmethods(withnopreferenceforcertaintypesofindividuals),theycanbeskewedtothosewhoaremostaccessible,havemoretime,orhavefewprivacyconcerns.Thiscanmeanthatsomegroups,suchastheaffluent,areunderrepresented.Thisisanimportantpoint.Whenacountry’spoliticalleadersarecommittedtothevalueofphilanthropyintheirsociety,surveysaremorelikelytobeadequatelyresourcedandimplemented,leadingtomoreaccurateassessmentsofgivingtrendsandopportunities.Forexample,a
comprehensivestudyofcharitablegivingbyUK-basedwealthywasmadepossibleonlythroughtheco-operationoftheHMRevenueandCustomsdepartmentforthesamplingframe(Taylor,Webb&Cameron,2007).
Finally,surveyfindingscanalsobelimitedbydesignfactors.Forexample,BekkersandWiepking(2006)showthatashortclusterofgivingquestionsislikelytoresultinanunderestimationoftheeffectsofgivingpredictorsontheamountdonatedandanoverestimationoftheireffectsontheprobabilityofcharitablegiving.Forthisreason,researchersneedtosharebestpracticeapproaches.
2. Tax returns.Theadvantageofusingtaxstatistics(andotherofficiallyrequiredinformation)isthatfindingsarecomprehensiveinawaythatcannotbeachievedbyvoluntarysurveysthusprovidingareliable‘appletoapple’databasefortrendanalysis.However,countriesvaryinthelevelofdetailtheyrequireaboutgiving.Generally,studiesbasedontaxstatisticsundercountgivingbehaviour,sometimessubstantially,anditisunclearhowcountriesdifferonthis‘undercounting’.InAustralia,analysisoftaxdatasuggeststhatonlyaboutoneinthreedollarsdonatedtocharitiesisclaimedasgiftdeductions(McGregor-Lowndes&Marsden,2005).Otherresearchestimatesthattheratioofclaimedtounclaimeddonationsbyindividualsmaybeaslowasonedollarinfour(GivingAustralia,2005).TheGivingAustraliaresearchsuggeststhatwhiledonorsgenerallyarereluctanttoclaimsmalldonations,theaffluentappearmorewillingtoclaimdeductionsfordonationsthanthoseonlowerincomes.Thisisunderstandablegiventhegreateruseofaccountantsbywealthierindividualstopreparetheirtaxreturnsaswellasthelargerdonations,onaverage,bythosewhodogive.
INTRoDUcTIoN
�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
3. NPOs and intermediary organisations. Sectordataaboutprivatedonationscanprovideavaluabletrackingmethodfornationalgivingbutunlessmandated,NPOsdifferwidelyintherecordstheykeep(andlegislativerequirementsalsovary).Whilelargeronescommonlykeepgoodrecords,mostNPOsinAustraliaaresmall(Lyons&Hocking,2000)andmaynotberesourcedtodoso.Indeed,smallNPOsmaybeunder-representedinsectorsurveysduetolackoftimetoparticipate.
Insum,whileindividualstudiesprovidesnapshotsofgivingbehaviourbyindividuals,noonestudycantelltheentirestory.Relyinguponmorethanonetypeofdatasourceisessentialanddifferentkindsofstudiescanfillingaps.However,becausesomecountrieslackthepoliticalwill,orresources,forundertakingevenonenationalstudyletaloneregularstudiestotrackchanges,internationalcomparisonsareincomplete.
�
ThissectiondescribesrisinglevelsofpersonalwealthinAustralia(section2.1),charitablegivingbehaviouracrossthecountry(section2.2)andgivingtrends(section2.3).ItthenacknowledgesthescopeandimpactoftaxationinitiativesbytheAustralianGovernmenttoencouragecharitablegiving,especiallybythosewiththemeanstodosoathigherlevels(section2.4).
2.1 RISING PERSoNAL WEALTh
Australiareflectsinternationalwealthtrends(seesection3.2).InAustralia,realprivatesectorwealthreached$6.3trillionin2005,morethansixtimestheannualGDPandthehighestlevelonrecord(ABS,2006a).TheaverageAustralianwasestimatedtoholdassetsvaluedat$361,000atJune2006,anincreaseof$150,000since2001(AustralianTreasury,2007).Indeed,inthedecadeto2006,theaveragehouseholdincomesgrewby34%inrealterms(ABS,2006a).Thisbroadtrendtoaffluenceismainlybasedonrisingvaluesofhousingbutalsosuperannuation,shares,andotherassetsheld(ABS,Harding,2003&Kelly,2006a).
However,itismoreaffluent individualswhohaveexperiencedthegreatestaccelerationinwealth.Since1995,therealmeanincomeofbothlowandmiddleincomepeoplehasincreasedbyaround31%,comparedto36%forhighincomepeople(ABS,2006a).Injusttwoyearsto2006,householdincomesinthelowandmiddleincomesegmentsgrewby8%whilethoseinthehighincomesegmentjumped,onaverage,by13%.
Asaresult,thewealthiest20%ofhouseholdsheld61%oftotalAustralianhouseholdnetworthin2006,withanaverageof$1.7millionperhousehold(ABS,2006a).Otherresearchsuggeststhatthewealthiest10%ofthepopulationholdsalmosthalfthetotalhouseholdwealthinthiscountry(Baker,2007).Moreprecisely,Datamonitorcalculatesthatthewealthiest1.4%ofthepopulation(thosewithmorethan$513,000inliquidassets)held43%oftotalliquidretailwealthin2004(Datamonitor,2005,p.17).Thisstrongergrowthatthetopendcanbeexplained,atleastinpart,byfavourabletaxcuts,accordingtothedirectoroftheNationalCentreforSocialandEconomicModelling,Ann
chARITABLE GIVING IN AUSTRALIA
Harding(Saulwick,2007).Therisingvalueofsuperannuationassets(andequities)alsohasbeenanimportantdriverofwealthinthecountry( InvestAustralia/AxissAustralia2007).
NotonlyhastheaffluentAustralian’saveragelevelofassetsrisensubstantiallyoverthepastdecadebutthenumbersofaffluentaresurging(AustralianFinancialReview,2006).TherateatwhichAustraliansarejoiningtheaffluentsegmentputsthecountryalongsideSingapore,SouthAfricaandHongKong,thefastestgrowinghighnetworth(HNW)populationsintheworld(MerrillLynch/Capgemini,2006).Thatis,thegrowthrateoftheHNWpopulationinAustraliaexceedsmanyoftheworld’smostaffluentnationsincludingtheUS,theUKandJapanandtheprivatewealthmarketinthiscountryisnow11thlargestintheworld(InvestAustralia/AxissAustralia,2007).
Australiajoinedtheranksoftheworld’stoptencountriesforthe absolute numbersofHNWindividuals(HNWIs),ratherthanpercapita,forthefirsttimein2006,whichisremarkablegivenitsrelativelysmallpopulation(MerrillLynch/Capgemini,2007).ThetotalnumberofAustralia’sHNWpopulationisonlyexceededbyJapanandChinaintheAsia-Pacificregion,morethaninSouthKorea,India,HongKong,Taiwan,SingaporeorIndonesia.TheWorldWealthReport(MerrillLynch/Capgemini,2007)statesthenumberofHNWIsinAustraliatohaveleaptbymorethan37% injustthreeyearsto2006(from117,000to160,000).Thisgroup–withinvestableassetsworthUS$1millionormore–representsapproximately1%ofAustralia’sadultpopulation.Thewealthiestsub-group–the‘ultra’highnetworthwiththeequivalentofUS$30mplus–isestimatedbytheWorldWealthReport(MerrillLynch/Capgemini,2007)tohavegrowninnumberby11.9%tonearly1,200in2006.
Indeed,growthattheapexofwealthhasbeenstellar.Intheyearto2007,thetotalwealthofthewealthiest200individualsinAustraliaisestimatedtohaveincreasedbyamassive26.7%,from$101.5bto$128.6b(Thomson,2007).Thetop200familiesinAustralianowclaimanaveragenetworthof$611m,up17%from2006(p.30).Drivers
2
�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
ofthiswealthincludeacontinuingresourcesboom,record-breakingsuperannuationdollarsandthelucrativeopportunitieswithinprivateequitymarkets(p.28).Alsomanyinvestmentshavebeensoldatpeakpricesinthepastyearorso,withconcerntocashinonthegoodtimesandtakeamoredefensiveinvestmentpositiongiventhecountry’sdecade-longperiodofprosperityand,forsome,toprepareforretirementandwealthtransfer(Thomson,2007).Itissuggestedthatwealthyentrepreneursincreasinglyprefertosellupandsplitproceedsratherthanforcereluctantoffspringintofamilybusinesses(p.38).Forsuchreasons,thecountry’sfinancialeliteis‘awashwithmoney’(p.34),furtherwideningthegapbetweenrichandpoor.
ThefutureisalsoprojectedtobehighlyfavourablefortheaffluentinAustralia,asitisinarangeofothercountriessuchastheUS,theUK,ItalyandSweden.Whilestockmarketsareexpectedtofluctuate(asdemonstratedbytheirrecentvolatilityduetothesub-primelendingcrisisintheUS)andeconomicconditionsswingintoneutralorevennegativecyclesovertime,assetsareexpectedtocontinuegrowing.Levelsofprivatewealth,especiallyatthewealthierendofthepopulation,willbeboostedbysubstantialwealthtransfersoverthenext40yearsasoldergenerationsdie,leavingestatestotheiroffspring(Havens&Schervish,2003;Kelly&Harding2003).
2.2 CURRENT ChARITABLE GIVING
Basedontwonationalsurveys,totalcharitabledonationsinAustraliawereestimatedat$11bin2004(excludingTsunamidonationswhichpushedgivinglevelsunusuallyhigh).Strippingoutbusinessgiving($3.3b)andgamblingthatbenefitscharities($2b),amoreprecisenationalgivingtotalforindividualsis$5.7bor0.68%ofGrossDomesticProduct(GDP)(GivingAustralia,2005).Some87%ofAustralianadultsareestimatedtohavepersonallydonatedatleastoncein2004,withtheaveragedonation$424andthemedian(includingreligiousgiving)at$130.
Chart 1 belowshowsthesizeofannualcharitablecontributionsbyrespondentsintheGivingAustraliahouseholdsurvey.Itisnoteworthythatonly8.6%(532respondents)reporteddonatingmorethan$1,100in2004andthemajorityofthesegavelessthan$3000.ThisdatahighlightstheprevalenceofsmallvaluedonationsacrossthegreatmajorityofAustralians(Appendix2showswherethismoneygoes).
TaxstatisticsalsoshedlightonAustraliangiving.ThetotalvalueofdonationsclaimedbyindividualsastaxationdeductionsinAustraliain2004-05was$1.47b,up26.3%($307million)fromthepreviousyear(McGregor-Lowndes&Newton,2007).ThisincludesaidtovictimsoftheAsianTsunamiwhichisestimatedatincreasingdonationsbyupto21.7%withoutimpacting‘normal’givingtolocalcausesinanyseriousway(McGregor-Lowndes&Newton,2007).
Inthecontextofoverallpersonaltaxdeductions,however,donationsonlyrepresentatinyslice(6%),asChart 2 shows.Itsshareoftotalpersonaldeductionsisonlyslightlyhigherthantheamountclaimedforusingtaxagentstoprepareincometaxstatements(5.3%ofthetotalvalueofdeductions)andone-eighthofwork-relateddeductions.Evenforthosewithtaxableincomesinexcessof$100,000,donationsrepresentonly10%ofthevalueofalldeductions.
ChART 1: SIzE oF ANNUAL DoNATIoNS BY
INDIVIDUALS IN AUSTRALIA IN 2004
% o
f R
esp
on
de
nts
40
35
30
25
20
15
10
5
0
No
do
natio
ns:
$0
$1–
$10
0
$101
–$
50
0
$5
01–
$11
00
$110
1–
$3
00
0
$3
001
$1
0,0
00
$1
0,0
00
and
mo
re
Annual Donations ($)
Note:DonationsaretotaldonationsincludingtoreligiouscausesSource:GivingAustralia(2005)householdersurveydatabase
8
Overall,38.4%ofallAustraliantaxpayers(4.3million)madeandclaimedforcharitablegiftsintheirtaxreturnsof2005,representinganaverageofjust0.33%ofthesedonors’taxableincomes.Acrossalltaxpayers,donatingornot,donationsaccountforaminuscule0.00032%oftheaverageAustralian’staxableincome.
Evidencesuggeststhatmanydonationsarenotclaimedontax,althoughthosenotclaimingtendtobethoseonlowandmidincomes.Themainreasonfornotclaimingdeductionsontaxappearstobetheperceivedsmallsizeofgift(GivingAustralia,2005).
RecentfiguresfromtheAustralianBureauofStatistics’VoluntaryWorkSurvey(ABS,2006b)estimatesthat77%or11.8millionAustralianadultsmadeatleastonecharitabledonationin2005-06(whetherclaimedasataxdeductionornot).ThisisamoresubduedparticipationratethanthatprovidedbyGivingAustraliaayearearlierbutthereweremethodologicaldifferencesandapotential‘halo’effectassociatedwiththeAsianTsunamimayhavepushedGivingAustraliafiguresalittlehigher.
2.2.1 ChARITABLE GIVING BY STATE
GivingAustralia(2005)researchindicatesthatdonorparticipationratesarehigherincapitalcitiesthanelsewhere(withtheexceptionofQueenslandwhichishighlydecentralised).SydneyandMelbournehavethehighestproportionofdonorstotheirtotalpopulationsofallcapitalcities(around88%ineach).Further,thetotalvalueofdonationsishighestinSydney,reflectinginpartitslargepopulation,and,takentogether,SydneyandMelbourneaccountforalmosthalfthedonationdollarinAustralia(47%).
TaxstatisticsconfirmthedominanceofNewSouthWalesinthegivingstakesin2005(McGregor-Lowndes&Newton,2007):NSWtaxpayersclaimedthelargestamountoftax-deductibledonationsofanyAustralianstateorterritory,as Chart 3 shows.Theyalsomadethehighestaveragedonationinrealdollarsand thehighestdonationasapercentageoftaxableincome.(Thislatterfigureisaparticularlyvaluablefigureasitaccountsfordifferentincomelevels.)
Other25%
Gifts or donations
�%
Non-employersponsored
supercontributions8%
Costofmanagingtaxaffairs
5%Interestanddividend
deductions9%
Otherworkrelatedexpenses
17%
Self-educationexpenses
3%
Uniform/clothingexpenses4%
Travelexpenses4%
Carexpenses19%
ChART 2 : DEDUCTIoN CATEGoRIES AS A
PERCENTAGE oF ToTAL DEDUCTIoNS
IN AUSTRALIA (2004–5 )
Source:DrawnfromATOfiguresaccessedwww.ato.gov.auSeptember2007
ChART 3 : TAX-DEDUCTIBLE DoNATIoNS BY STATE
oF RESIDENCE IN 2004–05
NSW Vic Qld SA WA Tas NT ACT
$1000$900$800$700$600$500$400$300$200$100
$0
Tota
l De
du
cti
on
s
($m
)
State
Source:McGregor-Lowndes&Newton,2007
The2005-06VoluntaryWorkSurvey(ABS,2006b)highlightswidedifferencesindonorparticipationinAustraliabasedongeography,rangingfrom70.3%intheNorthernTerritoryto85.1%intheACT.ThepercentageofdonorsinNSWandVictorianpopulationsisestimatedas73.1%and78.6%,respectively.
chARITABLE GIVING IN AUSTRALIA
�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
Othersocio-demographiccharacteristicsofAustraliandonorscanbederivedfromGivingAustraliaandABSresearch.Thesestudiesgenerallyagreethat:
• Acrossthewholepopulation,theagegroupmostlikelytodonateis45to54;
• Thosewhovolunteerweremorelikelytodonatethanthosewhowerenot(85%comparedwith72%);
• Agreaterpercentageofwomendonate(81%)thanmen(73%);
• Thosewithhigherlevelsofeducationalqualificationshadaboveaverageratesofgiving:85%ofthosewithdiplomasand84%ofthosewithagraduatedegreeorhigher(comparedtotheaverageof77%);
• Thoseinpart-timeemploymentweremorelikelytodonatethanotherAustralians(81%),withfemalepart-timeworkersthemostlikelytomakedonations(85%).
SeeAppendix3foradditionaldataonAustraliandonors.
2.3 GIVING TRENDS
Are Australians becoming more or less engaged in charitable giving?
DifferentdatasourcessupporttheconclusionthatthetotalvalueofdonationsgivenbyAustralianshasincreasedoverthepastdecade,inrealdollartermsandinflation-adjusteddollarterms.So,too,hastheaveragedonation.ThislatterfigureisthemoresignificantfigurebecauseAustralia’sgrowingpopulationhasexpandedthepoolofgivers,muddyingtheanswertotheopeningquestionofwhetherAustraliansarebecomingmoreengagedincharitablegivingoraretheresimplymoreAustraliansavailabletogive?Australia’s2007populationstandsatjustover21million,anincreaseofalmost17%since1995(and10%since2000).
Trackingchangeincharitablegivingiscomplicatedbecausethefewstudiesthatexistrelyupondifferentmethodsofcalculationoverdifferenttime
periods,asdiscussedabove.TheGivingAustraliaresearch(2005)ishelpfulbecause,whileithasitslimitations,itprovidesthemostcomprehensivedatatodate.Itsfindingsclearlypointtoariseintotalgivingafterinflation,andariseintheaveragedonation,inthesevenyearsfrom1997to2004(estimatingincreasestobe58%andfrom$331from$424,respectively).
CPNS’annualcomparisonoftaxdatashowsasimilarpositivetrendsince1978-79.Inrealterms,theincreaseintaxdeductibledonationsisdramatic,clippingalongat10.4%perannuminthepastdecade(McGregor-Lowndes&Marsden,2006;McGregor-Lowndes&Newton,2007).Indeedtherehavebeentwomarkedincreasesintaxdeductibledonationsinrecentyears:in2001-02(thesameyearPrescribedPrivateFundswereintroduced)whenclaimeddonationsjumped16.7%overthepreviousyearandin2004-05(whentheAsianTsunamioccurred)whenclaimeddonationsrose26.4%overthepreviousyear).
Asnoted,populationincreaseshelpexplainincreasedtotalgiving,andtaxincentivesandnaturaldisasterswillhavesomeimpactongivinglevels.WhilethegrowthindonationshasoutpacedCPIincreasesoverthepast14years,theinflation-adjustedincreasesarefarmoremodest,asChart 4shows.
ChART 4 : ToTAL TAX-DEDUCTIBLE DoNATIoNS
To INFLATIoN-ADjUSTED ToTAL TAX-
DEDUCTIBLE DoNATIoNS SINCE 1978–79
Tota
l Ta
x-D
ed
uc
tib
le D
on
ati
on
s
(in
$m
)
$1500$1400$1300$1200$1100$1000$900$800$700$600$500$400$300$200$100
$0
1978
–79
198
0–8
1
198
2–8
3
198
4–8
5
198
6–8
7
198
8–8
9
199
0–9
1
199
2–9
3
199
4-9
5
199
6–9
7
199
8–9
9
200
0–0
1
200
2–0
3
200
4–0
5
Income Year AllTax-DeductibleDonations(in$millions)
Inflation-adjustedtotaltax-deductibledonationsusing1979base;( in$millions)
Source:McGregor-Lowndes&Newton,2007
�0
Chart 5 showstheriseintheaverage annualtax-deductibledonationindollars(beforeandafterinflation)since1979.Afterinflation,theaveragedonationinAustraliahasincreasedfromaround$30in1979toalmost$110in2005.
Anevenbetterindicationofchangesinpersonalgivingistocalculatetheaveragedonationasapercentage of income, asittakesinflationoutoftheequation.Chart 6 identifiestheverymodestincrease(lessthan0.15%)inthevalueoftheaveragedonationasapercentage of individual donor’s taxable incomesince1992.
Themostdiscernablechangehasoccurredsince2000.Itshouldbenotedthatthesefiguresexcludetaxpayerswhodonotclaimcharitabledonations;iftheywereincluded,rateofgivingwouldshrinkdramatically.
WhilethenumberofAustraliantaxpayersmakingandclaimingforcharitablegiftsisnowatitshighestrecordedlevel(4.31million,upfrom3.12millionin1994-95),the proportion ofAustraliansmakingdonationshasincreasedbyjustover5%,from33%to38.4%ofthetotaltaxpayerpopulation,asChart 7 shows(McGregor-Lowndes&Newton,2007).
Perhapssurprisingly,thisincreaseisnotskewedtohigherincomeindividuals,whosewealthhasescalatedmostquickly.TheproportionofAustraliansineachincomebandwhoclaimtaxdeductionsontheirgivingremainedrelatively unchangedinthedecadefrom1993to2002.Itistooearlytodetermineiftheslightriseofthepastthreeyearswillcontinue.
ChART 5: AVERAGE TAX-DEDUCTIBLE DoNATIoN
To INFLATIoN-ADjUSTED AVERAGE TAX-
DEDUCTIBLE DoNATIoN SINCE 1978–79
Inflation-adjustedtotaltax-deductibledonations(using1979base)
Alltax-deductibledonations
$350
$320
$290
$260
$230
$200
$170
$140
$110
$80
$50
$20
Income Year
1978
–79
198
0–8
1
198
2–8
3
198
4–8
5
198
6–8
7
198
8–8
9
199
0–9
1
199
2–9
3
199
4-9
5
199
6–9
7
199
8–9
9
200
0–0
1
200
2–0
3
200
4–0
5
Ave
rag
e Ta
x-D
ed
uc
tib
le D
on
ati
on
s
Source:McGregor-Lowndes&Newton,2007
0.400%
0.350%
0.300%
0.250%
0.200%
0.150%
0.100%
0.050%
0.000%
199
2–9
3
199
3–9
4
199
4–9
5
199
5–9
6
199
6–9
7
1997
–98
199
8–9
9
199
9–0
0
200
0–0
1
2001
–02
200
2–0
3
200
3–0
4
200
4–0
5
Income Year%
of
Taxa
ble
in
co
me
ChART 6 : TAX-DEDUCTIBLE DoNATIoNS AS A
PERCENTAGE oF TAXABLE INCoME
Source:McGregor-Lowndes&Newton,2007
% o
f Ta
xp
aye
rs
Income Year
5%
10%
0%
15%
20%
25%
30%
35%
40%
45%
199
2–9
3
199
3–9
4
199
4–9
5
199
5–9
6
199
6–9
7
1997
–98
199
8–9
9
199
9–0
0
200
0–0
1
2001
–02
200
2–0
3
200
3–0
4
200
4–0
5
ChART 7: PERCENTAGE oF DoNATING
TAXPAYERS To ToTAL TAXPAYERS
Source:McGregor-Lowndes&Newton,2007
chARITABLE GIVING IN AUSTRALIA
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
Insum,Australiansoverallhavebecomemoreengagedincharitablegivingoverthepasttwodecades.Thestrongestincreaseshowsforthetotalvalueofcontributions.Amoremodestincreaseisrecordedfortheaveragecontribution(thedollaramountgivenadjustedforinflationand thepercentageofincomeclaimedasadonation),andthedonorparticipationrate.
2.4 GIVING BY AFFLUENT AUSTRALIANS
ThebulkofcharitablegivinginAustraliatodayisintheformofsmalldonations,asnoted,givenbyvarioussegmentsinthewiderpopulationnotonlytheaffluent(with$1.2millionplusininvestableassetsortaxableincomesinexcessof$100,000).Evendonationsclaimedontaxreturnsarelargelytheprovinceofthosewithpersonaltaxableincomesofbetween$50,000and$100,000annually(witharound$52,000beingtheaverageAustralianincome).Ofthislargecohortof2.4millionpeople,some1.3millionclaimedforadonationontheirtaxreturnin2004-05(McGregor-Lowndes&Newton,2007).Thesedonorsclaimedthelargestsliceofthetax-deductiblegivingpie,28.5%ofthetotalvalueofdonationsclaimed.Theaffluentgivemore,onaverage,butnotenoughtochangethegivingbalance.
AsbothtaxdataandGivingAustraliaqualitativefindingsindicate,thegreateranindividual’sincome,themorelikelyheorshewillmakeandclaimadonationandthehigherthatdonationislikelytobe(SeeApendix4).Forexample,some10%ofAustralianswithincomesunder$10,000claimedtax-deductibledonationsin2005,aratethatriseswitheachincomebandtoapproximately65%ofalltaxpayersinthepeakincomecategoryof$1millionplus(McGregor-Lowndes&Newton,2007).
FurthersupportforthispositiverelationshipbetweenincomeandgivingisprovidedbythelatestAustralianVoluntaryWorkSurveywhichaskedaboutmakingdonationsgenerally(bothclaimedontaxornot).ItsfindingsshowthatAustralianslivinginareasinthehighestquintileofsocio-economicstatushadan80.9%donorrate,comparedwith69%inthelowest20%(ABS,2006a).
However,givingbytheaffluentinAustraliaishighlyvariable,withinandacrossaffluentincomesegments.Analysisof2005taxstatisticsbyMcGregor-LowndesandNewton(2007)revealsanupperaffluentcategoryof4,500individualswithtaxableincomesof$1millionplus(‘theuppertier’),ofwhom66%claimedcharitabledonationsvaluedat$176.6millionandanaveragegiftperdonorof1.98%ofthesedonors’taxableincome($59,351).
Themidtiercomprises13,230taxpayerswithtaxableincomesbetween$500,000and$1million,ofwhomapproximately62%claimedcharitabledonationsvaluedat$64.5million,withanaveragegiftperdonorof0.78%ofthesedonors’taxableincome($7,775).
Thelowertier($100,000to$499,000)comprisesamassivebaseofjustunderhalfamillionaffluentAustralians(466,130)ofwhomjust59.2%claimedcharitabledonationsvaluedat$310millionandanaveragegiftperdonorof0.45%ofthesedonors’taxableincome($1,123).
Charts 8, 9 and10contrastthegivingbehaviourbythesegroupswithintheaffluentpopulation,highlightingtheimportanceofsegmentationintodistinctcategories.
Chart 8 demonstratesthatasincomelevelincreases,sotoodoesthedonorparticipationrate.However,suchfiguresalsospotlightthosewhoarenotgivingtocharitablecausesdespitetheirfinancialwherewithaltodoso.ThesefiguressuggestthatoneinthreeaffluentAustraliansmaybedonatingonlynegligiblesums.
ChART 8 : PERCENTAGE oF DoNATING TAXPAYERS
To ToTAL TAXPAYERS BY INCoME BAND
IN AUSTRALIA 2004–05
100.00%90.00%80.00%70.00%60.00%50.00%40.00%30.00%
20.00%10.00%0.00%
Less
tha
n$1
0,0
00
$10,
00
0–
$14,
99
9
$15,
00
0–
$19,
99
9
$20
,00
0–
$24
,99
9
$25
,00
0–
$3
4,9
99
$3
5,0
00
–$
49,
99
9
$5
0,0
00
–$
99,
99
9
$10
0,0
00
–$
49
9,9
99
$5
00,
00
0–
$9
99,
99
9
$10
00,
00
0–
and
mo
re
Income Band
% o
f D
on
ati
ng
Ta
xp
aye
rs t
o
Tota
l Ta
xp
aye
rs
Source:McGregor-Lowndes&Newton,2007
�2
Chart 9confirmstheexpectationthatthosewithgreatestfinancialcapacitywouldgivethemost,atleastinpart.Whileaffluentindividualsdogivemoreinrealterms,thoseinthe$100,000-$499,999and$500,000-$999,999incomebracketsgiveatarelativelylowlevelinrelationtothesetaxpayers’incomes.Theformer’saverageclaimeddonationof$1,123,forexample,isoutofscaletothe$59,351donationbythoseinthehighestaffluentbracketnotwithstandingthewiderincomerange.Noristhis$1,123averagedonationinscalewiththoseonlowerincomes;itisonlysome$800morethanthe$321averagedonationbythosewithincomesbetween$50,000and$99,999).
ThewealthdistributionofaffluentAustraliansreflectsapyramidshapewiththebasecomprisingthosewithtaxableincomesbetween100,000-499,999andthepeakcomprisingthosewithtaxableincomesover$1million.In2005,thoseatthepeakrepresentedjust0.9%ofaffluenttaxpayersbut32%oftotalaffluentgivingwhilethosewith$100,000to$499,999incomesrepresentedanoverwhelming(96.3%)ofallaffluenttaxpayersyetonly56%ofthetotalvalueofaffluentgiving(McGregor-Lowndes&Newton,2007).
Chart 10 showsthatitisonlysomeaffluentAustralianswhogiveasubstantiallyhigherpercentageoftheirincomethanthosewithlesswealth.Individualswithtaxableincomesunder$100,000whoclaimcharitabledonationsgiveapproximately0.3%oftheirincomes.This
percentageincreasesasoneprogressesintohigherincomebandsbutonlybysmallincrementsandcomingoffalowbase,untilonereachesthe$1millionplusincomebracket.
Otherdata,whilescarce,alignswiththistrend.TheGivingAustralia(2005)nationalhouseholdsurveyaddressedgivingbytheaffluentinalimitedway–byonlyreportingonindividualswithincomesover$52,000–butitidentifiesaslightlyhigherdonorparticipationrateforaffluentindividualscomparedtoAustraliansgenerally:90.5%and87%,respectively.ItalsoidentifiesahigherlevelofdonationbyaffluentindividualscomparedtotheaverageAustralian:$769and$424,respectively.
Delvingdeeperintothehouseholdsurveydataset,220respondentswithgrossannualhouseholdincomesof$104kormorewereincludedinthesample,reportinganaveragedonationof$1,431morethanlowerincomegroups(seeAppendix5formoredetail).
ABSdataalsosupportsthiswealth-givingnexusshowingthatthehigherthesocio-economicstatusoftheareainwhichanindividualresides,thehigherthepercentageofdonorsinthatarea(ABS,2006a).Inthehighestquintile,forexample,itis80.9%.
Insum,fourmainconclusionscanbedrawnaboutcharitablegivingbytheaffluentinAustralia.
ChART 9: AVERAGE TAX-DEDUCTIBLE DoNATIoN
BY INCoME BAND IN AUSTRALIA 2004–05
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Under$50,000 $50,000–$99,999
$100,000–$499,999
$500,000–$999,999
$1,000,000andmore
Income Band
Ave
rag
e D
on
ati
on
(in
$)
Source:McGregor-Lowndes&Newton,2007
ChART 10 : TAX-DEDUCTIBLE DoNATIoNS AS A
PERCENTAGE oF TAXABLE INCoME BY
INCoME BAND IN AUSTRALIA 2004–05
Under$50,000 $50,000–$99,999
$100,000–$499,999
$500,000–$999,999
$1,000,000andmore
3.0%2.8%2.6%2.4%2.2%2.0%1.8%1.6%1.4%1.2%1.0%0.8%0.6%0.4%0.2%0.0%
Income Band
Do
na
tio
ns
as
% o
f Ta
xab
le I
nc
om
e
Source:McGregor-Lowndes&Newton,2007
chARITABLE GIVING IN AUSTRALIA
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
1. Individualsonhigherincomesaremorelikelytogivethanthoseonlowerincomesbutthereisstillalargeproportionoftheaffluentwhogiveatnegligiblelevels.
2. Theaveragedonation,perannumindollars,ishigherthanthoseonlowerincomesbutwidevariationsindonationamountsexist.
3. Thepercentageofincomethatisgivenishigherfortheaffluentbutitonlyexceeds0.8%oftaxableincomeatthevery toplevelofaffluence.
4. Theshareoftotalgivingbythoseinloweraffluentbandsistinycomparedtothoseinthewealthiestsegment.
Thereisevidence,too,thatgivingbehaviourisnotkeepingpacewithincreasesinpersonalwealthforthoseinaffluentsegments.Chart11highlightsthemodestincreasesinaveragedonationsforthemidandloweraffluentsegments,expressedasapercentageofincome,overthepastdecade.Thelargestincreasehasoccurredfordonorsinthewealthiestcohort–the‘upper’affluentgroup–whoseaveragedonationof1.98%oftheirincomeisupfrom0.7%in1996.ContrastthistoABS’sestimated36%increaseinrealmeanincomebytheaffluentpopulationasawholeoverthisperiod(ABS,2006a).
Thus,despiteagallopinggrowthinaffluencebythisgroupsince1995,tax-deductiblecharitabledonationsbythoseearningover$100khavenotmatchedwealthtrends.Moredetailedbreakdownoffiguresfordifferentaffluentsegmentsisrecommendedasthereappearstobeanincreaseindonationsbythehighestincomegroupsince2001thatisnotmatchedbyotheraffluentgroups.
Moreover,theproportionofdonorsintheaffluenttaxpayercohortparticipationhasincreasedatamodestrateoverthedecade. Chart 12 showsthatthedonorparticipationrateamongstthosewithtaxableincomesbetween$100,000and$1millionperannum,measuredbythepercentageofdonorsinthattaxpayercohort,increasedbyjustover10%between1996and2005.Contrastthistothedramaticgrowthinnumbersintheaffluentpopulation(estimatedtohavegrownby37%injustthreeyearsto2006)(MerrillLynch/Capgemini,2007),aswellastheirhigherassetlevels.
Finally,Chart 13 showstheshareofthetotalvalueofdonationsinAustraliaforeachaffluentsegmentfrom2000to2005.Thissharehasgrownforeachsegment,withthemostgrowthinthetopincomegroup.Thegreatestfluctuationisalsoshownforthoseinthehighestincomebracket(taxableincomesinexcessof$1million).
ChART 11: AVERAGE CLAIMED DoNATIoN BY
AFFLUENT DoNoRS AS A
PERCENTAGE oF INCoME
3
2.5
2
1.5
1
.5
01996 1997 1998 1999 2000 2001 2002 2003 2004 2005
YearsLowerAffluent
MidAffluentUpperAffluent
Ave
rag
e D
on
ati
on
as
% o
f In
co
me
Note:Donationsrefertotax-deductibledonations.FiguresaredrawnfromMcGregor-Lowndes&Newton,2007.
ChART 12 : DoNoR PARTICIPATIoN RATE BY
AFFLUENT AUSTRALIANS 1996–2005
% o
f D
on
ati
ng
Ta
xp
aye
rs
LowerAffluent
MidAffluentUpperAffluent
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Years
70
65
60
55
50
45
40
Note:Donorparticipationreferstoindividualtaxpayerswhomadeandclaimedtax-deductibledonations.FiguresaredrawnfromMcGregor-Lowndes&Newton,2007.
��
Insum,despitegrowthinpersonalwealthfortheaffluentsince1995,indicationsarethatcharitablegivinghasgrownatamoresubduedrate.Whilemoredetailedbreakdownoffiguresfordifferentaffluentsegmentsisnotcurrentlyavailable,suchfiguresareneededtodiscerncharacteristicsof,anddynamicsassociatedwith,bothhighandlowgiverswithintheaffluentpopulation.
2.5 TAXATIoN INITIATIVES INTRoDUCED SINCE 1999
ManyfactorsarelikelytohaveinfluencedthewiderAustralianpopulation’sincreasedwillingnesstogiveoverthepastdecade,notablyanincreasedlevelofwealth.Thisrisingtideofprosperityhasincreasedonthebackofaresilienteconomywithstableemployment,increasedparticipationindirectsharesandagenerallysurgingsharemarket,andgrowthinthevalueofproperty(albeitcreatingissuesaroundhousingaffordability).
Therehavealsobeenkeypublicpolicyandtaxationchanges,andotherinitiativesbythegovernmenttobolsterprivategiving(seeAppendix6formoredetail,alsowww.partnerships.gov.au).SuchmovesreflecttrendsintheUKandtheEuropeanUniontoencourageprivategiving
(CatalogueforPhilanthropy,2006).ThissectionconsiderstheinfluenceofPrescribedPrivateFunds(PPFs),thekeytaxmeasureaimedatwealthierAustralians.(Section 5providesalargerdiscussionofeffortstonurturephilanthropyinthiscountry).
Since1999,thefollowingsuiteofmeasureshasbeenintroducedbyThePrimeMinister’sCommunityBusinessPartnershiptostimulateindividualgiving:
• 5-yearaveragingofdonations
• Deductionsforgiftsofpropertyover$5,000
• Deductionsforgiftsofsharesunder$5,000
• Deductionsforminorbenefitcontributions(e.g.galadinners)
• Deductionsforworkplacegiving
• Conservationcovenants
• CapitalgainstaxexemptionforgiftswithintheCulturalGiftsProgram
• TheintroductionofthePrescribedPrivateFund(PPF).
2001 2002 2003 2004 2005 2006
Year
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
-0%
% o
f To
tal d
on
ati
on
s
�.��%
�.�2%
17.72%
2�.��%
17.67%
�2.��%
5.3%
4.78%
��.0�%
�.�8%
2�.0�%
�0.��%
4.74%
��.�2%
15.39%
3.91%
8.��%
�.��%
2�.��%
��.2�%
4.83%
19.65%
16.36%
3.62%
�.00%
�.��%
28.��%
�0.��%
4.62%
20.42%
16.27%
3.71%
��.�2%
�.2�%
2�.0�%
�.��%
3.97%
19.85%
14.74%
3.13%
�.�8%
28.��%
�.��%
3.74%
21.06%
14.38%
2.91%
$1,000,000andover
$500,000–$999,999
$100,000–$499,999
$50,000–$99,999
$35,000–$49,999
$25,000–$34,999
$20,700–$24,999
$15,000–$29,700
$10,000–$14,999
Under$10,000
ChART 13 : INCoME BANDS AS A PERCENTAGE oF ToTAL DoNATIoNS IN
AUSTRALIA 2000–05
Note:Totaldonationsrefertothetotalvalueoftax-deductibledonationsthatindividualtaxpayersmadeandclaimed.FiguresaredrawnfromCPNSanalysesoftaxstatistics2000-2007.
chARITABLE GIVING IN AUSTRALIA
�2.00%
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
ThetwothatappeartobecreatingthemostchangeareworkplacegivingandPPFs.Todate,qualitativedatasuggestskeenandgrowinginterestinworkplacegivingprogramsforAustraliansgenerallybutquantitativeassessmentoftheirimpactislimitedandwillrequiremoretime.
ThemostcompellingdataofanyincentiverelatestoPPFs,whichhasseenacceleratedtake-upbytheaffluentsincetheirintroductionin2001(corporateinterestalsoexists).Bytheendof2006,while452PPFshadbeenformallydocumented,anecdotalevidencesuggeststhatmorethan600havebeenestablishedandmanymoreareinthepipeline.(Chart 14trackstheirgrowth).
RecentgrowthinthetotalvalueofdonationsinNSWandVictoriaaswellashigheraveragetax-deductibledonationsbyindividualslivinginthosestatescorrespondstoahighertake-upofPPFsinthosestates.Somehavesuggestedalinkbutitisunder-researchedtodate.
Givingpatternsmaybetterreflectwealthtrends,aswellascommunityresponsestothespateofbothnaturaldisastersandman-madeemergenciesexperiencedgloballysince2000,orallthree‘triggers’.Regardless,thereisenthusiasmforPPFsasagivingvehicleforlargerandmoresustainedgivinginAustraliaandPPFfundsaregrowing.
Insum,evidenceexiststhatcharitablegivinghasincreasedinAustraliasince1979,amongstthewiderpopulationaswellastheaffluent.However,inlightofthestrongincreaseinwealthheldbywealthierAustraliansespeciallyinthepastdecade,theirincreasedgivingisatalowerratethanmightbehoped.Despitesignsofphilanthropicinterestasshownbytheestablishmentofsome600PPFs,thereremainsomecriticalrentsinthefabricofaffluentgivinginthiscountryusinganumberofindicators:actualdollarsgiven,theproportionofwealthorincomedonatedanddonorparticipationrates.
ChART 14: ThE GRoWTh oF PRESCRIBED
PRIVATE FUNDS (PPFS) IN AUSTRALIA
2001 2002 2003 2004 2005 2006
NoPPFscreatedNoPPFsceased
Year
No
.
120
100
80
60
40
20
0
Source:BasedonMcGregor-Lowndes&Newton,2007
��
Comparison caution. Thissectionrepeatstheriderthatinternationalcomparisonsneedcaution.Differentdefinitionsandmethodsofdatacollectionsmuddlebenchmarksandinsomecountriesonlypartialpicturesofaffluentgivingcanbegleaned.
Inanycountry,itisusualtofindanarrayofstudiesaboutthecharitablegivinghabitsofcitizensbutcomparisonsprovedifficultevenwithinthesamecountry.Studiestendtoadopttheirownuniqueapproachwithdifferencesinconceptsanddefinitionsused(suchasindividualversushouseholdbehaviour,categoriesofgiftrecipient),timingofgifts(forexample,bymonthoryear),theperiodforgatheringdata,andsubjectofinterest(forexample,monthlygiving/directdebitgiving/cash)(UKGiving,2006).Forexample,theextenttowhichdonationstoreligiousorganisationsareincludedingivingdatavariesand,beingsubstantial,thisvariationcomplicatescomparisons(CenterforGlobalProsperity,2007).
Asaresult,difficultiesexistforresearchersindevelopingtheoryandgaininginsightintogivingphenomenaaswellasforpolicy-makerswhoseektoassesstheeffectivenessofgivingincentives.Thegeneralpublic,too,canbeconfusedbymediareportingdifferentgivinglevelsortrends.
Thusitisessentialforgivingstudiestobeclearaboutthemethodstheyemploy,whatthefindingsactuallytellusandthelimitstothesefindings.Moreover,researcherscanalsolearnfromstudyingeachother’sapproachandthelessonsgainedfromhindsight.Bysharingmethodsandreplicatingbestpractice,thequalityoffindingsforgivingstudiescanbeoptimised.Partneringwithresearchersinothercountriesalsofacilitatescross-countrycomparison.Finally,repeatstudies(andthosethatseektoassesstheirrobustnessbycomparingtheirfindingswithsimilarbutfarmorecomprehensiveones),allows‘appletoapple’comparison socanbehighlyinformativeaboutnationalgivinglevels.
INTERNATIoNAL compARISoNS
Thissectionfirstlooksatglobalwealthtrends,thenchartsgivinginOECDnationsfollowedbyacomparisonofOECDcountries.
3.1 GLoBAL WEALTh TRENDS
Theglobalaffluentpopulationnownumbersmorethan9.5million,basedonindividualnetassetsheld,excludingthefamilyhome,ofmorethanUS$1million,upby8.2%intheyearto2006,andthehighestnumberonrecord(MerrillLynch/Capgemini,2007).ThisfigureisinlinewithTheBostonConsultingGroup’s(BostonConsultingGroup,2006)2005estimateof7.2millionmillionaires(inUSdollarterms)whocollectivelyown28.6%oftotalglobalwealth,whichitestimatesastotallingUS$88.3trillionin2004.
InvestableassetsheldbythiselitegrouptotalledamassiveUS$37.2trillionin2006,up11.4%since2005(MerrillLynch/Capgemini,2007).TheUSclaimsthelargestHNWpopulation(41%ofthetotal),followedbyJapan,theUK,Germany,FranceandChina(with250,000)(BostonConsultingGroup,2006).
Thetrendtoaffluencehasstrengthenedsince1995fuelledbyincreasesinGDPandmarketcapitalisationacrosstheglobe,especiallyinemergingmarketsofChinaandIndiawhichsustainedrealGDPgrowthratesof10.5%and8.8%respectively.Indeed,thispastyearwasmarkedbydoubledigit(11.4%)growthinthevalueofassetsheldbythisgroupglobally(MerrillLynch/Capgemini,2007).
IntheUSsince1975,theconcentrationofthecountry’spersonalwealthatthetopendhascontributedtomoremarkedlydisparatewealthdistribution(Irvin,2007).Indeed,thepast15yearshasbeenatimewhentheaffluentpopulationhasgrowndramaticallyinnumberandwealth(CommunityFoundationR&DIncubator,2002).Injustonefiveyearperiod(to2001),thenumberofmillionairesintheUSdoubled(Wolfe,2002).TheUSnowleadstheworld,notonlyforthenumberofhighnetworthindividuals(HNWIs),butfortheirlevelofassets,seededbyGDPgrowth(3.3%in2006)andmassivegovernmentconsumption(MerrillLynch/Capgemini,2007).Mostrecently,its
3
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
HNWpopulationexpandedby9.4%in2006,upfrom6.8%in2005,whileCanada’srobustgrowtheasedslightly,droppingfrom7.2%in2005to6.9%in2006.
Europe’saffluentpopulationalsohasgrownsubstantiallyinrecentyears,especiallysince2000.In2006alone,HNWnumbersgrewby6.4%,accordingtoMerrillLynch/Capgemini(2007),drivenbyrobustGDPsandstrongmarketcapitalizationinbothEasternEurope’semergingmarketsandinmoredevelopedWesterncountries.Aswellasnumbers,therehasbeenon-goingconcentrationofwealthheldbyindividuals,partlyduetoincreasesintheexportofoilandnaturalgasfromRussia.TheUKisnotleftout,witnessingtheemergenceofthesuper-richsegmentinthepopulationoverrecentyears(UKGiving,2006).Datamonitor(2006)reports,thatintheperiodbetween2000and2005:
• TheUKwealthmarketgrewintermsofassets(ratherthanoverallnumbers)held,rising4.6%toreachGB£541.5billion;
• WhiletherearemoreHNWwomen(withatleastGB£1million),mencollectivelyholdahigher,andfastergrowing,levelofassets;
• OlderagegroupsdominatetheHNWpopulationfornumbers(between66and75years)andwealth(between56and65years)butyoungerones(between18and45)aregrowingfastestinaffluence(bothinnumbersandassetsheld).
IntheMiddleEastandAfrica,theHNWpopulationgrewby11.9%in2006butlevelsofwealthacrossthisgroupfellslightly,incontrasttotheUK(MerrillLynch/Capgemini,2007).OilcontinuedtobethemaindriverofaffluenceintheregionwhileAfrica’srealGDPsurgedoncommoditypriceswhichledtoincreasedinterestinforeigndirectinvestment.
LatinAmerica’swealthisincreasingduetostrongcommoditypricesanddirectinvestments.RealGDPgrowthintheregionwas4.8%in2006(MerrillLynch/Capgemini,2007).Brazilledtheregion,showingajumpinitsHNWpopulationof10.1%in2006,underpinnedbyincreasedprivateconsumptionandinvestmentandlowerinflation.
IntheAsia/Pacificregion,Singapore,India,andIndonesiahavebecomeamongsttheworld’sfastestgrowingaffluentcountries(MerrillLynch/Capgemini,2007).Australiawassonamedfor2005(seesection2.1).Double-digitgrowthwasrecordedfortheHNWpopulationsofSingapore,IndonesiaandTaiwanin2006,andIndiaandChina,withmammothpopulationsandfastdevelopingeconomies,bothrecordedsignificantgains.
Othercountriesintheregionarealsoshowinggains.Japaniswitnessingatrendforindividualstobuildfortunesaswellasinheritwealth.In2003,60,000householdsclaimedaveragenetassetsofmorethanJPY500millionandsome720,000householdshadoverJPY100million(Miyamoto,Mutoh,&Ogimoto,2006).InKorea,asix-foldincreaseintheaffluentpopulationisexpectedbetween2003and2008(from42,000to270,200)(MarketResearch.com,2006).
Will these wealth trends continue? Thesignsarefavourable.SomeanticipatematuremarketsliketheUStoexperiencevolatilityinwealthlevelsintheshorttermifmonetarypolicyandliquiditytighten(witnesstherecentsubprimelendingcrisis)orpropertymarketsfluctuate(Farrell,Ghai,Shavers2005;MerrillLynch/Capgemini,2007).Generally,however,longer-termprospectsfortheaffluentareregardedasexceptionallyfavourable(seePricewaterhouseCoopersandtheWorldEconomicForum,2002).Forexample,Datamonitor(2006)projectstheUK’sHNWpopulationtogrowto1.34millionby2010andassetsofGB£846.7billion.Longerterm,punditsarealsopointingtowealthgrowthdrivenbythetransferofassetsacrossgenerations,whichhasalreadystartedandisexpectedtocontinueforthenextfourdecades.Thismovementofassetswillboostwealthlevelsofindividualsacrossmanycountries(Remmer,2000;Gerloff,2003;Johnson,2004).IntheUSalone,researchershavemodelledthistransferasinvolvingUS$40trilliondollarsormorebetween1998and2052(Gerloff,2003;Havens&Schervish,2003).
�8
3.2 GIVING IN oECD CoUNTRIES
3.2.1 USA
IthasbeenatransformativedecadeforgivingintheUS.2006markedthe$1.9billionfirstinstalmentofWarrenBuffet’sfouryearpledge(seefootnoteonpage22)andtotalcharitablegivingintheUSreachedarecordhighofjustoverUS$295billion(GivingUSA,2007).Totalprivatedonationsrepresent2.2%ofGDP,remainingforanotheryearabovethe40-yearaverageof1.8%.
In2005,theamountlefttocharitythroughbequestsaccountedforsome7%ofthetotalestimatedgivingoralmost$17.5billioncomparedto$199billiondonatedbythoseliving.Private,independentandoperatingfoundationgivingalsoincreased9.1%(inflation-adjusted)overthepreviousyear,arisethatisexplainedinlargepartbyasurgingstockmarket(gainingover10%afterinflationduringtheyear)(GivingUSA,2007).
TheGenerosityIndex(GI)(CatalogueofPhilanthropy,2006)givesanexcellentwindowintogivingbyAmericans,withsome1.2billiontaxreturnsacrossadecadenowinitsdatabase.ThepurposeofthisIndexistostimulatediscussionsofcharitablegivingintheyear-endholidaygivingseason,byreportingthelatest(twoyearsearlier)IRSdatasummarizingpersonalincometaxreturns,AdjustedGrossIncome(AGI)andItemizedCharitableContributions(ICC),forthenation.Itrevealsadecadeofeconomicboomtimes(mid90s,post2002)andrecession(2001-02)withincreasedglobalisationandunparalleledaccesstoinformation.Since1995,thenumberofindividualspayingtaxintheUSrose12%andwhiletheiraverageincome(AAGI)increased44%,their average charitable contribution (AICC) more than kept pace by increasing 64% over the decade (from$2,449to$4,012).
Indeed,thetotalvalueofICCsoramountclaimedontaxforcharitablegiving,morethan doubled —anincreaseof117%(from$74.8Mto$162.2M)–andthepercentageoftaxpayersseekingdeductionsforgivingthroughICCsrosefrom26%to30%duringthedecade.GivingUSAresearchersestimatethat,whileAmericansusingICCsrepresentonlyaminorityofthetotalnumberofdonors,theirgiftsequatetosome80%ofthetotalvalueofdonationsintheUS,thatis,more
than70%oftaxpayers(non-itemizers)contributeonly20%oftotalindividualgiving(CatalogueofPhilanthropy,2006).
ThelevelofcharitablegivingintheUStendstoparallelchangesinthestockmarket;forexample,in2001,ayearofdampenedeconomicconditions,individualgivingoverallfellby2.3%andbequestincomefornonprofitorganisationsfellevenharder(by7.1%)(Wolfe,2002).Bequests,inparticular,tendtorelyuponstockholdingsfortheirvaluesoareparticularlyvulnerabletoeconomicconditions(withotherfactorssuchaschangingdeathratesalsoplayingapart).
Overall,bequestsrepresentasmallpieceoftheoverallgivingpuzzleintheUS(asinAustraliaandtheUK),withfewerthan8%reportingacharitablebequestintheirwillforeachofthepastsixyears(Krauser,2007).Comparethistocharitabledonationsbytheliving:theclearmajorityofUShouseholds(68%)reportcontributionsannually(YoshiokaandBrown,2003)andthereisgrowinginterestintheoptionof‘livingbequeststhroughtheuseofcharitableremaindertrusts.
Intermsofgivingbytheaffluent,researchshowsthatthewealthyaremorelikelytomakecharitabledonationsthanthelesswealthy(althoughparticipationratesarehighforboth)andtomakeahigherlevelofdonation,asapercentageofincomeorwealthaswellasinrealterms(Schervish,2002).Theyarealsomorelikelytomakenon-cashcontributionssuchascorporatestock,mutualfundsandotherinvestments(Wilson&Strudler,2006)aswellascharitablebequests,andthisengagementwithphilanthropyincreaseswithhigherlevelsofwealth.Thispropensitytogivefindscomprehensivesupportthroughtaxincentives(suchasopportunitiestoreducecapitalgainstaxandestateduty).
FamilieswithanetworthofUS$1millionormorerepresentedonly7%ofallhouseholdsintheUSin2002yettheymade50%ofallcharitablecontributions(Schervish,2002).TheWorldWealthReport(MerrillLynch/Capgemini,2007)suggeststhatthisgroupdonatedanaverageof7.6%oftheirportfoliosin2006,morethana20%increasefrom2005levels,whichitattributedinlargeparttoaheightenedsenseofsocialresponsibilityamongstthisgroup.
INTERNATIoNAL compARISoNS
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
The2007GenerosityIndex(CatalogueofPhilanthropy,2006),arichreservoirofdata,confirmsthedirectionofwealthtrendsdiscussedabove.ThenumberofAmericanswithtaxableincomesinexcessofUS$200,000morethandoubledinnumberoverthepastdecade(up138%)andnowrepresent2.3%ofalltaxpayers(upfrom1.1%),asthefollowingtable(Table1)shows.Inaddition,theiraveragetaxableincome(AAGIs)rose11%($499,393to$554,643)overthisperiod.
Thisgroupalsoclaimstheheaviest‘itemizers’(thoseclaimingtaxdeductionsfortheirgifts)ofalltaxpayerbands,with90%itemising.Giventhepenaltiesforeitherexaggerationorunderstatement,thesetaxstatisticsaretakentobeagenerallyreliableindicatorofthissegment’scharitablegiving.Overthepastdecade,theseaffluentAmericansgavemorebothasindividualsandcollectively.Theaveragedonationindollarterms(AICCs)rose26%($16,882to$21,246)and,moremeaningfully,theirgivingasapercentageoftaxableincomerosefrom3.4%to3.8%.Asagroup,theirshareoftotalcontributionsintheUSrosefrom25%to36%(CatalogueofPhilanthropy,2006).
Takingintoaccounttheneteffectofalltheseincreases,GIresearchersconcludethattheaffluentintheUShavetripledtheirlevelofgiving(300%)andaccountfor45%ofthetotalincreaseingivinginthepastdecade.
3.2.2 CANADA
InCanada,too,overallgivingpatternsappeargenerallystrongintermsofparticipationalthough
averageannualdonationstendtoberelativelysmall.Onbothfronts,givingisincreasing.
FindingsfromthenationalsurveyofGiving,VolunteeringandParticipatingwith20,000Canadiansin2004(StatisticsCanada,2006)show85%(extrapolatingto22.2millionpeopleinthewiderpopulation)donating,(thatis,reportingatleastonecharitablecashdonationintheprevious12months)andfully94%makingeitherafinancialorin-kindgift(orboth)duringtheyear(StatisticsCanada,2006).Thisparticipationratesuggestsamarkedimprovementsincethe2000surveywhen78%ofCanadiansreportedmakingdonations(Lasby&McIver,2004).However,participationratesvarywidelyaccordingtogeographicallocation(93%ontheeasternseaboardto63%inremoteregions),asdogivinglevels(from$500inAlbertato$176inQuebec)(StatisticsCanada,2006,p.13).
TotalgivingbyCanadiansin2004wasCA$8.9billionrepresentinganaveragegiftof$400(upfrom$250in2000)andpatternsofgivingshowadirectcorrelationbetweenlevelofdonationsandage,educationandhouseholdincome(StatisticsCanada,2006).Inrealterms,forexample,thosewithhouseholdincomesinexcessofCA$100,000gave36%ofthetotaldonationdollar.Yetsmalldonationsdominatethegivingpie.ThemedianannualdonationCA$119andonly10%oftotaldonationvaluecomingfromannualdonationsexceedingCA$870.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
# of Returns (in millions)
1.3 1.5 1.8 2.0 2.4 2.7 2.5 2.4 2.6 3.1
% of itemizers
90.3% 90.0% 90.1% 89.8% 89.6% 89.5% 91.2% 91.3% 90.6% 90.1%
Average AGI $499,393 $528,357 $550,708 $569,738 $578,032 $594,298 $536,005 $504,147 $513,724 $554,643
Change in AAGI
5.8% 4.2% 3.5% 1.5% 2.8% -9.8% -5.9% 1.9% 8.0%
Total ICC (in millions)
$19.5 $26 $32.5 $37.5 $45.5 $51.8 $45.5 $41.8 $19.759 $58.6
Average ICC $16,882 $19,204 $20,422 $20,482 $21,346 $31,272 $19,712 $18,886 $19,759 $21,246
Change in Average ICC
13.7% 6.3% 0.3% 4.2% 0.3% 7.3% 4.3% 7.5%
Source:CatalogueofPhilanthropy2006
TABLE 1: US TAXPAYERS WITh INCoME > $200,000, 1995–2004
20
OmnibusSurvey,showstheaveragedonationinthepreviousfourweekstobe£16peradult–or£29perdonor.Hugevariationsingivingamountsexist,distortingaverages.Intermsofparticipation,itreportsthat54%oftheadultpopulationdonateinanaveragemonth(similarto2004-05butbelowthe57%of2005-06)andthepercentageofpeoplewhogiverisesacrossincomeband.
Overall,levelsofgivinglargelycorrelatewithwealth,althoughsomefromeachincomebandcomprisethehighestlevelgivingsegment(UKGiving,2007).Thepercentageofpeoplewhogive(donorparticipation)risesasincomerises(althoughthehighestincomecategoryis£26,000grossperannumwhichrepresentsthetopfifthofthedistributionofincomes)(UKGiving,2006).Theamounttheygivealsoissubstantiallymorethandonorsonlowerincomes,inrealterms (Figure 2).
However,despitegivingmoreoftenandgivinglargeramounts,thetotalamountgivenbydonorsinthemostaffluentgrouprepresentsjust0.8%oftotalincomecomparedto1.2%fordonorsgenerally.Whilehigherincomeindividualspayhighertaxesandthiswouldincreasethepercentagegiven,itisunlikelythatthefigurewouldexceed1.2%(p.28).Moreover,thislevelofgivingasapercentageoftotalincomeissimilartofindingsfromtheUK’sFamilyExpenditureSurveyintheearly1990swhichshowedthatthepoorest10%ofhouseholdsspentalmost3%oftotalweeklyspendingoncharitabledonations,comparedtojustover1%fortherichest10%.(UKGiving,2006)Methodologicaldifferencesdonotallowprecisecomparisons.
Moreover,donorswithannualhouseholdincomesofunderCA$20,000gaveagreaterpercentageoftheirhouseholdincome(1.7%)thanwealthiergroups,asFigure 1belowshows.HouseholdswithannualincomesinexcessofCA$100,000giveatonlyminutelyhigherratethanthosewithmidlevelincomes(0.5%),Asthishighincomegroupconsistsofcombinedgrossincomes,itisunclearhowevenmoreaffluenthouseholdscompare.
AsnotedwiththeUSAabove,bequestincomerepresentsonlyaverysmallproportionoftotalgiving:only4%reportprovisionsforagiftthroughabequestintheirwillorviasomeotherfinancialplanninginstrument(StatisticsCanada,p.14).
3.2.3 EURoPE
IntheUK,TheGivingCampaign(2003)showsevidenceofanupwardsshiftintheoveralllevelofgivingoverthepasttenyearswhichitattributesinlargeparttoimprovedtaxbreaksfordonations.However,therehavebeensomedips.Themostrecentdata,forexample,showscharitablegivingfor2006-07at£9.5billion.Whilethisisupfrom£8.9billionGDPthepreviousyear,itis3%lowerinrealterms(UKGiving,2007).Thelatestfigures,drawnfromtheUK’sIndividualGivingSurvey(IGS),amodulewithintheOfficeofNationalStatistics
INTERNATIoNAL compARISoNS
FIGURE 1: PERCENTAGE oF hoUSEhoLD
INCoME SPENT oN DoNATIoNS, BY
LEVEL oF hoUSEhoLD INCoME,
DoNoRS AGED 15 AND oLDER,
CANADA, 2004
FIGURE 2 : PERCENTAGE oF PEoPLE
GIVING, BY ANNUAL INCoME, UK
Source:CAF2007
Annual household income
Pe
rce
nt
2.0
1.5
1.0
0.5
0
$6,000to
$19,999
$20,000to
$39,999
$40,000to
$59,999
$60,000to
$79,999
$80,000to
$99,999
$100,000or
more
Source:StatisticsCanada,2006
20
0
40
60
80
£0-4,679
Individual gross income category (£ per year)
% o
f P
op
ula
tio
n
£4,680–£9,359
£9,360–£14,559
£14,560–£25,999
£26,000+
MenWomen
2�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
3.InOctober2007,$AU1=6.13Rand
InIreland,whilethenonprofitsectorissubstantialandindividualgivingrepresentsalargershareofnonprofitincomethaninmanyothercountries,thecountryhastraditionallyeschewedhighlevelgivingandthefoundationfieldisrelativelysmall(Donoghue,Ruddle,&Mulvihill,2000).Fromthiscontext,givinglevelshavebeenrisingoverthepast15yearsinthefaceofastronglyrevitalisedeconomyandtaxincentivestoencouragegiving.
InTheNetherlands,householdcontributiontocharitywasestimatedatalmost1900millionEuroin2003,with95%ofhouseholdsdonatinganaverageof£306pa(Weipking,2007).
3.2.4 SoUTh AFRICA
AdifferentpictureemergesforSouthAfrica,whereaninvestigationofgivingpatternsbySouthAfricansbasedonitscensusdataof2001showsarelativelylowformaldonorparticipationrate,atjustoverhalfofthoseinthesurvey(54%)(Everatt,Habib,Maharaj,&Nyar,2005).Givingdirectlytothepoor–tostreetchildren,peoplebeggingonthestreetandsoon–wascommonlyreported,withjustunderhalf(45%)doingso(givingmoneyorgoods).TheaveragemonthlydonationpercapitaisestimatedatZAR273toorganizationsandZAR6.60directlytopoorpeople,makingZAR33.60inall.ThemeanfordonorsisZAR44permonth.Onaverage,mengavemoremoneythanwomen,bothtoorganizationsanddirectlytothepoor(withwomenmorelikelytogivegoodsandtovolunteertheirtime).Whiterespondentsgavemoremoneytoorganizationsthanothers(ZAR80toorganizationsandZAR17directlytothepoor).Aclosecorrelationbetweeneducationandgivingisalsoindicated,showingthosewithnoorlowformaleducationgivingatloweramounts.
3.2.5 TURKEY
CharitiesAidFoundation(CAF,2006)showsindividualgivinginTurkeytobeseeminglylowat0.23%ofGDPbutalsospeculatesthat,likeSouthAfrica,donors’tendenciescanbetochoosedirectaidtothoseinneed,thustheirgiftisnotofficially‘counted’.
3.2.6 ASIA
ThroughoutAsia,wealthisrapidlyincreasing,asnoted,alongsideanexpandingnon-governmentalsectorandphilanthropyisgrowing(Deguchi1994;Altman,2005).Forexample,wealthycitizensinSingapore,HongKongandTaiwanareincreasinglyengaginginphilanthropy.
InJapan,whereasizeablepercentageoftheworld’sHNWpopulationresides(BostonConsultingGroup,2006),philanthropyhashadonlyashorthistoryanddataislimited.Nevertheless,theAsianCommunityTrusthasbeenformedandeffortsareunderwaytofosterphilanthropicco-operationbothwithinthecountryandinternationally(JapanCenterforInternationalExchange,2007).
Similarly,Koreanphilanthropyisinitsearlystages,supportedbyaneconomythatisoneofthefastestgrowingintheOECDregion(Datamonitor,2005;OECD,2007).Nodataisavailableongivingbyhighincomeindividuals.However,anation-widesurveyofgivingbytheCentreonPhilanthropyatKorea’sBeautifulFoundationin2006showedanaverageannualdonationofapproximatelyKRW70,000(US$70),andKRW102,000(US$102)forthosegivingregularly(Hee,2006).Thisrepresents0.46%ofpersonalincomeor0.23%oftheaverageKorean’shouseholdincome(p.6):religiouscashandkindcontributionstogetherwerevaluedattwicethis.Inaddition,measuresweremadeof‘congratulatoryandsympathetic’gifts,atraditionalcustomthatinvolvedtheaverageKoreangivingafurtherannualaverageofaroundKRW324,000(US$324),morethanfourtimestheaveragecashdonationforphilanthropicreasons(Hee,2006).
GivingbytheaffluentisalsorisinginthesuperchargedeconomiesofIndia(OECD)andChina(non-OECD),whethertheyaremotivatedoutofgoodwill,greaterpublicconsciousnessofphilanthropy,amorefavourabletaxandlegalenvironmentorimprovedeffortsbycharities(AWIDandJustAssociates,2006).Inparticular,India’srapidlyexpandingaffluentclassesare
MenWomen
22
spearheadingphilanthropicactivity(MerrillLynch/Capgemini,2007).Indianphilanthropyhasalonghistorybutlittleprecisetrendinformationiscurrentlyavailable.ResearchbytheSampradaanIndianCentreforPhilanthropy(2002)suggeststhat96%ofupperandmiddleclassurbanhouseholdsmakephilanthropiccontributionsamountingtoINS16billion(US$34million)annually.
In2007theChinesegovernmentannouncedtheestablishmentofaMinistryofCivilAffairsinformationclearinghousecalledtheChinaCharityandDonationInformationCentrewhichisaimedatimprovingcommunicationacrossthecharitablesectorandencouragingphilanthropy.PrivatedonationstoCivilAffairsdepartmentsfordisasterreliefin2006hasbeenvaluedbyChineseauthoritiesatnearlyCNY4billion(US$500million)(Tianle,2007).
3.2.7 ELSEWhERE
ThereareindicationsthatphilanthropyisgrowingacrossotherOECDcountries(aswellasinthenon-OECDBrazil).Forexample,theUnitedArabEmirates,RussiaandMexicoallregisterincreasesaswealthgrows(MerrillLynch/Capgemini,2007).
Next,weconsidercross-countrysimilaritiesthendifferencesingivingbehaviour,keepinginmindtheinconsistentnatureofdataavailable.
3.3 GIVING CoMPARISoNS ACRoSS oECD CoUNTRIES
AccordingtotheannualWorldWealthReport,(MerrillLynch/Capgemini,2007)affluentindividualsbothinandoutofOECDcountriesareincreasinglydrawntophilanthropy,with:
1. higher levels of giving at the top end. Thereappearsaslightlylessenedfocusonpreservingwealthandensuringinheritancesandanincreasingcommitmenttogiving.4Themostgenerous11%ofHNWdonorsdirectedover7%oftheirwealthtophilanthropicgivingin2006while17%ofultraHNWIdonors(US$30mandmore)contributedover10%oftheirwealth.(Of
course,thesefiguresrelatetoHNWdonorsnotallHNWIsandthemostgeneroussegmentofthese).
2. high correlation between active wealth generation and giving.IntheUS,wherethistrendismostpronounced,entrepreneursdonatesignificantlymorethanthosewhoinherittheirwealth:anaverageofUS$232,206versusUS$109,745.
3. high profile individuals modelling a ‘new philanthropy’ built on leveraging. Increasingly,wealthyindividualsarestrategicallyleveragingtheirfinancialresources,businesssavvyandentrepreneurialenergytocreatepositivechangeintheinternationalarena.Formerpoliticiansandentertainersarealsosteppingontothephilanthropicstage,donatingtheirtimeandinfluenceaswellasmoneytobringpublicattentiontocauses.
Arangeofadditionaltrendsaffectinggivingacrosstheglobeisoccurring(CenterforGlobalProsperity,2007;MerrillLynch/Capgemini,2007).
1. Intergenerational transfer of wealth. Thistrendtowealthforyoungergenerationsastheoldergenerationdiesisunprecedentedandwilldramaticallyboosttheassetsofmanyindividuals,includingthosealreadywealthy,withsomepositiveimpactongivinglevelsexpected.Manycountriesarealreadyexperiencingtheseestatetransfersandthiswillcontinueforthenextfourdecades(Havens&Schervish,2003).
2. Professional advice becomes more holistic and client-centred.Privatebanksandotherprofessionalfirmsaredelivering‘wealthmanagement’servicesthatexpandbeyondtheirtraditionalrangeofservicestoadviseHNWphilanthropists.
3. Partnerships between the private and public sectors.Increasingly,thereisawillingnessforco-operationbetweenthoseinprivateandpublicarenastoworktogethertoaddresssocialneed,eachcontributing
4SpearheadingthistrendisWarrenBuffet(projectedtodonatealargeproportionofhispersonalfortune,approximatelyUS$37btoahandfuloffoundations,
BillandMelindaGates(whoseUS$33b-plusfoundationseekstoaddressglobalhealthanddevelopmentissues)andRichardBranson(projectedtogiveall
profitsfromhisairlineandrailbusinesses,anestimatedUS$3billionoverthenext10years,oncombatingglobalwarming).
INTERNATIoNAL compARISoNS
2�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
theiruniqueexperiences,skillsandresources(CatalogueofPhilanthropy,2006).
4. Media giving immediacy and exposure to giving.Rapidtechnologicaladvancesareallowingimmediatemediaimagesofimpoverisheddisaster-struckareas,andtheeffortsofhighprofileindividualsontheinternationalphilanthropicarena,toenterhomesaroundtheworld.
5. Substantial and fast growing levels of ‘diaspora’ or remittance giving.Withmorepopulationmovements,thetotaldonationsmadebyindividualslivinginonepartoftheworldandgivingtotheirhomecommunitieswithwhomtheyfeelclosetiescontinuestogrow.Such‘migrantremittances’wasofficiallycapturedatUS$80billionin2002butisestimatedasfarhigher–uptoUS$200billion–duetosubstantialunderreporting,accordingtoascopingstudyfortheUKDepartmentofInternationalDevelopment(Sander,2003).TheIndexofGlobalPhilanthropyestimatesthat125millionpeopleindevelopedcountries‘sendmoneyhome’anditsvalueexceedsallgovernmentalaid(CenterforGlobalProsperity,2007,p.24).Fundsarecommonlydirectedtosupportfamiliesthemselvesorcommunityprojects.Inaddition,internaldiasporaisincreasinglyimportant:individualscomingfromothercountrieswhoseektosupporttheircommunitiesintheiradoptedcountries(CenterforGlobalProsperity,2007).
Are there trends emerging in regions? Thoughevidenceispatchy,there is someevidenceofregionalpatterns.
ThreeofthestrongestregiontrendslargelyshowintheUSandCanada(GivingUSA,2007;MerrillLynch/Capgemini,2007):
1. Increasing use by the affluent of donor-advised funds. Suchfundsallowindividualstogrowaphilanthropicinvestmenttax-freeandthenrecommendthetiming,amountandrecipientofsubsequentdistributionsfromthefundinordertomaximizeimpact.
AssetsheldatfourofthelargestUScommercialfundsgrewby50%in2005/06,fromUS$3.26billioninfiscal2003toUS$4.9billion.
2. Increasing use by the affluent of donor consulting firmstofacilitatephilanthropicinvestmentsandtomaximizesocialreturnoninvestment:leadingfirmsincreasedtheirmarketpenetrationbymorethan45%peryearfrom2002to2006.
3. Increasing interest in venture philanthropy.WiththenumberofbillionairesinNorthAmericaestimatedat400in2000,upfromjust13in1985,thosewithenormousfortuneshavebecomedrawntonewformsofphilanthropybasedonthesametenetsunderpinningtheirpersonalsuccess(Wolfe,2002),Venturephilanthropistsusetheprinciplesofventurecapitalisminanattempttomoreeffectivelyaddresssocialissues.
Othercross-countrysimilaritiesexist.Forexample,theoverwhelmingmajorityofcharitableincomeinOECDcountriesincludingAustraliacomesfrom individuals:forexample,intheUSin2006,itrepresents83.3%ofallprivategiving.Individualgivingisalsomainlyderived–notfrombequestsbutfromtheliving.Sortingoutthedifferencesismoreproblematic,asnotedearlier:dataislargelyvoluntaryandpatchy,andsurveymethodologiesdifferwidely,evenfordefinitionsofvoluntaryorganisationsandgiving.
However,theWorldWealthReport(MerrillLynch/Capgemini,2007)highlightstwomajorpointsofdifference ingivingbehaviourindifferentcountries:
1. Inclusion of philanthropy in portfolio. TheaffluentinNorthAmericaandtheAsia-Pacificleadthewayinseekingphilanthropicallocationsintheirportfolios:some13%ofHNWindividuals(withtheequivalentofassetsexceedingUS$1million)intheseregionsdoso,followedby6-7%inEuropeandtheMiddleEast,andonly3%inLatinAmerica,wherephilanthropyislessdeveloped.
2�
ThispatternalsoholdsforUltra-HNWIs(thosewithassetsinexcessofUS$30million:26%inNorthAmericaand16%inAsia-Pacificsoughtphilanthropicallocationsintheirportfolios,comparedwith10%ofUltra-HNWIsinEuropeandtheMiddleEast(MerrillLynch/Capgemini,2007).InLatinAmerica,againonlyabout3%ofUltra-HNWIsdoso.WhetherAustraliaisrepresentativeoftheAsia-Pacificregioninthisrespectisunclearfromthisaggregateddata.Anecdotalevidence,suchasobservationsfromanationalprivatebankingconferenceinMay2007,suggeststhatitlagsitsregionalcounterpartsinphilanthropicallocation.
2. Levels of donation. AffluentdonorsintheAsia-Pacificregionleadtheway,allocatingasubstantial11.8%oftheirportfoliostophilanthropiccauses,followedbythoseinNorthAmericaandtheMiddleEast,with7.6%and7.7%,respectively.EuropeanHNWphilanthropistsallocated4.6%oftheirwealthtocharitabledonationsandLatinAmerica,approximately3%.
TurningnowtostudiesofgivingbyOECDcountries,theforemostrecentstudyinthisareaisbytheUK’sCharitiesAidFoundation(CAF,2006)whichseekstocomparecharitablegivingacross12OECDcountriesthatmakeupmorethanhalfthewealthofthetotalglobaleconomy.Itfinds:
1. There is wide international variation in charitable giving,rangingfrom1.67%ofGDP(US)to0.14%(France)asthefollowingtable(Table2)shows.
2. Some countries show an inverse relationship between lower national giving levels (as a proportion of GDP) and higher levels of tax especially social insurance.CAFsuggeststhatsocialsecuritycontributionmaybehighlysignificantforsomecountriessuchasFranceandtheNetherlands(andaninfluentialfactorforgivinginothercountries,too,includingAustralia).Itwarnsofproblemslikelytoariseforthevoluntarysectorifageingpopulationspushsocialinsurancepaymentshigherinthefuture.
3. There is no direct relationship between average (per capita) incomes in the 12 oECD countries examined and overall giving levels.TheUS,UKandCanadaallhavehighlevelsofaveragewealthandhighproportionsofincomegiventocharity,othercountriesliketheNetherlandsandFrancedonot.Australia,likeSouthAfrica,issomewhatlowerforaveragewealth(seeTable 2above)buthigherforproportionsoftotaldonations.
Initsanalysis,CAFemphasisestheimportanceofspecific national contextsinwhichgivingoccurs,identifyingsixmainfactorsthatcombinetofostergivinginvaryingdegrees:
1. Governmentaltaxtakefromindividuals(usingtheOECDdefinitionof‘acompulsory,unrequitedpaymenttogeneralgovernment’);
2. Taxtreatmentofdonations;
3. Nationalwealth;
4. Religiosity;
5. Socialnormsincludingunofficialfamilialandsocialgiving;
INTERNATIoNAL compARISoNS
TABLE 2 : ChARITABLE GIVING IN 12 oECD
CoUNTRIES IN 2005
Source:CAF2006
Countries Individual giving (% of GDP)
Total tax take
USA 1.67 29.1
UK 0.73 33.5
Canada 0.72 31.6
Australia 0.69 28.3
South Africa 0.64 n/a
Rep of Ireland 0.47 25.7
Netherlands 0.45 38.6
Singapore 0.29 n/a
New zealand 0.29 20.5
Turkey 0.23 42.7
Germany 0.22 51.8
France 0.14 50.1
2�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
6. Meaningattachedtocharitablegiving(culturalinfluencesshapeindividualattitudes).
Forexample,incountriessuchastheNetherlands,FranceandSweden,thereisastrongbeliefthatgovernments ratherthancharitiesshouldprovideforsocialneeds,whereasintheUS,andincreasinglyintheUK,charitiesassumeanimportantroleinmeetingtheneedsofsociallyexcludedgroups(CAF,2006).ThisattitudeemergesinAustralianresearch,too,asGivingAustralia(2005)shows.
OthercomparativestudiesarelimitedinvalueforthisreportbecausetheydonotincludeAustralia,ortheyfocusonspecifictypesofgiving.Forexample,muchresearchthathasbeenconductedtodatehasfocusedoninternationalgivingbywealthiercountriestoaiddevelopingones,suchastheCenterforGlobalDevelopment’sIndexofDonorPerformance(Roodman,2004),theIndexofGlobalPhilanthropy(CenterforGlobalProsperity,2007)andtheOECD’sDevelopmentAssistanceCommitteewebsite(www.oecd.org/dac).
Whilesuchstudiesareimportantfortrackingtrendsinbothprivateandgovernmentfundingtointernationalrecipients,theyonlyreportoninternationalgiving,whichisonlyonetypeofprivategiving.Theyalsostruggleforaccuracy:ininternationalgiving,informalgivingmustbeaccountedforbecauseofthedominanceofgivingbyimmigrantssendingmoneytotheirhomecountries;thisiscompoundedbygreatvariationsacrosscountriesintheircapacitytocollectdata,thedifficultytoaccountfordifferencesintaxlaws,andoftenintertwiningofprivategivingandgovernmentfigures(CatalogueofPhilanthropy,2006;Worldwatch,2006).
Nevertheless,existingresearchsupportsCAF’sconclusionthatwidevariationexistsincharitablegivingbyindividualsinOECDcountries,particularlyfordonorparticipationratesandgivingasapercentageofGDP.
Worldwatch(2006),forexample,identifiesFrance,TheNetherlandsandCanadaasrelativelystrongforcharitablegiving(thoughnotasstrongas
theUS),wellaheadoftheUKandfaraheadofJapanwhereitshowsgivingatnegligiblelevels.Thisstudypointsoutthat,insuchcomparisons,wealthierOECDnationstendtocomeoutontopofsuchtablesbecausetheircitizensarewealthierandmoreabletoaffordmonetarydonationsthanthoseinpoorercountries;theyalsoaremorelikelytodosothroughformalchannelssuchascharities(makingcountingeasier),andtherearemoreresourceswithinthecountrytocollectdata(Worldwatch,2006).
Whilecountriesdovaryintheirspotinthegivingleaguesacrossstudies,Australiacommonlyfeaturesaroundthemid-level(see,forexample,Salamon,Sokolowski,&Associates,2004andCatalogueofPhilanthropy,2006).Table 3belowshowsAustralia’srankingforOECDdonorcountries’assistancetodevelopingcountries.Inthisanalysis,Australia’stotallevelofinternational
givingisjustabovethe0.80%average.
1.2
1.0
0.8
0.6
0.4
0.2
0.0
% o
f G
ross
Na
tio
na
l In
co
me
(GN
I)
1.191.17
TABLE 3 : oECD DoNoR CoUNTRIES ASSISTANCE
To DEVELoPING CoUNTRIES 2005
(AS % oF GNI )
*Note:ODA,officialdevelopmentassistance,isfromgovernment.
Source:CenterforGlobalProsperity,2007
RemittancesPrivateGivingODA*
AverageCountryEffort
0.80%
Sw
eed
en
Net
herl
and
s
Luxe
nbo
urg
No
rway
Den
mar
k
Can
ada
Uni
ted
Sta
tes
Aus
tria
Uni
ted
Kin
gd
om
Aus
tral
ia
Sw
itze
rlan
d
Sp
ain
Fran
ce
Irel
and
Bel
giu
m
New
Zea
land
Ger
man
y
Gre
ece
Finl
and
Ital
y
Po
rtug
al
Jap
an1.07
1.06
1.01 1.000.98
0.90
0.860.84 0.82
0.79
0.74 0.73 0.710.68
0.61
0.540.510.49
0.43 0.42
2�
Overall,areviewofinternationalgivingstudiessuggeststhatincontrasttoAustralia’srelativelyconsistentrankingincharitablegivingstakes(mid-levelorjustabove),someothercountries(suchasFrance)fluctuatewidelydependingonwhataspectofcharitablegivingisbeingmeasuredorhow.ThissupportsanassessmentthatAustralia’sprivategivingbehaviourisatamoderatetobenignlevelacrossthepopulation as a whole.However,apartfromsomeoutstandingexceptions,Australia’saffluentarenotdemonstratingthesamehigherlevelsofgivingthatarebeingwitnessedamongstthispopulationgloballydespitedrawingcloseronwealthindicators(MerrillLynch/Capgemini,2007).
Insum,studiesconfirmwidevariationsinprivategivingacrossOECDcountries.TheUS,withitsstrongerphilanthropiccultureandawiderandlonger-establishedrangeoftaxincentivestoabroaderclassoforganisations,leadsthegroup.Indeed,thefinancialplanningissueofdeathduties(estatetax)andtheabilityofUScitizenstomitigatetaximpactbymakingcharitabledonations(nowundergoingchanges)appeartohavebeenasignificantfactorinthephilanthropiclandscape(Burrill,2001).ChangestotaxationhaverecentlybeenmadeinAustralia,theUKandelsewheretofosterphilanthropyandmorechangesarebeingconsidered.Itistooearlytoappreciatetheimpactthesewillhaveonindividuals’interestinphilanthropyandperceptionsoftheircapacitytodoso,especiallybytheaffluentinthesecountries.
Finally,itisinterestingtonotethatAustraliatendstofallalittlebehindCanada(withoneortwostudyexceptions)andtheUK,butaheadofitssistercountry,NewZealand,inthecharitablegivingstakes.Despitebecomingamoreflexibleeconomythroughmanystructuralreformsoverthepasttwodecades(andwhichtheOECDnotesareinlinewithitsbestpractices),NewZealanders’livingstandardshaveconsistentlybeenbelowtheOECDmedian(OECD,2007).Whilethesituationhasbeenstudiedindepth,thereasonsforthisarestill
notwellunderstood(p.4).TheNZGovernmentisunderpressuretoraiselivingstandardsaswellastoconsiderhowitwillmeetfuturelikelydemandsonhealthandpensionspending:encouragingphilanthropymaybeonesuchstrategy.
3.4 hoW DoES GIVING BY ThE AFFLUENT CoMPARE?
Overall,studiescommonlyfindthattheaffluentinOECDcountriescontributeathigherlevels–inrealtermsandintheirratesofparticipation–thanthoseonaverageorlowincomes.However,thereiswidevariationacrosscountriesinthepercentageofincometheygive.CAF(2006)findsthat:
‘The level of wealth is generally a determinant of the absolute amount of money that people give: rich people give higher amounts than poor people, although wealth does not determine the proportion of income that people give away to charity and there is evidence in the UK that poorer people give away higher proportions of their income than the rich.’ (p.12)
Indeed,inmanycountriesstudiesshowaninverse relationshipbetweengivingmoneyandtime(referredtoastheJcurve).Thoseinhigherincomebandstendtogivemoney;thoseinloweronestendtogivetime(GivingAustralia,2005).Thispatternsuggeststhepoormaygiveasmuchastherich–althoughtheactualdollarvalueofgivingbytherichishigher–andthatvolunteeringcanbeagivingstrategyforthosewithoutfinancialcapacitytogive.
Thuspovertyisnotnecessarilyadeterrenttogiving:itmaysimplymodifyitsform.ThisisexemplifiedinSouthAfrica(seeEverattetal.,2005)whereanationalrandomsurveyof3,000respondentsshowedtheywereequally likelytohavegiveninthemonthpriortointerviewbutthemoreaffluentgavemoneywhilelessaffluentgavetime.Thewaythatquestionsarewordedingivingsurveysmayneglectinformalgivingbehaviour.
INTERNATIoNAL compARISoNS
2�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
Thepreponderancefortheaffluenttodonateatahigherlevelthanthosewithlesserwealthisexplainedbytheirhigherdisposableincomes,andtheacceleratedincreasesinwealthseenamongsttheaffluentpopulationoverthepastdecade.Wealthhasaccumulatedmorequicklyfortheaffluentthanforthoseonlowerincomes.Thusthequestionarises:has charitable giving by the affluent kept pace with increases in personal wealth? Generally,theanswerisnowiththeUSbeingthestandoutexception.Inmostcases,increasesingivingbytheaffluenthavebeenmoderatewhileincreasesinwealthhavebeenmuchstronger.
InassessingtheextenttowhichaffluentAustraliansgive,welargelyrelyupontaxstatisticswhichisnottheentirestory.However,liketheUS,suchdatacanstillberegardedasprovidingacrediblepicturefortwomainreasons.Firstly,theaffluentstronglytendtousetheservicesofprofessionaladviserssodeductionsforgivingarelikelytoshow.Secondly,suchfiguresarecomprehensiveacrossthisincomecategoryandcarrytangiblepenaltiesforinaccuracies,sodistortionsaresomewhatcontrolled.
Thissaid,therearepocketsofphilanthropyinAustraliathatarecomparablewiththegivingratesofEuropeandtheUS;thesearelargelydonorswithannualincomesinexcessof$1million(almost2%oftheirassessableincome).Byandlarge,andwithsomeoutstandingexceptions,Australia’saffluentgiveatalowerratethantheirOECDcounterparts,intermsofcontributionlevelbutparticularlyparticipationrates.Table4showsthiscountry’saffluentgiving‘blackspots’.Inbrief,alargesliceoftheaffluentpopulationinAustraliagiveasimilarpercentage of their income thanthoseonmiddleandlowincomes,whichisamediocreperformancecomparedtootherOECDcountries.Moreover,their donor participation rate isonlymarginallyhigherthanthoseonmiddleandlowincomes,alsolowerthansomeOECDcountries.
Discussion: What can be said about these giving patterns?
ThereislittledoubtthattheUSleadstheworldforitsphilanthropy;notonlyAustraliabuteverycountrycomeswellbehinditinthegivingstakes(CatalogueofPhilanthropy,2006).Ofcourse,theUShasthestrongesthistoryofphilanthropyasweknowit(AWIDandJustAssociates,2006,p.55):
[Philanthropy is much more embedded into the fabric of its society] than in Western European countries, Canada or Australia where historically governments have taken more social responsibility (citizens have the sense that “I pay taxes for a purpose”) both inside their countries and in relation to the global South (development cooperation). However this is changing and [people in these countries] are increasingly responding to donation requests, although still at lower levels than people in the US.
AlsodonationshaveplayedalargerroleintherevenuebaseoftheUSnonprofitsectorthaninmanycountries(althoughthisroleischanginginvariouscountries,includingAustralia),asthefollowingrevenuebreakdownfor1995shows.
TABLE 4 : BLACKSPoTS IN GIVING BY AUSTRALIA’S
AFFLUENT PoPULATIoN
Source:DevelopedforthisreportdrawingonATOtaxstatisticsfor2005-06
Taxable Income
Non Donor Rate (% of total affluent group not claiming charitable donations)
Donor Level(% taxable income claimed as donations)
Upper ($1m+)
Almost30% –
Mid ($500k+)
Almost40% 0.78%
Lower ($100k+)
Over40% 0.45%
28
Overall,likecountriessuchasCanadaandtheUK,givingbyindividualsinAustraliaisinfluencedbyone’spersonalincome,withthegreaterone’swealth,themorelikelyoneistogiveandthehighertheannualgift.Moreover,incomeoverlaysotherkeyfactorsincludingeducation,gender,labourforcestatus,andplaceofresidence(UKGiving,2006).However,affluentAustraliansvarywidelyastohow much more theygivethantheaveragedonor.Thoseinthemidandloweraffluentincomesegments(withannualtaxableincomesbetween$100,000and$1million)giveatsubstantiallylowerlevelsthanthetopaffluentincomesegment–notonlyinabsoluteterms,whichistobeexpectedbutalsoasdonationsexpressedaspercentageoftaxableincome.Thatis,evidenceexiststhat average donatingpatternsfortheaffluentcamouflagesubstantialtroughsinaffluentgivingbehaviour,thatis,someaffluentAustraliansappeartogiveatlowlevels.
Theotheraspectof‘highergiving’relatestotheproportionofthepopulationwhogive.InAustralia,whiletheGivingAustraliastudyshowedthattheaffluentweremorelikelytogivethanthoseonlowerincomes(2005),somefouroutoftenindividualswithincomesbetween$100,000and$1milliondidnotclaimforanytax-deductibledonationsin2004-05(McGregor-Lowndes&Newton,2007).Thissuggeststhereisstillasizeable proportionoftheaffluentwhodonotgiveatall.Certainly,indicationsarethataffluentdonorparticipationratesarehigherinotherOECDcountriessuchastheUSandtheUK.
AlsowhiletheaffluentinOECDcountriesmightgiveathigherlevelsthanthosewithlessfinancialcapacity,oneissuetoconsideriswhethertheircharitabledonationsareappropriatetolevelsofaffluencethatnowexist,thehighestonrecord.Indeed,whatchangesmightweexpectaspersonalwealthlevelscontinuetogrowquicklyandmorejointheranksofthewealthyinmanycountries?IntheUS,forexample,wheretheculturepromotesphilanthropy,thewealthiestonepercentofAmericansown41%ofthecountry’swealthbutdonorsinthisgroupallocateonly1-2%oftheirincomeseachyeartocharity(BusinessWeek,2004).IntheUKandAustralia,theaffluentalsogiveatrelativelylowlevels(AsiaPacificCentreforPhilanthropyandSocialInvestment,2004,2005;Blackhurst,2005).WalkerandPharoah(2002)pointoutthatthepoorest10%oftheUKpopulationgive3%oftheirhouseholdexpendituretocharity,onaverage,whiletherichest20%givejust0.7%.
Intermsofwealthtransfer,theaffluentacrossvariouscountries,includingAustralia,arestillhighlyfocusedonbenefitingtheirchildrenwhomaybewealthyintheirownrightbythetimetheyinherit.Forexample,91%ofa2006studyofthewealthiest1%oftheUSpopulationreportedhavingawilland80%hadaformalestateplan(U.S.Trust,2006).Justover90%ofthisgroupexpecttoleavesignificantestates(93%),withapproximatelyonethird(32%)expectingtheirestatetobevaluedatUS$10millionormore,31%expectingittobeUS$5milliontoUS$10million,and30%tobelessthanUS$5million.
Ofthegroupwiththelargestexpectedestates,almostonethird(10%overall)expecttoleavemorethanUS$25million.Oftheirestates,morethanthreequarters(83%)expecttoleavethemajorityoftheirestatestotheirspousesand,iftheirspousepre-deceasesthem,totheirchildren(74%),tocharity(9%),grandchildren(6%)andotherrelatives(6%).Some58%areconcernedthathightaxeswillwhittleawaytheirestatesandmanyhavetakentax-savingmeasurestominimisethisrisk:trusts(67%),givingmoneyaway(55%),lifeinsurancetopaytaxes(48%)andfoundations(18%).IntheUS(whereindividualsstillbenefitfromtaxincentives
INTERNATIoNAL compARISoNS
TABLE 5 : REVENUE STRUCTURE oF ThE
NoNPRoFIT SECToR IN 1995
(EXPRESSED AS % oF ToTAL REVENUE)
Source:CompiledfromfiguresprovidedbyJohnsHopkinsComparativeNonprofitSectorProject(http://www.jhu.edu/~cnp/country.htmlaccessed27April2004)
Country Public Sector
Donations Private fees & charges
Australia 30 9 61
UK 47 9 45
USA. 31 13 57
Average 36 10 54
2�G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
forcharitablebequests),only46%ofthewealthiest1%ofthepopulationplannedtoleaveatleastpartoftheirestatetoNPOs(U.S.Trust,2006).
Conclusion.GivingbytheaffluentinAustraliaislargelynascentalthoughchangeisstartingtooccuratthetoplevel(seeexamplesofoutstandinggenerousityonPhilanthropyAustraliawebsite(www.philanthropy.org.au).Currently,ouraffluentarenotengaginginhigherlevelsofgivingbeingseeninotherOECDcountries.TwokeyfactorsencouraginggreatergivingbehaviourbywealthyAustraliansarerisingwealth(notonlyforthenumberofaffluentbutalsointheconcentrationofassetsbeingheld)andrisinginterestinphilanthropybytheHNWpopulationglobally.Socio-culturalfactorsontheotherhandappeartodampentake-upofphilanthropyinAustraliabyourwealthiersegment.
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Giventheseriousfinancialchallengesofthenonprofit(NP)sectorandthevitalincomestreamthatgivingbyindividualsrepresents,itissurprisingthatthedynamicsofprivategivingespeciallybytheaffluent,hasattractedonlymodestattentionbyresearchers.Relativelyfewacademicsunderstandorusetheterm‘philanthropy’(Katz,1999)andtheareahasattractedrelativelylittleacademicinterest(Supphellen&Nelson,2001;Everattetal.,2005).Studiesrelatingtogivingexistmainlyinthefieldsofmarketing(suchasdevelopingNPbrands,identifyingdonorsegmentsandimprovingfundraisingstrategies)andsociologyandpsychologysuchasexplaininghelpingbehaviourandaltruism.AsSupphellenandNelson(2001)pointout,muchofthisefforthasconcentratedontestinghypothesisedrelationshipsratherthanseekingtodiscovernewconnectionsandexplanations,thusby-passingsomebasicquestionsaboutgivingbehaviour.Justasinconsumerstudies,studiescanwronglyassumehowindividualsapproachgiving(forexample,byassumingthatpeoplegivefullattentiontoadonationrequest,inisolationfromotherenvironmentalstimuli),sofindingsaredistorted.
Theunderdevelopednatureofknowledgeaboutphilanthropyispuzzlinginthefaceofincreasingprofessionalisminthefieldsoffundraisingandgrant-makingglobally,andcallsformoreresearchinthisarea(Fisher,1986;Griffin,Babin,Attaway&Darden,1993).Inparticular,betterunderstandingisneededoftheincentivesandbarrierstoengageingivingforthewealthy(Cermak,File&Prince,1994;Taylor,Webb,&Cameron,2007).ThisneedisstrongestoutsidetheUSwheremuchoftheexistingresearchhascentred.PerhapsthisstateofaffairscanbeexplainedbyrelativelylowinterestbypolicymakersandbyfoundationswhichcommonlyshyawayfromsupportingsuchresearchdespiteitspotentialtoaidbestpracticeintheNPsector.Keystakeholdersmayalsoholdreservationsaboutphilanthropyitself,associatingitwithnotionsofelitismandoutmodedideasofcharity(Everattetal.,2005):
[Such] connotations [represent] a grave misconception [for two reasons]…first…this understanding… is too narrow and precludes an
appreciation of the distinctive contribution they make to the life of the society. Second it focuses on the act and ignores the impulse – the private assumption of public responsibilities – thus missing critical questions about the nature and direction of development…at base, this relates to the role of government versus the socially conscious actions of individuals, communities and the greater society (p.282)
Ifcharitiesaretotargetnotonlythewealthyelitebutalsothemassaffluent,theywillneedtounderstandthegivinghabitsofthesegroupsincludingtheprocesstheygothroughtoarriveattheirlevelofgiving(TheGivingCampaign,2004).
4.1 Who GIVES?
Cermaketal.(1994)suggestthatmostacademicattentionhasbeengiventodeterminingdonor characteristicsforgivingatdifferentlevels(Danko&Stanley,1986;Ryan&Murdock,1986).Thesestudiesfocuson‘whogiveswhat’,linkingdonatingbehaviourtosocio-demographicfactorsononehand(suchasage,education,maritalstatusandfamilycircumstances,lifeexperiences,religiousinvolvementandvolunteeringbehaviour)andindividualfactors,ontheother(suchaspersonality,orfeelingsoffinancialsecurity).Affluentdonorswerefoundtoclusteraroundseven‘profiles’incomprehensiveUSresearchbyPrinceandFile(1994):
1. Communitarians,oftenbusinessowners,whoarestronglycommunity-focusedandthedesiretohelptheircommunity;
2. The Devout,whoarereligiouslymotivatedandliketosupportavarietyofcausesincludingchurches,synagoguesetc;
3. Investors,whowanttoseeabettersocietyandareinfluencedstronglybyfinancialconsiderations;
4. Socialites,whoareinfluencedbytheirmilieuandpeers;
5. Repayers,whoactoutofadesiretofulfilaperceivedobligationtoothersanddirectenergiesmainlytohealthandeducationalareas;
4 DYNAmIcS UNDERpINNING GIVING BY ThE AFFLUENT
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
6. Altruists,whogivebecauseitispersonallysatisfying;and
7. Dynasts,whohavelearnedfromfamilyandotherstobecharitable.
RecentresearchbyIpsosMorifortheHMRevenue&Customsalsofounditusefultousethefollowing‘types’ofwealthyUKindividual,basedongivingcommitment,frequencyandlevelofgift,andaroundwhichpersonalcharacteristicscanbeclustered(Tayloretal.,2007):
• Largecommitteddonors;
• Largead-hocdonors;
• Smallcommitteddonors;
• Infrequentdonors;and
• Non-donors.
Overall,theliteraturesuggestsfivekeyfactorsincreasingthepropensityofindividualstomakedonations,aswellastodonateathigherlevels(Bekkers,2005;Bekkers&Wiepking,2007):
1. higherincome;
2. older;
3. higherlevelofeducation;
4. marriage;and
5. strongerreligiousinvolvement.
Thelastisoftensuggestedasaprimarymotivatorforgiving,withreferencestotheUS(forexample,seeGivingAustralia,2005;LyonsandNivison-Smith,2006;StatisticsCanada,2006)buttherelationshipiscomplexandreligiondoesnotprovideadequateexplanationbyitselfforvariationsingiving.Comparingcountries,CharitiesAidFoundationfindsthatreligious-relatedgivingissubstantial,accountingforoverone-thirdofgivingintheUS,forexample,andaround13%intheUK.However,ifitisexcludedfromthegivingfigures,theUSstilloutstripstheUKbyabout0.4%ofitsshareofGDP(CAF,2006).
Ofparticularinterestinthisanalysisisfinancialcapacity.Arangeofstudieshaveshownadirect
correlationbetweenwealth/incomelevelandgivinglevel.Indeed,BekkersandWiepking(2007)identifymorethan75studiesindifferentcountriesshowinghighergivingamountsbyhigherincomehouseholds.Patternsingivingasapercentageofincomearesomewhatmorevariable,withresultsdependentupontypeofdataandstatisticalmodelsused.Factorssuchassourceofincomecanalsobeimportant(Daneshvary&Luksetich,1997).Whilethereisevidencethatthatthosewhomakemajorgiftstendtobefinanciallysuccessfulorhavebuiltupassetsoverthecourseofalifetimeandfeelfinanciallysecure(Schervish&Havens,2001,2002),muchremainsunclearatthistime.
4.2 WhY PEoPLE GIVE
Who gives whatisadifferentquestiontowhy peoplegive.Whiletheyarerelatedissues,theyarecommonlyconfusedindiscussionsofphilanthropy.Inseekingtoexplaingiving,studiescaninvestigatefactorsatthepersonallevel,atthefamilyandimmediatecirclelevel,atthelocalcommunitylevel,oratthewidersocio-culturallevel,asTable 6illustrates.
Individual level. Variousstudiesshowthepowerofinternalfactors.Forexample,thepersonalvaluesheldbyanindividualcantriggercharitablebehaviour(Schervish,2006).Otherinternalneedsmayalsopromptgivingsuchasthedesireforself-esteem,forpersonalsatisfaction,ortomakeamendsforone’sactions(Piliavin,Piliavin&Rodin,1975;Schwartz,1967).
Family/small group level. Individualsmayengageincharitablebehaviourtoprotectthemselvesortheirfamily,ortofulfiltheirroleswithinintimategroups(ClaryandSnyder,1995).Forexample,givingcanbemotivatedbythewishtoteachchildrenvaluesortohonourorrememberlovedones(GivingAustralia,2005),
Community level. Organisedaffiliationswithothersandsharingsystemsofbeliefandwaysofseeingtheworldcantriggergiving.Forexample,inSouthAfricareligionisadrivingforcein‘inspiringandorganizing’giving(Everattetal.,2005,p.290):thesamemightalsobesaidof
�2
someothercountrieswhereidentificationwithparticularreligionsishighsuchastheUS.Aswell,psychosocialmotives–togainrecognition,status,prestige,andrespectinthecommunity–canunderpingiving(Olson,1965;Becker,1974;Wright2001).ClaryandSnyder(1995)addcareerreasonstosomeformsofgiving.
Societal level. Seeingtheworldthroughaparticularsocio-culturallenscantriggergiving,orconstrainit(ClaryandSnyder,1995).Individualsmaynotbefamiliarwithphilanthropyorseetheneedforit.Alsothelargersocio-economicenvironmentanditscomplexweboflawsandtaxesrepresentasystemofrewardsoradvantageforcertainbehavioursbyindividuals.
Theinterplayofmotivations–andofconstraintstogiving–thatspandifferentlevelscanbecomplexespeciallyfortheaffluentwhohavemoregivingcapacity(see,forexample,Boris,1987;Prince&File,1994;Ostrower,1995;Schervish,2005).Motivesforgivingmay,forexample,varyfromsituationtosituation,aswellasovertime.
Aswell,forarangeofreasons,somelevelsofresearcharepreferred,leavingsometypesofinfluencesonlyvaguelyunderstood.Oneareanotsubjecttomuchscrutinytodate,particularlyinAustralia,isthewidersocietallevelwhere
factorssuchasculturalvalues,socialnormsandexpectations,mediacoverageandtaxationimpactonphilanthropicdecisionsbyindividuals.Thefieldofsocialmarketing,forexample,whichconsidersindividualbehaviourinawidersocialinfrastructureandhowchangecanbeeffected,largelyaddressesissuesofharminsociety,notphilanthropy,thuslimitingacademicdialogueandscholarlyattention.Signsthatthismaybechangingwillbewelcomedbythoseinterestedinseeingphilanthropyincreasebecausegivingmaynotbepurelyvoluntary.Everattetal.’s2005studyofSouthAfricangivershighlightstheimportanceofgivingthatis‘conditionedbypatternsofobligation’(p.290):
A significant proportion of the…population is socially organized around the extended family with the result that their patterns of familial obligation and reciprocity extend well beyond the nuclear family unit.
Givingstandardsornormativebehaviourwithinbroadsegmentsofthepopulationsuchastheaffluentisworthyofgreaterinvestigation(see,forexample,Wiepking,2007).
SargeantandJay(2004)includethisaspectintheirlistofkeymotivationsforgivingbyindividualsgenerally(pps.29-33):
TABLE 6 : A FRAMEWoRK To CLASSIFY MoTIVATIoNS To GIVE, oR NoT
Level Factors Examples of processes at play
Individual factors
Personalvaluesandgoals,individualpassions,uniqueaccumulationoflifeexperiences–factorsthatrelatetointernalfeelingsandattitudes,needs,desires,statesetc
Driveforsurvival,driveformeaningandpurpose,driveforselfexpression,driveforintegrationorcongruenceofpersonalcognitions,emotionsandbehaviour
Family/small group factors
Sharedvaluesandgoals,familyorsmallgrouptraditions–factorsthatrelatetoone’sintimates
Desiretofulfilfamilyrole,desiretoloveandbeloved,desireforacceptanceandsupportamongintimates,desireforprotectionandsafety
Community factors
Affiliations:localcommunity,religious,ethnic,business,professional,educational,sportingandpersonalinterests–factorsthatrelatetosocialnetworks
Desiretobepartofagroup/tribe,desiretocontribute,desiretobesuccessful,desireforpeeracknowledgementandrespect
Societal factors
Widerculturalvalues,moresandnorms,legalandtaxationsystem,systemforearningandspendingmoney–factorsthatrelatetoone’swiderenvironment
Engaginginsociallearningandconditioning,desireforsocialrewards,desireforunderstandingtheworld
DYNAmIcS UNDERpINNING GIVING BY ThE AFFLUENT
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
1. Self-interestincludingadesireforself-esteem,atonementfor‘sins’,recognition,memorialisinglovedonesandtaxbenefit;
2. Empathy orgivingoutofdistressforthesufferingenduredbyothers,uptoapointthatthedistressexperiencedismanageable,notoverwhelming;
3. Sympathy orthebeliefthatitisinappropriateforthebeneficiariestobesufferinginthewaytheyareperceivedtobe;
4. Social justicewherebyanindividualgivestohelprestorejusticetoasituationperceivedasunjust;and
5. Conformity to social norms wherebyindividualsgiveoutofadesiretoactappropriately,inagreementtosocialnormsandtodowhatothersaredoing.
InAustralia,theABSVoluntaryWorkSurveyforMarchtoJuly2006(ABS,2006b)suggeststhatconcernforothers’basicwelfareneeds,betheyathomeorabroad,isthegreatestincentiveforAustralianstogivemoneydonations.Thisalignswithinternationalreportsthatprivategivingislargelyinresponsetonaturaldisastersandtragedies.AidforthevictimsoftheAsiantsunamiinlate2004mobiliseddonationsfromindividualsexceeding$1billionfromaroundtheworld(AWID,2006).EmergencyeventsthathavetriggeredwavesofsupportnationallyandinternationallyincludeHurricaneKatrinaintheUS(2005),earthquakesinJapan(1995)andMexico(1985)andtheterrorismattacksintheUS,Bali,theUKandelsewherepost-2000.Suchgivingislikelytospringfromempathy,sympathyorasenseofsocialjustice,usingtheabovecategories.
Afterconcernforbasicwelfare,involvementwithreligiousorganisations–whichoftenhaveestablishedpracticesofregulargivingbymembersandadherents–issuggestedasthenextmostcommonreasonforAustralianstogive(ABS,2006b).LyonsandNivison-Smith(2006),examiningGivingAustraliastatistics,emphasisethestrongpositivecorrelationbetweenregular
attendanceatreligiousservicesandfrequencyandlevelofgiving(ratherthanmerelyclaimingreligiousaffiliation)buttheyalsowarnagainstassumingadirectcausalrelationship(p.434).Also,itisdifficulttoidentifythemostlikelymotivationsfromSargeantandJay’slistbecauseanyofthefivemaydrivegivingbythoseaffiliatedwithreligiousorganisations.Moreover,CAF(2006)suggeststhatreligiousgivingaloneisinsufficientbyitselftoexplainvariationsingivinglevels.Comparingdifferencesbetweencountries,CAFnotesthatreligiousgivingissubstantial(overone-thirdofgivingintheUSandaround13%intheUK)butifitisexcludedfromthegivingfigures,theUSstilloutstripstheUKbyabout0.4%ofitsshareofGDP.CAFsuggeststhatotherfactors,suchasculturalandpoliticaldifferences,mustbeconsidered.
MuchdonormotivationresearchhasbeenconductedintheUSrelatingtobequestsliterature5.Findingsfromonelargerecentstudy(2000householdsacrossfourregions)givefurthercredencetothetwomotivationsforcharitablegivingmentionedabove–helpingothersandreligiousbeliefs–aswellasathird:givingbacktosociety(Krauser2007).GivingAustralia(2005)alsofoundthisthirdmotivatorof‘givingback’resonatedwithmanyAustralians,particularlyolderandmoreaffluentindividuals.
AnotherUSstudyof1579individualsintothemotivationsforplannedgivingmoregenerally,suggeststhefollowing two main reasonsforsuchgifts(DameGreene,2003):
• BeliefintheNPOandthedesiretosupportit(nominatedby97%);and
• Supportfortheultimateuseofthegift(82%)
Thatis,donorswereconvinced,themselves,oftheworthinessoftheorganisationandhowtheirgiftwouldbeused.Othermotivatorswereimportantbutlessso:
• desiretoreducetaxes(nominatedby35%)
• long-rangeestateandfinancialplanningissues(35%)
• createalastingmemorialforselforlovedone(33%)
5ThisbequestfocuscanbeexplainedbythelegalandtaxsystemintheUS,whereanestatetaxwascreatedin1917tohelpfundWorldWar1(Sargeant.
2006,unpublishedliteraturereviewonbequests).Thistaxiscurrentlyintheprocessofbeingremoved,promptingaflurryofanalysesandprojectionsabout
theimpactofsuchamoveonthistypeofgiving.
TABLE 6 : A FRAMEWoRK To CLASSIFY MoTIVATIoNS To GIVE, oR NoT
Level Factors Examples of processes at play
Individual factors
Personalvaluesandgoals,individualpassions,uniqueaccumulationoflifeexperiences–factorsthatrelatetointernalfeelingsandattitudes,needs,desires,statesetc
Driveforsurvival,driveformeaningandpurpose,driveforselfexpression,driveforintegrationorcongruenceofpersonalcognitions,emotionsandbehaviour
Family/small group factors
Sharedvaluesandgoals,familyorsmallgrouptraditions–factorsthatrelatetoone’sintimates
Desiretofulfilfamilyrole,desiretoloveandbeloved,desireforacceptanceandsupportamongintimates,desireforprotectionandsafety
Community factors
Affiliations:localcommunity,religious,ethnic,business,professional,educational,sportingandpersonalinterests–factorsthatrelatetosocialnetworks
Desiretobepartofagroup/tribe,desiretocontribute,desiretobesuccessful,desireforpeeracknowledgementandrespect
Societal factors
Widerculturalvalues,moresandnorms,legalandtaxationsystem,systemforearningandspendingmoney–factorsthatrelatetoone’swiderenvironment
Engaginginsociallearningandconditioning,desireforsocialrewards,desireforunderstandingtheworld
��
• relationshipwitharepresentativeofacharity(21%).
Otherstudiessupporttheimportanceforindividualsofbeingpersonallyconvincedthatacauseisworthyofsupport–ofbelievinginacause–aswellashavingcompassionforthoseinneed(see,forexample,Lasby&McIver,2004andStatisticsCanada,2006).
Oneaspectofmotivationalresearchthathascapturedtheimaginationofmanyresearchersisthequestionofwhetherdonorsevergiveforpurelyaltruisticreasons.Some(particularlyeconomists)arguethatautilityexistsinallbehaviourincludinggiving–withthoseofatraditionalviewsuggestingthatdonorsmakerationaldecisionsaboutdonationsbasedonanticipatedbenefitsandmoremodernviewssuggestingemotionalbenefits.Incontrast,others(includingfundraisers)pointtosituationswherenoobviousbenefitaccruestothedonorespeciallywhengivingisanonymous(Sargeant&Jay,2004).
Whatemergesfromtheliteratureisthatmotivationsarecommonlymixedandcanchange.
4.3 MoTIVATIoNS FoR GIVING BY ThE AFFLUENT
Inmanyrespects,theaffluentcohortgive–ordon’tgive–forthesame reasonsasdothoseonlesserincome(Tayloretal,2007).However,givinglargeamountscanbringinextraissues;withmoreatstake,theremaybemoredonorinvolvement,higherexpectations,andmoremotivationsatwork.
OneearlystudyofwealthyindividualsandprivatefoundationstaffintheUSfoundphilanthropicmotivesforestablishingaprivatefoundationandgivingtocharitablecausestoreflectculturalandphilosophicaldifferencessuchasreligiousheritage,personalphilosophy,senseofsocialresponsibility,politicalbeliefs,peerpressureandegoism(Boris,1987).Morerecently,SchervishandHavens(2001)haveconcludedfromvariousstudieswiththewealthy,intheUS,thatawiderangeoffactorsplayaroleinmotivatingmajorgivingbythewealthyespecially(SchervishandHavens,2002):
• Desireforthehappinessthatcomesfromcaringfor,orabout,others;
• Desiretohelpotherslikethemselvesortheirspouse,theirparents,theirsiblingsortheirchildren,thatis,theygiveoutofidentificationwithbeneficiaries;
• Feelinggratefulfortheirgoodfortuneandwishingtogivebackandperhapssharetheirgoodfortunewithothers;
• Desiretoapplytheirentrepreneurial orientationtothephilanthropicsphere,perceivingtheircontributionwillhelpimproveoutcomes;and
• Desiretolookbeyondtheirmaterialsuccess tofindamorepositivepersonalvalues,meaningormoralityinlifeforthemselvesandtheirchildren.
Thefirsttwomotivationsarewidelysharedbydonorsgenerally:thelastthreemayapplymorespecificallytotheaffluent.ThisispartiallyconfirmedbythelatestWorldWealthReport(MerrillLynch/Capgemini,2007)thatsuggeststhatfeelingprosperousandfortunatecaninspiretheaffluenttowanttogivebacktosociety,notjustintheUSbutglobally.Theyreportthatasenseofsocialresponsibilityisaprimarymotivationforsome60%ofphilanthropistsinEuropeandAsia,and47%inNorthAmerica.IntheMiddleEast,evidenceexiststhatacombinationofsocialresponsibilityandreligiousobligationdrivesgiving.Suchamotivationmaybeparticularlyrelevanttothosewhohavemadetheirmoneyratherthaninheritedit.ResearchersattheCenteronPhilanthropyatIndianaUniversityalsofind‘givingbacktosociety’resonatesstronglywithaffluentdonors;italsospotlightsentrepreneursasparticularlygenerous,offeringsupportforthepotentiallinkbetweenphilanthropyandthosewithentrepreneurialorientation(CenteronPhilanthropy,2006).Theycitetwoadditionalkeymotivationsfortheaffluent:meetingcriticalneedsandsocialreciprocity(thefeelingthatthosewhohavemoreshouldhelpthosewithless).Othermotivationssuchasthedesiretolimitfundstoheirs,leavealegacy,andsocialnetworkingbenefits,werealllessimportant(p.4).
DYNAmIcS UNDERpINNING GIVING BY ThE AFFLUENT
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
BothAustralianandUKresearchoffersimilaraffluentdonorprofiles.GivingAustralia’s(2005)qualitativeresearchemphasisedthedesirebysomewealthyindividualstogivebacktosocietyandtodosomethingworthwhilebeyondmakingorspendingmoney.Inthatstudy,acommonthreadintheresponsesoftheaffluentwhowereengagedingivingwasthattheysoughttoapplytheirentrepreneurialskillstoaddressthecausesofsocialproblemsratherthanhelpalleviatetheirsymptoms(Madden,2006a).IntheUK,‘dutyandresponsibility’arisingfromone’sprivilegedsituationisakeymotivationforthewealthytogiveasis‘beingacatalystforchange’(entrepreneurialinput)and‘self-actualisation’(personalsatisfactionorgrowth)(Lloyd,2005).BoththeUKandAustralianstudiessuggestthatsomeaffluentdonorsaremotivated,inpart,bysocialbenefitsexperiencedsuchassatisfyinginteractionswithcharitystaff,beneficiariesorfellowdonors.
Oneadditionalmotivation–andoneofthemostcommon–fortheaffluenttogivewherevertheyresideispassionforacause(or,relatedtothis,astrongbeliefintheworthinessofaNPOanditsmission)(Lloyd,2005;Madden,2006a;Tayloretal,2007).
Forsometime,researchershavepuzzledoverhowbesttounderstandthemixedbagofmotivationsseemingtodrivegivingbytheaffluent.ForexampleCermak,FileandPrince(1994)suggesteightmaincategoriesofmotivatingfactors:
• Family tradition –wheretherewasastrongsenseofpersonalobligationandexpectationrestingonfamilyand/orspiritualfoundation;
• Being a beneficiary –eitherdirectorindirect,ofthenonprofitorganisation’sserviceswhoadmiretheservicesprovided;
• Social affiliation–reflectingthesocialconnectionsadonorhastoanonprofitorganisationorcausethroughtheirnetworkoffriendsorbusinessassociates;
• orientation of the nonprofit –reflectingthegeneralworthinessofthecause,itsgoodwork,andhavinggoalsconsistentwiththedonor;
• humanitarianism–reflectingconcernforassistingmanycauseshelpingthepoorandneedy,andlinkingthenonprofitworkwithdonor’sspiritualreasons;
• Tax advantages –wheretaxmitigationisakeyfactor;
• Communitarianism –reflectingaconcernforthecommunity,andlinkingthenonprofit’sactivitiesinthelocalcommunityandthedonor’stiessuchasbusinessties;
• Being needed–reflectingabeliefthatthecharityneedswhatthedonorcangive.
Again,theseoverlapsomewhatwithmotivationsfordonorsgenerally.Tofocustheirfindings,Cermak,FileandPrince(1994)thenwentontotoclusterthesemotivationsintofourdistincttypesofaffluentdonor(p.125):
1. Affiliators(44%ofstudyparticipants),tendtobeunder65yearsandstronglymotivatedbyacombinationofsocialandhumanitarianfactors;
2. Pragmatists (27%),alittleolderandlesseducated,onaverage,stronglymotivatedbytaxadvantages;
3. Repayers (17%),tendtogiveasaresultofeventsintheirlife(orthoseclosetothem),stronglymotivatedbyhavingbenefitedfromtheNPOtowhichtheygive;and
4. Dynasts (14%),includemanyofthosewithinheritedwealth,stronglymotivatedbyfamilytradition.
StoneandMcElwee’s(2004)studyofaffluentCaliforniansremindsuswhilethataffluentdonorsmaybeclassifiedalongsuchlines(thatis,withadominantmotivation),thereisusuallyacombinationofbothegoisticandaltruisticmotivesatplay.Forexample,theyfoundthreetypesofpersonalbenefit(ego-relatedmotivators)thatplayedapartevenforthemostaltruisticgiver:
• findingpersonalsatisfactionoraddinganewdimensiontotheirlives;
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• engagingwith/bondingwiththeirchildrenthroughphilanthropy,andteachingtheirchildrenaboutphilanthropy;
• connectingwithlike-mindedotherstomakeadifferencetothecommunity.
Theyalsosuggestthattaxbenefitscanbehighlypotentmotivatorsfortheaffluentbut,again,oneneedstolookforamixofmotivationsastaxbenefitswereinsufficientbythemselvestotriggergiving.TheirfindingsfitwellwithqualitativeresearchundertakeninAustralia(GivingAustralia,2005).
Intermsofchildhoodexperiencesandsubsequentgivingbehaviour,HodgkinsonandWeitzman(1996)foundthat73.6%ofadultswhorecalledseeingsomeoneintheirfamilyhelpotherswerecurrentlymakingdonationstocharitablecauses,comparedtoonly50%ofthosewhodonotrecallsuchepisodes.However,datafromtheCenteronPhilanthropyPanelStudy(YoshiokaandBrown,2003)suggestthattherelationshipbetweenthereligiousgivingofparentsandchildrenismuchstrongerthanthatoftheirnon-religiousgiving,althoughcausalityhasnotbeenproven(Steinberg&Wilhelm,2003).
Inastudyof130USmillionaires,Schervish(1995)identifiesfivemainfactorsinwhetherornotchildrenofwealthyparentshaveaphilanthropicorientation:
(1) historicalforces;
(2) parentaltransferofanachievementethic andfamilyeconomicstyle;
(3) parentalrolemodellingofmoneyand philanthropy;
(4) institutionaltraininginphilanthropy,and
(5) parentalteachingofframeworksof moralityaboutmoneyandgiving.
Astohowthesourceofincomeinfluencesgivingbehaviour(thatis,whetherinheritedwealthhasadifferentimpactongivingbehaviourcomparedtowealththatisaccumulatedinotherways
suchaslabourorcapital),YoshiokaandBrown(2003)suggestthatnon-inheritedwealthhasamuchlargereffectongivingthaninheritedwealth(Steinberg&Wilhelm,2003).Itappearsthatchildrenmaybeabout3.2timeslessgenerouswiththemoneytheyreceivethanweretheirparentspriortodeath,howeverthiseffectmaybemitigatedthelongerthewealthisheld(Steinberg&Wilhelm,2003,p.18).Ostrower’s(1995)studyof98wealthyNewYorkdonorssuggeststhatindividualswithinheritedmoneyfeelobligedtokeepitinthefamily;considerwhatmightbeexpectedoftheminusingit;andexperienceemotionsnotsharedbythosewhohavecreatedtheirownwealth.
Religion,too,providesapowerfulframeworkforgivingbyfamiliesandgroups,encouragingcertaintypesofgiving,suchaswhatistobegivenandtowhom(Steinberg&Wilhelm,2003).
IntheUSatleast,morethanfouroutoffivehighnetworthhouseholdssaytheywishtodomorefinanciallyfortheNPcommunity(Prince,2000).IntheUKastudybyTheGivingCampaign(2004)showedawidespreaddesirebydonors,includingthewealthy,tocontributetotheimprovementofpeople’slivesthroughfinancialgifts.
4.4 BARRIERS To GIVING FoR ThE AFFLUENT
CPNSresearchsuggeststhatnoone–affluentornot–identifyasbeingnon-givers:everyoneperceiveshimselforherselfasapersonwhogivestoothers,althoughnotnecessarilybydonatingtoformalcharities.Evenwhensuchdonationsarediscussed,fewreportmakingnodonationsatall(andwhenthisdoesoccuritisnormallyduetoadeliberatecontrarianstance).Moreover,thosewhoreportgivingatlowlevelsperceivethisasaresultofcompetingcallsontheircashflowatthatpointintime(althoughtheymaynotholdfirmexpectationsthattheirdonationswillincreaseascircumstanceschange).
BothaffluentandlowerincomeAustralianscommonlyseethemselvesasgivingwhattheycan,withonlythoseonlowerincomesexpressing
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discomfortattheirlevelofcontribution.Thus,identifying‘barriers’togivingcan,tosomeextent,beanartificeinresearchthatdoesnottranslatetohowindividualsperceivetheirreality.
Externalfactorssuchasgovernment,taxes,legislation,andperceivedNPwastage,aremorecommonlyraisedasconstraintstotheirgivingthanfactorspertainingtotheindividualconcerned.Thisisespeciallylikelywhenresearchingtheaffluentwhoarelikelytohavesuperioraccesstoresourcesandthusthecapacitytosolveproblemsthattheywishtosolve.Feelingpersonallyconstraineddoesnotnecessarilysitwellwiththisgroup.Also,thesocialdesirabilityofgivingmaycontributetothereportingofexternalratherthaninternalbarriers.Inanycase,researchfindingscanbebiasedtowardscertaintypesofexternalbarriers.
FindingsfromCPNS’investigationofAustralianfinancialadviserstotheaffluentillustratethispoint(Madden,2007).Theseadviserslargelybelievedthatphilanthropywashighlyunlikelytobe‘ontheradar’ofmanytheiraffluentclients.Ratherthanseepersonalbarrierstogiving,philanthropyitselfwasseenasirrelevanttothelargerpartoftheirclientbase.
Intermsofpersonalbarriers,astandoutonethathasemergedinresearchwiththeaffluentbothhereinAustraliaandoverseasisthebeliefbymanythattheycannotaffordtogiveatahighlevel.Thishastwoaspects:theperceptionthatoneneedstobesuper-wealthytobephilanthropic(forexample,thelevelofassetsneededtoestablishaPrescribedPrivateFund)andtheworrythattheymaynothaveenoughtomeettheirneeds,orthoseoftheirfamilies,intothefuture.Whilethereisnotmuchdirectempiricalevidenceonhowtheaffluentviewthe‘cost’ofengaginginvariousphilanthropicoptions,thereismuchmoredataonattitudestowealthandfinancialinsecurity.
TheUSTrustsurveyofaffluentAmericans(2006)reportsthatthesinglegreatestworryofthewealthiest1%ofAmericans6isthatthenextgenerationwillhaveamoredifficulttimefinanciallythantheythemselveshad(aconcernto83%).Twothirdsormorealsoworryaboutterrorism’s
effectontheeconomyandsecuritiesmarket(77%),stockmarketgainswillbelowerthaninrecentyears(69%)andinflationwilleatawayatthevalueofpersonalinvestments(67%).Theseconcernsexistdespitemorethannineoutoftenreportingthattheirinvestmentportfolioshadincreasedinvalueovertheyear(91%).InAustralia,too,therearesignsthattheaffluentdonotfeelparticularlyaffluent.Forexample,despite6.4%ofalladultAustraliansbelievingtheywereinthelowestincomebracket,only0.7%thinktheyareinthehighest,withamassive93%sayingtheywereinthemiddleincomecategory(Healey,2007).Moreover,notonlydo‘nearlytwo-thirdsofAustralianssaytheydonothaveenoughmoneytobuywhattheyreallyneed[but]46%oftherichest20%ofAustralianhouseholdsbelievetheycannotaffordeverythingtheyneed’(p.3).Professionaladvisersalsoreportthattheirwealthierclientsfrequentlyunderestimatetheirownlevelofwealth,sometimesconsiderablyso,andadvisersseethismisperceptionasabarriertogiving(Madden,2004,2006b).
Relatedtothisisambiguity around wealth transferwithinfamilies,whichmayputphilanthropytothebackburner.TheWorldWealthReportwarnsthatmanyaffluentindividualsinAustraliaandelsewherehavenotyetsortedoutsuccessionandlegacyissues:itestimates12,000Australiansinthemiddle-tierHNWwealthband(thosewithassetsofbetween$5millionto$30million)arelargelyunsettledonthesequestions(MerrillLynch/Capgemini2006).IntheUS,theUSTrustresearch(2006)showsthefollowingconcernsaboutwealthtransfer:29%ofwealthyfamiliesbelieveinheritancewillunderminetheiroffspring’sinitiativeandself-reliance,22%believetheiroffspringwillsquandertheseassets,18%thatfamilymemberswillfightoverassetsand18%thatthespousewouldremarry,withchildrenlosingtheirintendedinheritance.Feedingintothereluctancebysomeaffluenttoplantheirestatesisthatindividuals,regardlessofincome,donotwanttodienorthinkaboutit.Thebabyboomergeneration,inparticular,hasshownkeennesstothinkofitselfasyoungandlivingon,soperhapsitisnotsurprisingthatestateplanningisanissuenorthatNPOsfinditachallengetoencouragecharitablebequests.
6Thisgroupcomprisesthosewhohaveeitheranannualadjustedgrosshouseholdincomeofmorethan$300,000oranetworthgreaterthan$5.9million
(U.S.Trust,2006).
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Intermsofexternalbarriers,researchfromtheUSandtheUKsuggeststhatreliableadviceaboutgivingwellislacking,andthathavinglittleornoguidanceaboutanappropriatelevelofgivingisaconstraint.Weems(2002)reportedononeUSstudythatfoundaffluentindividualswhowanttomakegiftstocharitiesdidnotalwaysknowhowbesttodoso.Also,despitehavingadesiretoengageinphilanthropicgiving,someaffluentindividualsdidnotwanttojeopardisetheirownfinancialsituationandlifestyleindoingso(Prince,2000).Princepredictsgrowingcomplexityinthefinancialenvironmentregardingassetsandoptionsfortaxtreatmentandincreasingclientdemandfor‘themostfinanciallycongenialcontributionstrategy’(p.23).Morerecently,wealthyCaliforniandonorsrevealedanunsatisfiedneedforinformationaboutallcharitableoptions,clearexplanationsoftheseoptions,andadvicethatsuitedtheircircumstances(Stone&McElwee,2004).Whilemanybelieveaggressivepromotionofphilanthropyisinappropriate,affluentclientswantbetterassistancewiththeirphilanthropicneeds(Johnson,2004;Stone&McElwee,2004).AsimilarfindingcomesoutoftheUKwhereastudyofcharityfinancialproductsshowedaneedforfinancialadviceconcerningphilanthropy(TheGivingCampaign,2003).RecentCPNSresearchwithfinancialadvisersconfirmsasimilarsetofbarrierstogivingfortheaffluentinAustralia,asperceivedbythisprofessionalgroup(Madden,2007).
ThisapparentlackofinformedassistancefromfinancialadvisersorothersourcessupportsseveralstudiesintheUS,theUKandAustraliathatshowfinancialadviserstobeextremelyreluctanttodiscussaclient’sphilanthropicgivingunlessspecificadvicewassoughtbyclients(TheGivingCampaign,2001;Johnson,2004;Madden,2006b&2007).Moreover,whentheydo,theycanlackknowledgeofcharitablevehiclesandthenonprofitsectorgenerallyandcommonlywilltakeanextremelycautiousapproach,recommendingthesameoneortwogivingmethodsregardlessofclientneeds.Whileadvisersarenowmovingtoofferservicesinthisarea,someevidenceexiststhatAustralialagstheUSandtheUKinthisregard.Overall,thereappearstobeunrealisedpotentialforadviserstoprovidemorecomprehensiveandstrategicservicesinphilanthropicplanning.
TurningtoobstaclesthatNPOscandosomethingaboutitinadirectsense,anewsurveyofaffluent7AmericansbyresearchersattheCenteronPhilanthropyatIndianaUniversity(2007)findstwoNPissuesreportedaslimitingdonations:
1. perceivedwasteandinefficiencyfromNPadministration;and
2. perceivedlackofmeasurementandreportingontheimpactoftheirwork.
TheseconcernscansubstantiallylowerconfidenceintheworkoftheNPsectorbypotentialdonors.Indeed,concernaboutwasteandinefficiencyortheperceptionofsuchwasa‘headline’findingfromtheGivingAustralia(2005)projectaswell.QualitativefindingsfromGivingAustraliaspotlightedthedesirebyaffluentindividuals,inparticular,forNPOstodemonstrateaconcern,asheldbybusinesses,forreducingwaste,andimprovingefficiencyandoutcomes(MaddenandScaife,2005).ParticipantscommonlyreferredtomediastoriesexposingextremeexamplesofNPadministrationcosts(suchashighsalariesforCEOsandother‘perks’ofmanagement;indeed,theywantedNPOstohaveminimaloperationalcosts(GivingAustralia,2005).
ThisillustratestheparadoxthatexistsinAustralia:manypotentialdonorssaythattheywouldgivemoretoNPOsiftheseorganisationsweremoretransparent,moreefficient,andbetteratcommunicatingtheiroutcomes;yettheywanttogive onlyiftheirdonationistobespentonprogramsnotadministration(thatwouldenableNPOstomeetdonordemands)(GivingAustralia,2005;Madden&Scaife,2005).CPNS’financialadviserresearchalsoconfirmstheexistenceofthismyth:thattransparency,efficiency,measuringoutcomesdonotcomeatacosttoNPOs(Madden,2007).DespitemediastoriessuggestingthatNPOwastefulnessisaproblem,theNPsectorgenerallyoperatesonverylowoverheads,withfewpaidstaff;greaterinvestmentininfrastructuremaydeliverhighlydesirablegainsovertime(GivingAustralia,2005).However,publiceducationisneededtodemonstratethatadministrativecostswillbeincurredbyNPOsiftheyaretomeetfuturecommunityneedsefficientlyandeffectively(O’Donoghue,McGregor-Lowndes&Lyons,2006).
7Thisstudywasbasedonsurveysentto30,000AmericanhouseholdswithannualincomesinexcessofUS$200,000oranetworthoverUS$1million.
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4.5 ThE DoNoR DECISIoN-MAKING PRoCESS
Thedecision-makingprocessforindividualstodonateathigherlevels–ornot–ismulti-facetedandnotcompletelyunderstoodwiththeresearchthathasbeenconducted.Giventheaimofthisreport,thissectionwillmerelyspotlighttherangeoffactorsthatshapethatdecision.Italsoseekstoflagtheimportanceofunderstandingtheindividual’sownperspectiveandthesocio-environmentalfactorsthatmouldhisorherphilanthropicorientationovertime.Thesearevitalconsiderationsifeffortstoincreasephilanthropyaretobeeffective(seeSection5).
Decision-makingaboutgivingissimilartotheconsumerdecision-makingprocessforthepurchaseofintangiblegoodsorservices:botharemorecomplicatedthandecision-makingaboutthepurchaseoftangibleproductsasmarketingbooksexplain.However,thedonordecision-makingprocessaddsyetanotherlayerofcomplexityforresearcherstounderstandbecauseitisathirdparty–theultimatebeneficiaryoftheNPO’sservices–thatdirectlybenefitsfromthedonationsothe‘purchaser’,whilearguablyindirectlybenefitingfromthedonation,isseparatetothe‘consumer’ofthegoodpurchased.Asaresult,givenlimitedacademicworkinthisareauponwhichtobuildandtime/budgetconstraintsthatcharacterisemuchofthisresearch,tightboundariesarecommonlydrawnaroundaspectsofthegivingprocess.Thusresearchtendstotellusaboutasliceofthephenomenonratherthanaholisticprocessoccurringovertimeandinvolvingvariousstages.
Thefollowingfactorsallinfluencethedecisiontodonateathigherlevels:
1. Beingdirectly asked togive(Lloyd,2005);
2. Theleveloffamiliarityandtrustbetweenthepersonaskingandbeingasked(SargeantandLee,2004);
3. Theperceivedsizeofthegift:the‘smaller’theperceivedcostofmakingthegift,themorelikelyitwillbemade(Clotfelter,1985);
4. ClosenesstoacauseoraNPO.Volunteering,inparticular,butalsoactivemembershipandmakingpreviousdonationsbondsapotentialdonortoacauseorNPO(GivingAustralia2005;CentreonPhilanthropy,2006);
5. Beingpersonallyreceptivetoarequest(Supphellen&Nelson,2001);
6. Normstowhichtheindividualsubscribes(Cicirelli,1998;Warburton&Terry,2000);
7. Religious,culturalandpoliticalcontext(CAF,2006).
Theprocessbroadlycomprisesseveralstagesandinitsmostsimplifiedformunfoldsasfollows.Firstly,andpriortotherequest,thepotentialdonordevelopsanorientation togivingornot.Silberg(1990)identifiesthefollowingninefactorsthatarecommonlyfoundinaffluentindividualswhodonatelargegiftstocharitableorganisations.Suchfactorscanhelptoorient,orpredispose,anindividualtohigherlevelgiving:
• hasahistoryofinvolvementwithreligiousinstitutions;
• hasfamilyinvolvementingiving;
• hasaphilosophyofsharedwealth;
• seesgivingasawayoflife;
• hashadsuccessinbusiness;
• haslargeamountsofdiscretionaryincome;
• seekstosolvesocialproblems;
• involvedinaNPOanditsdecision-making;and
• wantstoassociatewithleaders.
IntheUK,TheGivingCampaign(2004)alsofoundthefollowingfactorsimportantforthe‘massaffluent’–thoseinthetop20%ofthepopulationforhouseholdincome–indeterminingtheleveloftheirdonations:
1. thecharity’s‘ask’(whichwasassumedtobeforwhatitneeded);
2. findingalevelofgiftthatfeels‘comfortable’;
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3. perceivedcapacitytodonateatthatspecificpointintime,takingintoaccounttheirfinancialsituationoverall;
4. thedesireto’dogood’;
5. thedesireto‘makeadifference’;
6. identificationwithacauseorNPO;
7. confidencethatacauseorNPOcanmakeapositivedifference;
8. confidencethataNPOisconcentratingonitscoremissionandthatfundsarebeingspentappropriately;and
9. externalguidanceandsupportinsuggestinganappropriatelevelofgiving.
Secondly,theindividualrecognisesarequestorneedandapprovesofitbeingmade,thatis,they
‘letdowntheirguard’toactuallyheararequestforsupport.Thirdly,heorsheassessesthedonationopportunityandeithermakesadonationornot,orchoosestowaittomakeadecision.Finally,thedecisiontodonateornotisassessed.
Table 7illustratesthebroadfabricofelementsateachstagethatcontributetoanindividual’sgivingdecision.Mainlythesestagesinvolvesorting and assessment functions,especiallycomparedtoalternativeusesfortheirmoneyinthewiderenvironment,bothNPandother.Sortingrequirestheindividual’sawarenessandattention;assessmentrequiresaccumulatedknowledgeaswellascheckingwithothers.
Aspartoftheassessmentprocess,individualsmayseekinputfromthosetheyknowandtrustaboutanyaspectoftheirdecision(suchasthesizeof
DYNAmIcS UNDERpINNING GIVING BY ThE AFFLUENT
TABLE 7: FACToRS ThAT INFLUENCE ChARITABLE GIVING BEhAVIoUR, BY STAGES
Source:Developedforthisanalysistoillustratethevarioustypesofstudiesconductedtodate
Stage 1 orientation Stage 2 Recognition Stage 3 Pre-donation assessment
Stage 4 Post-donation assessment
Culturalattitudestogiving,consumptionandwealth
Awarenessofasocialneed Comfortablewiththerequestitself:whoasks,howandwhen
Giftisappliedaspromised
Widersocialgivingpatterns,normsandexpectations
Cause/beneficiaryseenasworthy
Comfortablewithtimingofgift
Gifthasapositiveimpact
Socialandfinancialfears/issues NPOseenasworthy Comfortablewithuseofgift QualityofNPcommunicationwithdonor
Publicagenda:mediacoverage,politicians,peakbodies,opinionleaders
SuccessfulNPObranding ConcernsaboutefficiencyandeffectivenessofNPO
Expectationsregardinggiftmeaningorbenefitmet(orexceeded)
Governmentsupportforcommunityneeds
Attention Senseofownfinancialsufficiency(present)andsecurity(future)
Appropriaterecognitionandgratitude
Peerbehaviourandrolemodels Personalinvolvement Potentialtoshapeoutcomes GiftoptiondeemedappropriateAttitudesofprofessionals/
expertsReceptivenessoropennesstorequest
Meaningattachedtogift
Taxsystem Socialapprovalattachedtogift
Legislation Otherbenefitattachedtogift
Valuesincludingearlyfamilyvalues
Informedaboutoptions
Experiencesasachild
ExposuretoNPOs
Volunteeringexperiences
Previousgivingbehaviour
Lifeexperiences
Personality
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thegift,itsformortimingorthelikelyimpactofthegiftontheirfinances);theymayalsoinadvertentlyreceiveinformationthatisrelevanttothedecisiontheyface.Forexample,anindividualmaybeactiveindiscussingthedecisionwithhisorherspouse,lawyer,financialadviser,friendorrespectedacquaintance,orseekouttheadviceofan‘expert’.Whethertheyreceiveencouragementornotcanbeinfluential,asiswhethertheirquestionsorinformationneedsareadequatelyaddressed.Theymayalsobeexposedtoothers’opinionswithoutactivelyraisingthetopic.
Assessmentalsoinvolvesevaluatingthecostofgiving.Critically,the‘cost’ofadonationisnotmerely‘real’dollarcostbut‘psychic’costaswell–thelevelofeffort,levelofambiguity,opportunitycostandotherconcernssuchasnotwantingtoloseprivacyorberepeatedlyapproachedformoredonations–anditmustbeweighedupagainsttheanticipatedbenefittobegained,notonlyfortheend-userbeneficiary,butfortheintermediaryNPO,thewidercommunityandthedonoraswell.
Thismulti-dimensionalprocessofsortingandassessingmayresolvequicklyortakeanextendedperiodoftime.Itmayoccurwithoutmuchexternalinputorevenmuchconsiderationbythatindividual.Indeed,potentialdonorsvaryenormouslyintheirlevelofinvolvement,extentofactiveinformation-seeking,andtheirneedforfactsversesintuition.ResearchonmessageprocessinginothercontextssuggestsinvolvementcanbeextremelylowandSupphellenandNelson(2001)suggestthisalsooccurswithrequestsforsupport:decisionsmaynotinvolveseriousconsiderationoftherequestortheneedsofthecharitymakingit).However,asdonationvaluesrise,itislikelythatindividualswillinvesttimeandenergyinthedecision-makingprocess.
Howanindividual’sneedsandinterestsare‘handled’bytheNPorganisationthroughthewholeprocessisvital.NPOsinfluencedonorexpectations,andbuildexperiencesthatincrease–ordecrease–donorsatisfaction.Ultimately,though,thedecisiontodonateornotdoesnot occurinisolationfromanindividual’sotherbehaviourandthatofothersclosetohimorher.
Itisaffected,atleastinpart,bynewrequestsforsupportreceived,changingknowledgeofthesupportedNPO(orthespecificprojectinvolvedorgeneralcausearea)throughexposuretomassorcustomisedmedia,orwordofmouthmeans.Moreover,atitscore,individualgivingbehaviourisdeeplyembeddedinitsnation’sinfrastructureandsocial,economicandpoliticalcontexts.Onthisfoundationofmultipleinfluences,opportunitiestocreatepositivechangeingivingbytheaffluentarediscussedinSection5.Thissectionconcludeswithanoverviewofchangesinthewaytoday’saffluentindividualsapproachphilanthropy.
4.6 ChANGING DYNAMICS IN GIVING BY ThE AFFLUENT
Researchersareincreasinglyobservingthe‘newgeneration’ofphilanthropist.Shapedbyafast-changing,increasinglyglobalisedworld,somephilanthropistsaregivinginverydifferentwaysthaninthepast.TheWorldWealthReportidentifieseightdynamicsguidinggivingbehaviourofthisnewbreed(MerrillLynch/Capgemini,2007):
1. Seeinggivingasinvestingnotonlytheirwealthbutpersonalresourcesoftheirtimeandenergyaswell(andjustasvaluable);
2. Willingtolookbeyondlocalcauses(forexample,tolocalreligiousinstitutions,communitygroups,artsfoundations,etc.)toembraceawider(moreinternational)perspective;
3. Adoptingabroadapproach,supportingarangeofcauses;
4. Growinginterestinattainingspecificphilanthropicgoals;
5. Seekingoutcomesintheshorttomediumterm,ratherthanjustleavingalegacyforfuturegenerations;
6. Wantingtomaximizetheimpactoftheirgiving(thesocietalreturnontheirpersonalandfinancialinvestment);
7. Becomingmorestrategicandinvestment-orientedinhowtheymanagethemoneytheyallocatetophilanthropy;and
Stage 1 orientation Stage 2 Recognition Stage 3 Pre-donation assessment
Stage 4 Post-donation assessment
Culturalattitudestogiving,consumptionandwealth
Awarenessofasocialneed Comfortablewiththerequestitself:whoasks,howandwhen
Giftisappliedaspromised
Widersocialgivingpatterns,normsandexpectations
Cause/beneficiaryseenasworthy
Comfortablewithtimingofgift
Gifthasapositiveimpact
Socialandfinancialfears/issues NPOseenasworthy Comfortablewithuseofgift QualityofNPcommunicationwithdonor
Publicagenda:mediacoverage,politicians,peakbodies,opinionleaders
SuccessfulNPObranding ConcernsaboutefficiencyandeffectivenessofNPO
Expectationsregardinggiftmeaningorbenefitmet(orexceeded)
Governmentsupportforcommunityneeds
Attention Senseofownfinancialsufficiency(present)andsecurity(future)
Appropriaterecognitionandgratitude
Peerbehaviourandrolemodels Personalinvolvement Potentialtoshapeoutcomes GiftoptiondeemedappropriateAttitudesofprofessionals/
expertsReceptivenessoropennesstorequest
Meaningattachedtogift
Taxsystem Socialapprovalattachedtogift
Legislation Otherbenefitattachedtogift
Valuesincludingearlyfamilyvalues
Informedaboutoptions
Experiencesasachild
ExposuretoNPOs
Volunteeringexperiences
Previousgivingbehaviour
Lifeexperiences
Personality
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8. Usingleveragingtacticssimilartothosetheyhavefoundsuccessfulintheirbusinessventuresandpersonalinvesting.
Underpinningsuchchangesarechangesintheeconomicenvironment:
• Newopportunitiesforindividualstobuildwealththemselvesthroughtheirowneffortsratherthanthroughinheritance(activenotpassivewealthaccumulation);
• Thedevelopmentofaglobalperspectiveinthewayaffluentindividualswork,playandthink;and
• Newinvestmentapproachesthatcansupportabroaderrangeofcausesthaninthepast.
Atthevanguardarethosewith ultrawealth,whosebehaviourisbeingpickedupbytheaffluentmoregenerally(MerrillLynch/Capgemini2007).Mostclearly,thisnewtypeofaffluentdonorcontrastswiththetraditional‘cheque-writing’supportertoonelookingforhigh-impact,measurableresults(Johnson,2005).Thisdonormaybecharacterisedbyanentrepreneurialapproachtogiving;wheretheyhavetime,donorswantanactive,hands-onroleintheirphilanthropy;wheretheydonot,theywanttodelegatethisroletoentrepreneurialintermediariesinwhomtheyhaveconfidence.Johnsondistinguishesthenewdonoras:
• stronglyoutcome-focused.Whilemanyindividualsremainhappytowriteacheque,otherswantmoreinvolvementinachievingoutcomes;
• expectingthattheNPOwillbeentrepreneurialandapplyfamiliarconceptsofefficiencyandaccountability;
• preferringacauseratherthananinstitution,withapriorityforsocialchange;
• interestedinworkingwithothers,suchasgivingcircles,affinitygroupsorsupportnetworks.
Theconceptofa‘newdonor’hasbeenpickedupbyvariousresearchersespeciallythoseinvestigatingtheemergenceofsocial
entrepreneurshipandventurephilanthropyinrecentyears.Bothmodelphilanthropicengagementinanewway,placingemphasisslightlydifferentlybutsharingahands-on,business-likeapproachtosocialproblems.Thesocialentrepreneuractivelyseeksinnovation,finding‘practicalsolutionstosocialproblemsbycombininginnovation,resourcefulnessandopportunity’(Hartigan,2005,p.19)whileventurephilanthropistsfocusoninvestment,gettingtherightmixofresourcestoachievespecificsocialreturnsandtogeneratesustainableincomeforaNPOoverthelongerterm(Pepin,2005).
Whilethereisatrendbyaffluentdonorsinlookingforhigh-impact,measurableresults,notallaffluentdonorsfitthistypology.Moreover,TheGivingCampaign(2004)identifiedanotherdifferencebetweentoday’saffluentdonors.The‘committed’have‘arrangementsinplacetoimplementtheirwishtogive’(andthiscanbestructuredinalternativeways)whilethe‘adhoc’donorspreferthefreedomofgivingonanadhocbasis(p.2).Indeed,whilemuchmoreremainstobediscovered,itisclearthatthedonatingbehaviourandexpectationsofaffluentindividualsvarysubstantially,withresearchsuggestingage;levelofwealth;workingstyle;positionon‘thephilanthropiccurve’;andtheirrelationshiptoNPOsareallimportantinfluencers(Johnson,2005,p.52).Section5nowaddressesissuesaroundthepromotionofphilanthropyintheaffluentpopulation.
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Thefieldofsocialmarketinggrewfromthequestion‘canyousellbrotherhoodlikesoap?’.Inanextensionofsocialmarketingthought,arangeofnationshavesoughtto‘market’theconceptofgreaterphilanthropy,withvaryingtriggersandequallyvariedsuccess.NotmuchliteratureanalysesgivingeffortsbutwiderangingpromotionactivitiesaredescribedheretopresentapictureofwhatisunderwayinandbeyondAustralia.Thissectionbeginsbyhighlightingarangeofindicatorsthatsuggestinsomecasestheaffluentmaybepoisedtoactmorephilanthropically,giventherightconditions.Itthenlookstowhathasbeenwrittenaboutthesestimulantstophilanthropy.
Asanoverarchingcomment,somewritershavedistilledwhatneedstobeinplacetomakephilanthropypromotionsuccessful.ForinstanceJohnson,JohnsonandKingman(2004,p.17),assert:
• arangeofstrategiesorapproachesneedstobeemployed;
• thewidediversityofpotentialdonorswithinapopulationrecognisedanddiversepopulationsencouragedtogive;and
• creativityisneeded.
Further,Johnsonetal.(2004)pointoutthatbasedontheexperiencesofarangeofcountriesthathavesoughttopromotephilanthropye.g.Mexico,Canada,theUK,theCzechRepublic,publiccampaignstopromotephilanthropymust(p.19):
• haverealisticexpectationsforchange(changeisdifficult,andthemassmediaislimitedinitspower);
• goalsandtimelinesmusttakethelongview:campaignsmustlastfiveyearsormoreandentailsignificantcost(andmaybegreatertimeandcost-wisethaniswantedbyfunders);
• messagesmustbeaccompaniedbymovingpeopletoaction–messagesneedtobeconcrete/tangibleandactionable(withmechanismsinplacetofacilitate);
• multi-dimensionalcommunicationisneeded,notjustmassmediabutmessages/
EFFoRTS To ENcoURAGE GIVING
infrastructureatotherlevelstooe.g.face-to-faceinteractionisvital;
• specificrequestsforsupportarerequired:nonprofitsmustbeorganisedandpreparedtocapitaliseonapubliccampaign.
NotablegivingpromotionsincludethethreeyearUKGivingCampaign,Canada’sImagineCampaignandCentralEuropeaneffortstoengagepeopleingivingthroughtheoptionofpercentagephilanthropywheretaxpayerscanallocate1-2%ofwherethetaxtheypaygoes.
5.1 READINESS To BE MoRE PhILANThRoPIC
Arangeofindicatorssuggestsomereadinessparticularlyonthepartoftheaffluenttobemorephilanthropicandperhapsopentosuchcampaigns.Theseindicatorsincludeanexpresseddesiretobemoreengagedinthecommunity,agrowthinlifetimegiving,consciousnessofwealthasaburdenandtheneedforabalancedlife.Eachoftheseisconsideredbriefly.
Community engagement interest. IntheUS,morethanfouroutoffivehighnetworthhouseholdssaytheywishtodomorefinanciallyforthenonprofitcommunity,includingthosewhohadalreadymadeplannedgifts(Prince,2000).Drawingfromin-depthinterviewswith341majordonorsintheUS,PrinceandFile(1994)reportthatallsawthemselvesascharitablebut80.4%believedtheyweredoingasmuchastheycouldfornonprofits.Thisattitudeconsistentlyshowedthroughinworkshopswith1600affluentAmericans(Breiteneicher,1996)aswellasinfocusgroupsandin-depthinterviewswiththeaffluentinAustralia(GivingAustralia,2005).Prince&File(1999)alsofoundthatsome85%ofaffluentrespondentsexpresscuriosityaboutprivatefoundationsandwantedtolearnmore,withonly15%expressingnointerestatall.
Thosewhohadalreadyestablishedprivatefoundationslikedthemfortworeasons:itfocusedtheirgiving(enablingthemtohandletheconstantstreamofrequestsforsupportthattheyreceived),andithadmadetheirfamilycloserbecauseofthesharedinterestinit(Prince&File1999).Indeed,
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some38%ofthosesurveyedsaidthefoundationprovidesmanymoreopportunitiesforfamilyget-togethers,andtheother62%saidithadbeenapositiveforce.Nineoutoften(92%)whohadsetupaprivatefoundationintheprevioustwoyearsreportedrecommendingfoundationstoothers.
IntheUK,aGivingCampaignstudyshowedasimilarwidespreaddesirebydonors,includingthewealthy,tocontributetotheimprovementofpeople’slivesthroughfinancialgifts(Sargeant&Jay,2004).AffluentUKindividualswantedto‘dogood’and‘makeadifference’throughphilanthropicgiving(TheGivingCampaign,2004,p.3).SimilarlyinCanada,astudyofmillionaires–whichwasestimatedataround200,000in2001,withafurther10,000elitefamilieswithsuperfortunes–showedthatalmost90percentexpectedtheirwealthtoallowthemtohelpothers(Wolfe,2002).
More lifetime giving. Bequestgivinghasbeenafavouredterritoryfortheaffluent,especiallythosewithalotofmoneyandintheUSwheredeathdutieshavetraditionallyencouragedcharitablebequests.However,agreaterphilanthropicreadinessappearstoexistinthegrowinginterestingivingbyaffluentindividualsinvivos–duringtheirlifetime.Evidenceliesintheincreasingnumberoffoundationsthathavebeenestablishedtoallowgivingbydonorswhiletheyareliving(TheEconomist,2004),notonlyintheUSbutAustraliaaswellwhereuptakeofthenewPrescribedPrivateFundsstructurehasbeenpositive.
HNW wealth concerns. EventheHNWattitudesidentifiedbyPrinceandFile(1994)aspotentiallylimitingtheirlevelofgivingmayindicateopennesstobeingmorephilanthropic.Theirfindingssuggestthatmaking,andhaving,alotofmoneyhasrepercussionsforthoseindividuals,someofwhichwouldbeassistedbyphilanthropy:
• Wealth as burden. Thewealthycanregardwealthnotonlyasadesirablesituationbutalsoasaburden:itdoesn’ttakecareofitselfandthosewhohaveasenseofresponsibilityabouttheirwealthtakethisresponsibilityseriously.
• Need for balance.Thewealthycanfinditmoreimportantthanevertofindbalancebetweenfamilyandbusinessinterests,andteachingtheirchildrentomanagetheirmoneyproperlyyetalsotocareaboutandgivetoothers(tobephilanthropic).About30%ofthoseintheUS$1milliontoUS$5millionbracketworryaboutteachingtheirchildrenhowtomanagemoney.Thatnumberdoublesatthehighesttier.Balancingfamilyandbusinessinterestsworried23%ofthoseinthelowerrangeand60%inthehighest.Havingmoneycanconfusepeople(selfandothers)andthePrinceandFileresearchemphasisedthewishtogainperspective.Theresearchunderlinesthatchildren,too,canbeverymoney-focusedwhentheyareinawealthyfamilyandcanequateself-esteem,friendships,etc.withmoney.
Wealth volume.Afurtherindicatoristhesheervolumeofwealthlikelytobeinplayincomingyears,asoftenmentionedintheliterature.IntheUS,evenusingthemostconservativeprojectionsforthegrowthofwealthexpectedto2052,anincreaseinthelevelofgivingbythewealthyislikely(Schervish,2000).Thisisduelargelytotheimpactsoftheimpendingintergenerationaltransferofwealth(HavensandSchervish,2003).Schervishsuggeststhatforthefirsttimeinhistoryasizeable,andgrowing,groupofindividualsarebeginningtoownmorefinancialassetsthantheyrequireorthantheywishtoleavetotheirchildren(TheEconomist,2004).Thisgapbetweenpersonalandfamily-relatedneedsandthelevelofassetsheldissignificant.AsMurphy(PrivacyAct,2000)pointsout,thecapacitytobephilanthropicisnotsolelyafunctionofone’swealth;itdependsontherelationshipbetweenwhatonehasandwhatoneneeds.Thus,asnumbersriseofpeoplewhosepersonalincomeexceedswhattheybelievetheyneed,thereispotentialformoremoneytoflowthroughtothecommunitysector,boththroughphilanthropicgivingduringadonor’slifetimeaswellasbequests.
Astheincomeandwealthofaffluentindividualscontinuestogrow,more‘willseethemselves
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capable…ofdoingsomethingmoresystematicandformativeforthepeopleandcausestheycareabout’(Havens,SchervishandOHerily,2003p.38).
5.2 TRIGGERS To ACT oN ThIS READINESS
Triggerstostimulatemorephilanthropyinclude:
• promotioncampaignsthat:
» increasevisibilityofphilanthropytotheaffluent;
» highlighttheirdifferentinvolvementoptions;
» offermoreguidelinesand‘wheretofromhere’direction;
» canvassgiving‘norms’;
» encouragemore‘planned’versusspontaneousgiving;
» highlightinvolvingchildreningivingasavaluesexercise;
• actingontrendssuchas‘group’givingmodelsthatseegreaterpeersupportemerging;
• encouragingmore‘givingchampions’atthehighestlevelswhohavethecredibilitytoseedtheideaofgiving;
• taxationincentives;
• referralpointssuchasprofessionaladvisers;
• buildingastronger‘case’forphilanthropyandstrongerawarenessofthevalueofthenonprofitsector;
• encouraginggreatertransparency,efficiencyandevaluationinthenonprofitsectortohelpovercomepotentialdonorconcerns;
• improvingtheunderstandingofthenonprofitsectorabouttheneedsofaffluentgivers;
• improvingaffluentvolunteeringopportunitiesinnonprofitorganisationsthatembracetheirskillsandexpertise.
Differentcountrieshavetackledthisquestionoftriggeringmorephilanthropyinarangeofwaysasthefollowingsectionshighlight.
Promotion campaigns. Elementsofpromotioncampaignshavebeendirectedthroughtheyearstosociety’saffluent(e.g.theUKGivingCampaignfocusedparticulareffortintothissegmentofthegivingmarket–seewww.givingcampaign.org.ukandBanceandMitchell,2004).Asanotherexample,inCanada,theE-maginecampaign–afollow-onfromtheImagineCorporateGivingcampaign–targetedentrepreneursandinvestorstocommitaminimumofonetofivepercentoftheirfutureprofitstotheircharityofchoice8.WithintheImaginecampaign,corporations(notindividuals)adoptedagiving‘norm’andpledgedtogiveonepercentofpre-taxprofitstocharity.AnevaluationoftheE-maginecampaignisnotpubliclyavailablebutthecampaignappearstobenolongerrunningsomeyearslater,perhapsreflectingtheUKexperienceofthehighnetworthbeingloathtogiveaccordingtoapercentage.AUKstudybyTheGivingCampaign(SargeantandBreeze,2004)ofthe‘massaffluent’9foundamixedresponsetotheconceptofagivingbenchmark,suchasthepromotionofdonating1%ofincometocharity:thiswasseenasmost likelytoworkforthosewhowere(andfelt)financiallysecureandnotcurrentlygivingatthislevel.Nonetheless,thequestionofwhetherpeoplemightbeabletoliveon99%oftheirincomewasaconsistentUKGivingcommunicationthemethatwasregardedasatleastopeningpeople’smindstotheideaofgivingmorethantheircurrentsupport.
Thistithingapproachaimstoencouragemoreplannedthanspontaneousgiving,anareawarrantingfurtherinvestigationasapromotionalaim.FromGivingAustralia(2005)itisknownthat16%ofgivingisdescribedbydonorsasplanned,anddonorswhoplangiveonaveragefourtimesmorethanthosewhoarespontaneousgivers.WhiletheAustralianfigurespansallgivers,itwouldbepowerfultoseeplannedgivingfosteredespeciallyamongtheaffluent.Bequests,foundations,donoradvisedfundsandmajorgiftsallofferopportunitiesfordonorstoplantheirgivingathighlevelsandtobecomewhattheUKstudyterms‘committed’ratherthan‘adhoc’givers(BanceandMitchell,2004).
8Seehttp://www.envision.ca/templates/news.asp?ID=49169Definedforthepurposeofthisstudyasthoseinthehigherincomesegment/thoseinthetop20%ofthepopulationforhouseholdincome
(seeTheGivingCampaign,2004).
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Nationalgivingcampaignsreceivemixedevaluations.Johnsonetal’s(2004)commentsattheopeningofthissectionpointtothedifficultyofbuildingaphilanthropiccultureonalargescale.Thisperhapsexplainswhycampaignsalsoareruninmodesotherthannational.BrisbaneCityCouncil,forinstance,commissionedphilanthropyresearchthatamongothertopicsconsidershowcitiesacrosstheglobefacilitateagreatercultureofphilanthropy,highlightingeffortswiththeaffluentsuchasChicago’sMillenniumParkproject(GivingCity,2007).InBrisbane,increasingvisibilityofphilanthropytotheaffluentisontheagendawithaninternationalphilanthropyexposcheduledfor2009,featuringplenarysessionsfromsomeoftheworld’slargestgiversandAustraliangiving‘champions’andamajorefforttospotlightgiving.Thisinitiativeandtheincreasingrangeofworkshopsfromgivingintermediariesandadvisers10aremakinginroadsinhelpinghighnetworthindividualsunderstandtherangeofgivingoptionsbeforethem.Otherintermediariesareemergingasalsoimportantinthismoretargetedpromotiontotheaffluentabouthowtoproceedwithaninterestingiving.Forexample,ArtSupportAustraliaestablishedin2003withthetaskofgrowingculturalphilanthropy11andthenewerResearchAustraliaHealthandMedicalResearchPhilanthropyCentrewillperformasimilarroleforitscausearea12.GivingchampionshavealsobeenpartofthepromotioneffortsoforganisationssuchasArtSupportwherewellconnectedindividualswhothemselvessupportacauseareaopttoproactivelyseekopportunitiesinhighnetworthmarketstotalkpubliclyabouttheirgivingandwhyothersmaybenefitfrombecomingphilanthropistsaswell(seethespeechesfromhighprofileAustraliansontheArtSupportsite13).
Theinternationalscenereflectsmoreofthesegeneralandsinglecauseintermediariesthatassistinterestedpotentialgiverstounderstandhowtheycanbegininphilanthropyandfollow
throughinareasofspecialinterest.IntheUS,forexample,thesportsPhilanthropyprojectworkswithprofessionalsportsfiguresandtheirclubstofacilitatemeaningfulgiving.14PhilanthropypeakssuchastheCouncilonFoundations15offerlargerscaleversionsoftheservicesgivenlocallybyPhilanthropyAustralia,providingtemplatesandspecificcausearearesearchandguidelines.InternationalgroupssuchastheNationalCenterforFamilyPhilanthropy16focusonassistingthehighnetworthtogainthebenefitsofphilanthropyasavaluesbaseandfamilyunificationmechanismacrossthegenerations.GivingguidelinesinAustraliatendtobemorelimitedalthoughageneralguideisavailablefromPhilanthropyAustralia.17
Suchgroupsassisttheprocessofenticingmorepeopletogiveaccordingtotheirmeansbyalsobuildingthecaseforgiving.ThereportedsuccessofeffortssuchasMelbourneCares18orMacroMelbourne19appeartoinpartrelyuponthepresentationofwellresearchedneedsthatsparkgiving.Presentingspecificprojectsthathavebeenidentifiedthroughresearchascrucialandunlikelytobefundedelsewhereisencouraginginthesecasesbusinessdonorstogiveonalargerandmoretargetedscale.FeedbackfromhighnetworthintervieweesinGivingAustralia(2005)wouldreinforcetheneedtoclearlyarticulatewhygovernmentisnotableorlikelytofundparticularneedsandareticencetoshoulderaresponsibilitythatmoreproperlybelongstothestate.Researchandpracticehighlightthatthephilanthropicdollarcanfundinwaysthatthepublicpursecannotbutlittlecommunicationofthisnotionisapparent.WhereinAustraliacouldanyinterestedpersongotoreadthecaseforphilanthropy?
Professional advisers as giving intermediaries.Theroleparticularlyofintermediariessuchasfinancialadvisershasbeenrecognisedintheliteratureasholdingpotentialtobreedmorephilanthropy,especiallyamongstthehighnetworth.Anextensivestudyin2000byJohnson
10Seeforexample,EnrichAustralia,http://www.enrichaustralia.comandGoldmanSachsJ.B.Were,http://www.gsjbw.
com/?p=PhilanthropicServices_P11Seewww.ozco.gov.au/artsupport12www.researchaustralia.org13Seehttp://www.abaf.org.au/communicationscentre/speeches.html14Forexample,www.sportsphilanthropyproject.com15Seehttp://www.cof.org/16Seehttp://www.ncfp.org17AGuidetoGivingforAustralians,downloadablefromhttp://www.philanthropy.org.au/involved/guidetogiving.htm18Seewww.melbournecares.org.au19Seehttp://www.communityfoundation.org.au/news/latest/macromelbourne-liveable-city/
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(2004)suggestsatleastforUSfinancialandlegaladvisersthereisanexpressionofanunprecedentedlevelofinterestinphilanthropicplanningwiththeirhighnetworthclients,withsomeindicationsthattheyarebecomingmoreactiveinthisarea.Barrierstothisoccurringhavebeenfoundtobesimilaracrosswesternnations,includingAustralia.Advisersindicatetheywouldbemoreproactiveinpromptingclientstowardphilanthropicactivityiftheyhadmoreresourcesandinformationwithwhichtodoso.
AsKaroffindicates(1994)byincludingphilanthropyintheirestateplanninginanefficientway,individualscansatisfytheneedto‘feelgoodaboutthemselves’aswellaspassingonfamilyvaluestothenextgenerationandbeyond(p.47)
Fortheprofessionalplanner,engagingtheirclientsindiscussionsabouttheiroveralllifeandfamilyactivitiescansolidifyandexpandrelationships,inthemouldofthefamilyofficemodelthatoperatestoasmalldegreeinAustralia.SomethreequartersofindependentUKfinancialadvisersandstockbrokersreportedthatastrongincentiveforthemtoofferadviceontaxefficientorplannedgivingwastheopportunitytodoagoodjobfortheirclients;todeliverqualityadvice(TheGivingCampaign,2001).
Incountrieswherearangeofplannedgivingvehiclesexist,thepotentialforcross-overbetweenthecharitableandfinancialservicessectorsisgreat.IntheUS,totalcharitablegivingwasover$US240billionin2002butmanyindividualswhogivedonottakeadvantageoffinancialadviceandstrategiesthatwouldenablethemto‘givesmarter’(Olson,2003,p.12).AnanalysisofaffluenttaxfilersintheUSrevealedanaverageof$3000incapitalgainstaxsavingscouldhavebeenmadeifappreciatedassetsinsteadofcashhadbeendonated(TheNewTithingGroup,2003,p.4).TheGivingCampaign(2003)highlightedtotalcharitablegivingfromindividualsofallincomeswas£7.3billionin2003,approximatelyonetwelfthofthe£80billionplusthatflowedintolifeandinvestmentfinancialservices,excludinginsuranceproductsandretailbanking.Yetcampaignresearchpointedtotaxeffectivecharityvehiclesbeingunderutilisedbydonorsandsuchvehicleshavinglowawarenesswithinthefinancialservicessector.
The role of involvement. Othercommentatorssuggestthepromotionneedliesinbridgingtheexperiencegapbetweenthosewhohaveandthosewhoneed(AllianceRoundtable,2004).Roundtablecontributor,Simmons,assertslittlewillchangeuntilyoungpeopleareoutandworkingindevelopingcountriesanddevelopingthebondandthe‘senseofpersonalconnectedness’thatarepreludestogiving.ThepairconductedaworkshoponbehalfofAlliancemagazinewhosekeythemesonliftinggivingreinforcemuchinthissection,being:
• Makinggivingeasierandmoreattractive;
• ImprovingthepublicperceptionofNPOs,particularlythroughmoreinformationandmeasurement;
• Usingfoundationstostimulateindividualgiving,byactingas‘thesmartmoney’,givingaleadandleveragingdirectindividualgiving;and
• Recognisingthatfamilyandpeerinfluenceplayalargeroleinpersuadingpeopletogiveinthefirstplace.
Clearlyitisnotjustyoungpeoplewhohavethecapacitytoengagewithcausesasaresultofdirectcontact.Variousapproachesexistthatdrawaffluentpeopleintocharitablecircles,rangingfromthevarietyofcommunityleadershipcourses(seewww.ourcommunity.comforafulllist)totheAdviceBankvolunteeringarmofArtSupportthatmatchesinterestedbusinessvolunteerswithartsorganisations.InIndia,theDignityFoundationdrawsuponretiredprofessionals,manyofwhomareaffluent,asabankofvolunteerstoactivateitsmyriadofservicesforolderIndians.ThelinkbetweenvolunteeringasacommonentréetogivingiswellestablishedandwassolidifiedintheAustraliancontextthroughGivingAustralia(2005).
Peer group giving. Ataformallevel,thiselementofpeerinfluencehasachievedoutcomesthroughtherelativelynewdonormediumofgivingcirclesthathasbecomepopularacrosshighandlownetworthgiversalikeintheUS.Anestimated800suchgivingordonorcirclesoperateintheUS,moststartingsincetheyear2000(Bearman,2007).Thecirclestypicallycomposepeopleofthesamerace,genderandageandoperatewitha
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widerangeofformality.Workingsimilarlytoashareclub,agroupoflikemindedpeopleusuallyknowntooneanotherpoolstheirfundsandinvestsintheircauseofchoice,usuallymakingthesameannualcommitmenteach.Oftenhands-onvolunteeringorassistancetothecauseisalsopartoftheactivity,breedingagainthat‘senseofconnectedness’mentionedabove.AsimilarideaisatworkinthebiomedicalventurephilanthropyeffortsofhighnetworthgiverssuchastheLauderFamilythroughitsInstitutefortheStudyofAgingintheUS20andGoldmanPhilanthropicPartnerships21.Coretobothphilanthropicadvocacyeffortsaremanagementofthegivingoptionssotheyarescientificallyvalidated,basedonbusinessmodelsthatmanydonorsunderstandandineffectcreateagroupoffellow-donorsinprojectswhoareeagertousephilanthropyforinnovation.
Awiderangeofphilanthropyawardshasbeeninstigatedtoheightenawarenessofphilanthropyandappealtothosewhomaybemovedbythestatusandpeeracclaimthatcanattachtogiving,acommonmotivationaccordingtothegeneralgivingliterature.ExamplesincludetheCommunityFoundationforIrelandPhilanthropistoftheYearAwards22.
AsinthecaseofhighprofileAustraliansspeakingtopromotespecificcauseareas,philanthropicadvocacyhasalsobeenevidentinbusinesscircles.Forexample,theAustralianDAVOSConnectionleadershipforumhasincludedaphilanthropyfocusforthepasttwoyearsandthisarenaembracesmanypotentialindividualgivers.Providingkeymessagesfrompeersmayagainpromptpotentialgiverstothinkmoreseriouslyaboutphilanthropy.
Taxation.Punditsaresomewhatdividedontheimpactoftaxongiving.AsCham(2003,p.19)suggests‘Ithaslongbeenavexedquestionastowhetherornottaxincentivesareimportanttothegrowthofphilanthropy.Australianexperiencesofarsuggeststhattheycertainlyhelp.’Schervishontheotherhand,intheUSclaimsthatstimulatingtheeconomyandcreatingmorewealthisthebestwaytofosterphilanthropy,soheisinfavouroflivingwithouttaxationincentivessuchastheUSEstateTax(Schervish2001).OtherUSresearchers
(Auten,Clotfelter&Schmalbeck,1997)concludethattheaffluentgivesignificantlymoretocharitywithtaxincentivesinplacethantheywouldweretheircontributionsnotdeductibleasconfirmedbyaChronicleofPhilanthropypollthatreportsmorethanhalfofwealthypeoplesaidtaxbenefitsinducethemtogive,whileonly28percentofthetotalpopulationcitedtaxesasamotivation(TheChronicleofPhilanthropy,2001).
ThelatestUKresearchwithwealthygivers(Taylor,Webb&Cameron2007,p.8)suggestsgreaterawarenessoftaxincentivesisneededtoimprovetheiruptakeandmayinturnincreasecharitabledonations.GivingAustraliafoundasimilarlylowlevelofawarenessoftherangeoftaxationbenefitsavailable.
Johnsonetal(2004)commentthatwhiletax-basedpromotioninitiativesarenotalwaysappropriateforparticularcultures,nornecessarilyeasytocreateoradminister,manycountriesaregrapplingwith‘thoughtfulpoliciesandstructures’while‘tryingtoguardagainstthemisuseoffiscalincentives’andlimitonesthatcoulddecreasetaxrevenue(Johnsonetal,2004,p.l7).ThecostofcharitabletaxdeductionstotheUSGovernmentin1999wasestimatedatUS$25billion(Cordes,1999).Johnsonetal(2004)suggesttheemphasisbymanygovernmentsontaxlimitationsandrestrictions‘reflectsthegeneraldistrustandsuspicionofthenonprofitsectorgenerally’(p.17).Astheypointout,‘Newpoliciesandtaxincentivesareonlylikelytobeimplementedifgovernmentandpublicattitudestowardstheroleofphilanthropyandcivilsocietyaresimilarlyreformed’(p.17).
Taxationpolicygenerallyfiguresintheraftofideasnationsputforwardtoencouragegiving.InanearlyUScampaign,White(1986)calledforstrategiesthatwouldcapitaliseonthosewhofeeltheyshouldbegivingmoreandwouldofferthemnewmechanismsforgiftgiving.SargeantandBreeze’s2004BlueprintforGivingthatfollowedtheUKGivingCampaignsuggestedfurtherdevelopmentoftaxeffectivemeasurestobenefitcharities,aswellaseasyaccessandbetterpromotionofsuchmeasures.SotootheAsiaPacificPhilanthropyConsortium(2001,p.8)whohighlightedtheneedforAustraliatochangeitscharityandtaxlawto
20Seewww.aging-institute.org/venture.htm21Seehttp:www.goldmanpartnerships.org22Seehttp://www.activelink.ie/ce/active.php?id=2759
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beclearer,morecoherentandmoreconsistenttobettersupportphilanthropy.TaxhasbeenaninterestingleverinEasternEuropesince1996whenHungaryintroducedthepercentagephilanthropyinitiative.Asalludedtoearlier,throughpercentagephilanthropylegalmechanismsallowtaxpayerstoallocateacertainpercentageoftheirpreviousyear’spaidincometax(usually1-2%)toapprovedbeneficiaries.Hungary,Slovakia,Lithuania,PolandandRomaniahaveenactedmechanismstoallowcitizenstodirecttheirtaxinthiswayandearlyresearchsuggestsitisbuildingacultureofgreaterphilanthropyfromtheprivatepurseaspeopletakemoreinterestincommunityneedareas(http://www.onepercent.hu/project.htm).
Usefulthoughsuchinitiativesareinbuildingacivilsocietywherenotmuchhasexisted,theyareverydifferenttothetaxincentivesforHNWindividualsinothercountries.Cordes(1999)notesthatearlytaxstudiesindicatethatgivingelasticitywassignificantlyaffectedbytheaftertaxcostofgiving.However,hepointsoutthattheonlygroupthatsawamajorgivingdropintheUSafterits1986taxreformswastheverywealthysegment.Assuggestedearlier,taxmaybeaparticularlyimportanttriggerforthisgroup,whereasitmaybelesssoforthosewithsmallerdisposableincome.
NewZealandin2006exploredtheeffectoffavourabletaxpoliciesoncharitablegivingconcludingthattaxincentivesreinforceexistinggivinginclinationsbutthatinisolationareunlikelytosignificantlychangegivingbehaviours(Cullen&Dunne,2006).Astheyandothersconclude,avarietyofmarketingeffortsbeyondtaxationseemtoberequired.Whatisalsoneededistheabilitytoovercomesomeofthebarrierstogivingthatarecitedasissuesbytheaffluent.
Overcoming barriers to giving.RecommendationsweremadeaspartoftheGivingAustralia(2005)studythatrelatetothequestionofencouragingaffluentgivingandsettingabetterclimateforittooccur.ActivitiesidentifiedinAustraliathatcouldhelpovercomebarrierstomoregivinginclude:
Throughnonprofits:
1. Ensuring the credibility and accountability of nonprofit organisationsbyaddressingthepublic’sunrealisticexpectationforallof
adonationtogotoamission,identificationofunpopularpracticesofsomenonprofitssuchasverylargeCEOpackages;andmovingtoasimpler,consistentlegalframeworkforactivities;
2. Supporting efforts to raise the standing of the fundraising professionwithinthesectoraswellasthewidercommunitysothefieldattractsastrongworkforce.
Throughstrategicintermediariesforgiving:
1. Fostering advice by professional groups suchasaccountants,financialadvisersandsolicitorstoindividualsandbusinessesthatfacilitatesgivingdecision-making;
2. Promoting bequeststhroughintermediariesbecausetheyarerelativelyunusedbyAustralians;
3. Supporting PPFsinaddressingnewandexistingcommunityneedsthatarenototherwisebeingadequatelyaddressed,andhelpingthesenewcomerstophilanthropytomanagetheirgrantingifneeded;
4. Supporting established foundations and trustswithissuestheyfacesuchasmeetingfoundersneedswhileremainingcontemporary.
Throughgovernmentsupport:
1. Establishing a long term, applied giving research agenda,ensuringregularandaccessibledata,bothquantitativeandqualitative,relevanttogiving,forexample,givingpatternsandactivitiesofthenonprofitsector;
2. Resourcing the ATO to generate confidentialised data setstofacilitatetrackingofgivingbehaviouracrossgenerationalcohorts;
3. Policies, and funding, to raise public awareness ofNPOsandencouragegiving.
Thus,arangeofinitiativeshavebeenusedinAustraliaandbeyondtoenticemorepeopleintothegivingmarket,especiallypeopleofmeans.Theissuesraisedasbarriersandopportunitiesseemtobeoftensimilarincountriesroundtheworld.Thepotentialtoconsidersomemoreinternationalstrategiesexists.
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ThisreporthasquestionedwhetherhighnetworthAustraliansaregivingaccordingtotheirmeans.Itfindsthatdespitesomestellargenerosity,suchgivingbythewealthyasawholeisperhapsmoreaspirationthanreality.MuchisabuzzaboutthetopicofphilanthropyinAustraliatodaybutdespiteburgeoningnumbersofaffluent,therelativelyresilienteconomyandlikelyintergenerationalwealthtransfer,actualhighnetworthgivingisnotasvibrantasitmightbe.
AshighlightedinSection 1,measuringwealthandcomparingthoseyardsticksisnotstraightforward.Differentstudiescastaffluenceatdifferentlevelsand‘applestoapples’internationalcomparisonsarerare.Moreover,thenotionofan‘iceberg’ofwealtharisesbecausepersonalassetscanbeoutofviewduetofamilytrustsandsavvystructurestominimisetaxation.Similarly,lackofknowledgeofcorrespondingdebtlevelsmakesassumptionsproblematic.However,trackingthecomparativelevelsofaffluentgivingacrosscountrieshasbeenhighlightedashighlyvaluableforpolicymakersandotherstounderstandwhereonecountrysitsagainstinternationalbenchmarksandwhattrendsareoccurringamongstthosearguablybestequippedtocreatesocialchange.
Section 2 chartstheincreasingwealthofAustraliansgenerallyandofthehighernetworthinparticular,thankstopropertyandresourcebooms,equitymarketopportunitiesandsuperannuationboosts.Thelikelihoodofthiswealthsurgecontinuingseemssound,withassetvaluesincreasing,fedalsobywealthhandeddownfromtheprecedinggeneration.Charitablegivingbystate,asapercentageofoveralltaxationdeductions,bydemographicsandovertimearereportedtobuildthebackdropforaffluentgiving.Thestaunchroleofthe$50,000–$100,000taxableincomebanddonorwashighlightedwherevolumeofdonationsseethissegmentoutstripwealthierdonorsclaimingataxdeduction.
Thelongtermtaxdataestablishesthatasincomelevelincreases,sotoodoesthedonorparticipationrate.However,thesefiguresalsospotlightthose
inhigherincomebandsnotgivingtocharitablecausesdespitetheirfinancialcapacity.ThebaldfactsherearethatoneinthreeaffluentAustraliansmaybedonatingonlynegligiblesums.
Particularlythoseinthe$100,000-$499,999and$500,000-$999,999incomebracketsarelowinproportiontotheirincomes.Theformer’saverageclaimeddonationof$1,123,forexample,isoutofscaletothe$59,351donationbythoseinthehighestaffluentbracketnotwithstandingthewiderincomerange.Noristhis$1,123averagedonationinscalewiththoseonlowerincomes.
Section 3 reportsgivingactivityacrossOECDnations,highlightingAustraliaasamoderatelyrankedgiver.Again,theissueofAustralia’sgrowthinwealthbutnotcommensurategrowthinaffluentgivingcomestothefore.Whileintunewithinternationaltrendsthatpointtoincreasedgivingbythetopendoftheaffluentscale,givingbythenewcadreofAustralianmillionaireshasnotliftedinproportiontotheirgreaterabilitytodoso.Theyareparticipatingingivinglessthantheirinternationalpeersanddonatinglesseramountswhentheydogive.IndicationsfromthetaxdeductibilitydataarethatasizeablenumberofAustralia’shighnetworth–perhapsasmuchas40%–maynotgiveatall.
Section 4 canvasseswhatisknownfromvariousdisciplinesaboutwhypeoplegive,especiallytheaffluent.Givingprofilesaresummarisedincludingthefivekeyfactorsidentifiedaslinkedtoaffluentgiving:higherincome,olderage,highereducation,marriageandstrongreligiousinvolvement.Thefactthataffluentgiversreflectsimilarmotivationstothegeneralgivingpopulationbutalsohaveextraconsiderationsishighlighted.Thebarrierstohighnetworthgivingaresummarisedaccordingtotheresearch,includingnotablythesenseofnotbeingabletoaffordtogiveandconcernsthatthemoneywillbewellmanagedandused.Thedecisionmakingprocessisconsideredfortheaffluent,trackingfromorientationtowardgiving,recognitionofthecauseandotherfactorssurroundingthegifttopre-andpost-assessmentofthedonatingexperience.Theso-callednewbreedofphilanthropistsisalsohighlightedasachangingdynamic.
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SUmmARY oF FINDINGS AND REcommENDATIoNS
Section 5 highlightshowAustraliaandarangeofcountriesareseekingtostimulatemoregiving,recognisingthatsomelogicexiststhatthattheaffluentmaybeopentogivinginvolvementifpresentedappropriately.Theroleofamulti-strandapproachtoarangeofstakeholdersisclearandarangeofexperiencesinothernationscaninformwhatAustraliamightdotoengageitsaffluentmore.
Insummarythereportfinds:
1. Approximately 6 in 10 of the wealthiest Australians (approximately 5% of Australia’s total population) claim deductions for their charitable giving. Giventhepropensityofthisgrouptobenefitfromprofessionaltaxadvisersandutilisethetaxsystem,some40%arelikelytobeengagedinminimal–ifany–giving.
2. Affluent Australians give more than the average Australian but generally not much more.Contributionstocharity,measuredbydonationsclaimedagainstincomeandexpressedasapercentageoftaxableincome,areonlymarginallyhigherforthevastmajorityoftheaffluent(withtaxableincomesofbetween$100,000and$500,000)thanforAustraliansoverall,atapproximately0.45%and0.33%,respectively.
3. The level of personal wealth held by wealthier Australians has accelerated at a much faster rate than their charitable giving. Overthetenyearsto2005,meanhouseholdincomeforAustralia’saffluentpopulationhasincreasedby36%.However,itscharitablecontribution,asmeasuredbythepercentageoftaxableincomeclaimedascharitablegivingincreasedfromjustover0.36%tojustover0.45%,stillwellunder1%forthevastmajorityofwealthierAustralians.
4. Despite some superlative yet isolated examples, there is little evidence that Australia’s ultra-rich and ultra-ultra-rich are giving at the same rate as overseas counterparts.Despiteincreasinggiftlevelsinthepastdecadeto2005from
0.7%to1.98%oftheirtaxableincomes,thewealthiestofAustralia’saffluent($1mplusintaxableincome)donotappeartobeengaginginphilanthropy,asagroup,totheextentindicatedbyglobaltrends.TheWorldWealthReport(MerrillLynch/Capgemini,2007)estimatesthatthetop17%ofultrarichdonorsglobally(withassetsequivalenttoUS$30mplus)arenowgivingawayapproximately10%oftheirassetsannually;theyalsopointtotheglobalHNWpopulation’sgrowingpropensitytoallocatebetween3%and11.8%oftheirportfoliostophilanthropiccausesannually.WhilenodetailedfiguresexistinAustralia,taxstatisticsindicatethatmakingsubstantialdonationsstillconstituteanexceptionratherthananormforthewealthy.
5. Tax changes support a philanthropic culture. Moretax-relatedstrategiesarecalledfor,giventheformaldocumentationofmorethan450PrescribedPrivateFunds(PPFs)byindividualsandcompaniesbetweenintroductionofthemeasurein2001and2006.Sincethen,estimatespointtomorethan600inoperation.Inothercountries,the‘incentivising’impactofvariousmeasures,includingdeathdutiescannotbedenied.
6. The affluent is the affluent is the affluent…not so! WealthierAustraliansnowrepresentadiversegroup,withlargevariationsinfinancialcapacity.Segmentationoftheaffluentpopulationbyincome/assetlevelisessentialtounderstandareasoflowgiving(andhighgiving).
7. Drawinguponthefindings,thefollowingstandout opportunities exist to encourage giving by the affluent.
i. Increasevisibilityofphilanthropyamongsttheaffluent;
ii. Increaseawarenessofdifferenttypesofinvolvementtosuitvaryinglevelsofwealthandpersonalcircumstances;
�2
iii. Creategreaterpeersupportforgivinge.g.loosesupportivenetworksandgroupsprovidingopportunitiesfordiscussionandpotentialgroupfunding(e.g.givingcircles);
iv. Offermoreguidelinesforgiving,promoteaffluentgivingnormsandbuildthepracticeof‘planned’versusspontaneousgiving;
v. Thehighestechelonsofgovernment,business,theprofessionsandthecommunityneedtobepersonallyinvitingAustralia’swealthyopinionleaderstojoininvisionaryphilanthropicprojects;
vi. Promotetaxbenefitsattachedtogivingathigherlevels,andalternatives;
vii. Trainandsupportprofessionaladvisersaboutprovidingphilanthropicadvicetomatchclients’circumstancestothemostsuitablegivingvehiclesoroptions;
viii. ImproveawarenessamongstAustralia’saffluentpopulationofthebenefitsofinvolvingtheirchildreningiving,theopportunitiesavailable,andwhocanassistthemachievetheiraims;
ix. ImproveawarenessoftheAustraliannonprofit(NP)sectorandtheuniqueroleofphilanthropyincreatingchangeinthecommunity:thecaseforphilanthropyneedstobestrongerandclearerthanitiscurrently;
x. Increasetransparency,efficiencyandevaluationbynonprofitorganisationstohelpovercomeexpresseddonorconcerns.Atthesametime,publiceducationisneededtomorerealisticallysettheseexpectations;
xi. ImproveunderstandingandresponsivenessbytheNPsectoroftheneedsandinterestsoftheaffluent;
xii.ImprovevolunteeringopportunitiesfortheaffluentinNPOs,drawingupontheirknowledge,connections,experienceandinterests.
Thepotentialtoachievemoreinthisareaisclear.
SUmmARY oF FINDINGS AND REcommENDATIoNS
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
‘Donation’ Unlessotherwiseindicated,avoluntarytransferoffundsmadetoanorganisationinthepreceding12monthsbyaperson,onanindividualnotabusinessbasis.Donationsprecludereceivinganybenefitinreturnandexcludespurchasesofgoodsandraffletickets(althoughitincludescontributionstodoor-knocksandsponsoringwalkathonsetc)(McGregor-Lowndes&Newton,2007)
‘Philanthropy’ referstosubstantialandon-goingfinancialsupportforanonprofitorganisationwiththeaimofalleviatingorpreventingcommunityproblems,ortoimprovelifeandlivingconditionsforpeopleandcreaturesthathavenoclaimonthegivers.
‘Affluent’ usedinterchangeablywith ‘high net worth’ and ‘wealthy’ inthisreport.Itreferstoindividualswhohaveinvestableassetsofatleast$1.2millionorataxableincomeofatleast$100,000apartfromtheirprincipalresidence.Thisfigureisideallyminusdebtbutduetothedifficultyofobtainingaccuratedata,authoritativeestimatesarereliedupon.
‘Professional adviser’ usedinterchangeablywith‘adviser’(withthesamegeneralmeaningastheUS ‘advisor’ )andreferstothosepaidtolookafteranindividual’sorfamily’spersonalfinancialaffairs.Theirroleiscommonlydescribedas‘financialadviser’butprofessionaldescriptionsmaybeused(dependingonthequalificationsandspecialityoftheadviserinvolved):
• accountants
• financialplanners
• privatebankers
• taxorestatelawyers(whosefocusisonlegalaspectsoftheirclient’spersonalfinancialaffairs).
‘Prescribed Private Funds’ (or‘PPFs’ )–refertoarelativelynewformofprivatephilanthropictrustinAustraliathatissimilartotheUSfamilyfoundation.Inessence,aPPFisafundestablishedbyawillortrustinstrumentwithDGRstatus(thatis,giftstoitaredeductibletothedonor);previouslysuchfundswererequiredtoseekandreceivedonationsfromthepublicandbestrictlycontrolledbymembersofthepublic
SUmmARY oF FINDINGS AND REcommENDATIoNS AppENDIx 1 TERmS USED IN ThIS REpoRT
��
ThistableshowstherecipientareasfortotalreporteddonationsbyAustraliansinthe12monthpriortosurvey(excludingdonationsof‘0’).Totalnumberinsamplewas6,209.
AppENDIx 2 ToTAL DoNATIoNS BY INDIVIDUALS IN 2005, BY cAUSE AREA
NoTES:
N–Representsthenumberofrespondentsselectingacausearea.Non-reportingaccountsforanydiscrepancyinpercentages.
Lastthreecolumns–Theseshowsthedollaramountgivenbyrespondentsinthe25th(50thor75th)percentiles,forexample,itshouldbereadas25%(or50%or75%)ofpeopledonated$20orlesstothiscausearea.
TABLE 8 : ToTAL DoNATIoNS BY INDIVIDUALS IN 2005, BY CAUSE AREA
Source:GivingAustraliadatabase2005
NPo type N Min Max (‘000)
Mean SD 25th per Median (50th per)
75% per
Schools, universities, or colleges
1,091 0.12 10 177.54 539.37 20.00 50.00 150.00
Sporting clubs 813 0.53 2.5 78.87 175.47 20.00 30.00 80.00
Recreational or hobby groups
194 0.02 1 78.29 124.08 20.00 30.00 92.50
Religious or spiritual
1,698 0.30 50 552.80 1,580.37 50.00 200.00 500.00
Medical research
3,175 0.08 6 85.48 210.25 20.00 40.00 100.00
other health 1,077 0.08 8 98.81 335.74 20.00 40.00 100.00
Community or welfare services
3,769 0.01 20 89.36 392.71 10.00 30.00 75.00
International aid and development
1,468 0.18 6 261.76 391.18 30.00 120.00 400.00
Australian emergency relief
1,942 0.01 20 57.03 469.77 10.00 20.00 50.00
Environmental or animal welfare groups
1,389 0.53 20 99.43 577.11 10.00 30.00 75.00
Arts or cultural 285 0.11 50 282.79 2,974.04 20.00 50.00 100.00
Political parties, unions, business or professional
371 1.41 2 137.99 223.39 20.00 50.00 175.00
other 27 10.00 3 330.30 617.64 50.00 100.00 200.00
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
STATES AND TERRIToRIES
TaxstatisticsshowthatresidentsofNSW,VictoriaandQueenslandtogetheraccountedfor82%ofalltax-deductibledonationsmadetoDGRsinAustraliainthe2004-055incomeyear.ACTledthewayfortheproportionoftaxpayersclaimingdonations(with47.2%),followedsomewaybehindbyVictoria(41.56%)andNSW(39.57%).However,NSWlosesitsdominancewhentheratioofdonatingtaxpayerstonon-donatingtaxpayersiscalculated:ACTleadsotherStatesandTerritories,followedbyVictoria.
What, specifically, is the level of giving in each state or territory?23
• NSW In2004-05justover1,450,000NSWtaxpayersdonated$623.9milliongiven,almost43%ofthenationaltotal.NSWdonorsdonatedapproximately0.42%oftheiraveragetaxableincome,translatingtoanannualaverageamountof$430comparedtoanationalaverageof$341.
• Victoria ThenextlargestdonorstatetoNSWin2004-05wasVictoriawithalmost1,165,000taxpayersseekingdeductionsfordonationstotalling$394.4million.Victoriansdonated26.8%ofthetotalnationalamountdonated.Victorianresidentsdonatedanannualaverageamountof$339,whichrepresented0.37%oftheiraveragetaxableincome.
• Queensland Justover783,000Queenslandersdonated,totalling$189.9million,or12.9%ofthenationaltotal.Theaverageannualdonationwas$242or0.25%oftheiraveragetaxableincome.
• ACT ResidentsintheACTdonatedanaverageannualamountof$370,representing0.38%oftheiraveragetaxableincome.
• South Australia 37.5%ofSouthAustraliantaxpayersclaimeddonationstoDGRsin2004.
AppENDIx 3 moRE oN pERSoNAL GIVING IN AUSTRALIA
23DrawingfromCPNS’analysisof2004-05data(McGregor-Lowndes&Newton,2007).
NPo type N Min Max (‘000)
Mean SD 25th per Median (50th per)
75% per
Schools, universities, or colleges
1,091 0.12 10 177.54 539.37 20.00 50.00 150.00
Sporting clubs 813 0.53 2.5 78.87 175.47 20.00 30.00 80.00
Recreational or hobby groups
194 0.02 1 78.29 124.08 20.00 30.00 92.50
Religious or spiritual
1,698 0.30 50 552.80 1,580.37 50.00 200.00 500.00
Medical research
3,175 0.08 6 85.48 210.25 20.00 40.00 100.00
other health 1,077 0.08 8 98.81 335.74 20.00 40.00 100.00
Community or welfare services
3,769 0.01 20 89.36 392.71 10.00 30.00 75.00
International aid and development
1,468 0.18 6 261.76 391.18 30.00 120.00 400.00
Australian emergency relief
1,942 0.01 20 57.03 469.77 10.00 20.00 50.00
Environmental or animal welfare groups
1,389 0.53 20 99.43 577.11 10.00 30.00 75.00
Arts or cultural 285 0.11 50 282.79 2,974.04 20.00 50.00 100.00
Political parties, unions, business or professional
371 1.41 2 137.99 223.39 20.00 50.00 175.00
other 27 10.00 3 330.30 617.64 50.00 100.00 200.00
TABLE 9 : TAX-DEDUCTIBLE DoNATIoN AS
A PERCENTAGE oF TAXABLE
INCoME BY STATE oF
RESIDENCE 2006
NSW Vic Qld SA WA Tas NT ACT
2.00%1.80%1.60%1.40%1.20%1.00%0.80%0.60%0.40%0.20%0.00%
Taxa
ble
In
co
me
State
��
GIVING BY GENDER
TheGivingAustraliahouseholdsurveyin2004-05showsthatmoreAustralianwomenthanmenmadeadonationintheyearpriortothesurvey(89.5%and84.1%).ABS’VoluntaryWorkSurvey(2007)dataagrees:asintheyear2000,Australianwomenin2006weresubstantiallymorelikelytogivedonations(81%)thanmen(73%).ThisdifferencefadeswhenexaminingATOdata,however:38.44%ofmales(2.24millionindividuals)and38.32%offemales(2.08million)claimedfortax-deductiblegiftsin2004-0524(whichmaybelinkedtoincomedifferences).GAqualitativefindingssuggestthatthoseonlowerincomes–agroupwithahigherproportionofwomen–arelesslikelytoclaimfortheirdonations(GivingAustralia,2005).BothGAandATOdataagreethatAustralianmengavemoreinrealtermsthanAustralianwomen.AccordingtoGAfindings,mengaveanaveragedonationof$477fortheyeartoJanuary2005whilewomengave,onaverage,only$377(whichislikelytoreflectincomedifferences).Taxdatashowsthatmalesclaimedatotalof$877millionindonations,females$595million,withaverageannualamountsof$392and$287,respectively.Thisisbalancedsomewhatbyahigherdonationbyfemalesasapercentageoftheirrespectivetaxableincomes,with0.37%forfemalescomparedto0.33%formales.
GIVING BY AGE
BothGivingAustraliaandABSfindingssuggestthatdonationspeaktwicefortheAustraliansgenerally:theyincreasefromyoungadulthood(18years)untilmiddleage(45to55)afterwhichgivingdeclinesuntilthetraditionalretirementage(65years)thenrisesagain.Whilethesehighsandlowsarenotextreme,donationlevelsgenerallypeakatmidlifeandinpostretirementyears.(GivingAustralia,2005)researchspotlightsthoseover65asmakingthelargestdonations,onaverageacrossallAustralians,andcontributingthelargestamountoverall,proportionaltotheirnumbers.
GIVING BY INDUSTRY CLASSIFICATIoN
ATOstatisticsindicatethatAustralia’s2.45millionindividualwageandsalaryearners(withnootherreportedbusinessincome)drivemuchofthegivinginAustralia.Thishugecohort,representing85.3%ofallindividualspayingtax,donatedatotal$4.64billionin2004-05.Yetthesewageandsalaryearnersclaimrelativelymodestgifts($182),comparedtotheaverageclaimedgiftof$341(whichmayreflectthedisinterestofsomewageearnerstoclaimdeductionsfortheirdonations).
24‘Donations’referstotax-deductibledonationstoDGRsanddonorstoindividualtaxpayersmakingsuchdonations.
AppENDIx 3
TABLE 10 : PERCENTAGE oF DoNATING
TAXPAYERS To ToTAL TAXPAYERS BY
STATE oF RESIDENCE IN 2004-05
TABLE 11: TAX-DEDUCTIBLE DoNATIoNS AS
A PERCENTAGE oF TAXABLE INCoME
FoR SoLE TRADER BUSINESS
TAXPAYERS ACRoSS INDUSTRY
TYPES (ANzSIC)
NSW Vic Qld SA WA Tas NT ACT
100%90%80%70%60%50%40%30%20%10%0%
Taxa
ble
In
co
me
State
1.00%
Taxa
ble
In
co
me
Industry
0.80%
0.60%
0.40%
0.20%
0.00%
Pri
mar
yP
rod
uctio
n
Min
ing
Man
ufac
turi
ng
Ele
ctri
city
,g
asa
ndw
ater
Sup
ply
Co
nstr
uctio
n
Who
lesa
leT
rad
e
Ret
ailT
rad
e
Acc
om
adat
ion,
Caf
és,
Res
taur
ants
Tran
spo
rta
ndS
tora
ge
Co
mm
unic
atio
n
Fina
nce
and
Insu
ranc
e
Pro
per
tya
ndB
usin
ess
Ser
vice
s
Ed
ucat
ion
Hea
ltha
ndC
om
mun
ity
Ser
vice
s
Cul
tura
land
Rec
reat
iona
lSer
vice
s
Per
sona
land
oth
erS
ervi
ces
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
Individualtaxpayerswhoreporteddirectincomefrominvestments(forexamplerentalincome,interestanddividends)donated$3.36billion,withanaveragedeductiblegiftof$401.Thestandoutgroupcomprisedtaxpayerswiththeirownbusinesses,particularlysoletradersinfinanceandinvestmentareas,andculturalandrecreationalservices,(McGregor-Lowndes&Newton,2007).Thisgroupincludesthosewhoderiveincomefrominvestmentsordistributionsfrompartnerships,trustsorotheractivitiesinwhichwheyare notengagedthemselves.25Suchindividualsaccountedforthehighesttotaldonationsand thehighestaveragedonationsofallAustraliantaxpayersin2004-05.However,notallindividualsregisteredassoletradersgaveathighlevels.Thoseinfiveindustriesgaveatnegligible levelsconstruction,mining,communication,retail,andpersonalandotherservices.Theaveragetaxpayerdonationintheseindustriesrangedfrom0.1%to0.3%oftheirtaxableincomes.
25TheseareindividualswhocompletedtheBusinessandProfessionalItemsSchedulecomprisingItemsP1toP19ofthe2005incometaxreturnandit
excludesthoseoperatingbusinessthroughpartnerships,trustsandcompanies.
AppENDIx 3
�8
TheGivingAustraliahouseholdsurveyshowsasignificantrelationshipexistsbetweenpersonalincomeandtheamountofmoneydonated,F(17,6171)=7.27,p<.0001.Thoseearning$104,000ormorep.a.donatedmorethaneveryotherincomegroup(including“can’tsay”and“refused”).Also,thoseearning$52,000–$77,999p.a.donatedmorethanthoseearning$10,400–$15,599.Thesefiguresareforactualdollarsdonatedanddoesnotconsiderpercentageofincomegiven.
AppENDIx 4 RELATIoNShIp BETWEEN pERSoNAL INcomE AND ToTAL DoNATIoNS IN AUSTRALIA
TABLE 12 : RELATIoNShIP BETWEEN PERSoNAL INCoME AND ToTAL DoNATIoNS IN AUSTRALIA
Source:GivingAustralia(2005)dataset
No of respondents
Average annual donation ($)
Std. Deviation Min donation Max donation
Annual Income
Nil 261 309.69 633.294 0 4400
$1 – $2,079 39 266.00 430.258 0 2053
$2,080 – $4,159 61 179.55 340.203 0 2000
$4,160 – $6,239 85 264.81 404.304 0 1800
$6,240 – $8,319 111 290.91 536.698 0 3160
$8,320 – $10,399 218 240.82 513.563 0 3900
$10,400 – $15,599 557 247.91 716.734 0 14000
$15,600 – $20,799 368 320.81 576.151 0 4950
$20,800 – $25,999 409 383.61 678.823 0 6200
$26,000 – $31,199 373 329.48 612.233 0 5120
$31,200 – $36,399 297 318.97 511.460 0 3900
$36,400 – $41,599 324 411.21 840.125 0 7200
$41,600 – $51,999 587 568.61 2375.439 0 52570
$52,000 – $77,999 711 625.22 1368.968 0 18650
$78,000 – $103,999 271 622.44 1600.572 0 20000
$104,000 or More 220 1430.88 6458.933 0 92000
Can’t Say 545 352.59 727.878 0 7370
Refused 772 359.29 723.447 0 8190
Total 6209 435.61 1642.402 0 92000
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
AppENDIx 4 RELATIoNShIp BETWEEN pERSoNAL INcomE AND ToTAL DoNATIoNS IN AUSTRALIA
DrawingfromtheGivingAustraliadataset,anaggregatedprofiledrawnforthe220respondentswithannualgrossincomesof$104,000ormoreisasfollows:
• Slightlymoremalesthanfemales(53.1%comparedto46.9%)
• LivingacrossallstatesbutmainlyNSW(39%)andVictoria(28%)
• 77.5%residinginmetropolitanareas
• OverwhelminglyspeakingEnglishathome(97%)
• Mostareeither‘babyboomers’agedbetween45and59years(42%)or‘GenXers’aged30to44years(36%)
• Thevastmajorityareworking(43werenot,beingretiredorengagedinhomeduties)
• Fouroutoffivehavearelativelyhighlevelofeducation(21%haveyear12orless)
• Themajorityhavesomereligiousbeliefs(61%)
• ThegreatmajoritywereborninAustralia(71%)
• AlmostallspokeEnglishasthemainlanguageintheirhome(96.7%)
• Themajorityarefamilieswithchildrenathome(53.7%)and:
AppENDIx 5 pRoFILE oF AFFLUENT RESpoNDENTS IN ThE GIVING AUSTRALIA hoUSEhoLDER SURVEY
*samplesizeof170forthisquestion
Number of Children in Primary School
0 62.6%
1 22.2%
2 12.9%
3+ 2.3%
No of respondents
Average annual donation ($)
Std. Deviation Min donation Max donation
Annual Income
Nil 261 309.69 633.294 0 4400
$1 – $2,079 39 266.00 430.258 0 2053
$2,080 – $4,159 61 179.55 340.203 0 2000
$4,160 – $6,239 85 264.81 404.304 0 1800
$6,240 – $8,319 111 290.91 536.698 0 3160
$8,320 – $10,399 218 240.82 513.563 0 3900
$10,400 – $15,599 557 247.91 716.734 0 14000
$15,600 – $20,799 368 320.81 576.151 0 4950
$20,800 – $25,999 409 383.61 678.823 0 6200
$26,000 – $31,199 373 329.48 612.233 0 5120
$31,200 – $36,399 297 318.97 511.460 0 3900
$36,400 – $41,599 324 411.21 840.125 0 7200
$41,600 – $51,999 587 568.61 2375.439 0 52570
$52,000 – $77,999 711 625.22 1368.968 0 18650
$78,000 – $103,999 271 622.44 1600.572 0 20000
$104,000 or More 220 1430.88 6458.933 0 92000
Can’t Say 545 352.59 727.878 0 7370
Refused 772 359.29 723.447 0 8190
Total 6209 435.61 1642.402 0 92000
*samplesizeof171forthisquestion
Number of Children in household
0 1.2%
1 27.1%
2 45.3%
3+ 26.5%
*samplesize146forthisquestion
Number of Children in Secodary School
0 56.8%
1 22.6%
2 17.1%
3+ 3.4%
�0
ThefollowingisanexcerptfromMcGregor-LowndesandNewton(2007pp.5-6;18-19):
Background On26March1999,theAustralianPrimeMinisterannouncedvariousincometaxmeasurestoencouragegreaterphilanthropyinAustralia.Measurestofacilitateindividualgivingincluded:
• establishmentofprescribedprivatefunds(PPFs);
• giftsofpropertyover$5,000;
• 5-yearaveragingofdonations;
• deductionsforworkplacegiving;
• conservationcovenants;
• capitalgainstaxexemptionundertheCulturalGiftsProgram;
• deductionsforfundraisingdinnersandsimilarevents;and
• healthpromotioncharities.
a. Establishment of Prescribed Private Funds (PPFs)
OnemeasureinvolvedtheestablishmentofthePPFswhicharefundsestablishedbywillortrustinstrumentwith:
• DGRstatus(thatis,giftstoitaredeductibletothedonor);
• normally,incometaxexemptstatus(thatis,itsincomeisexemptfromincometax);
and
• theabilitytoattractavarietyofotherCommonwealth,StateandTerritorytaxanddutyconcessions.
ThereisnoneedforgiftstoaPPFtobesoughtandreceivedfromthepublicandaPPFcanbecontrolledbyanindividual,familyorcorporategroup.Thisisaremovalofamajorbarriertophilanthropy,asitwasoftendifficulttosatisfytheprevioustestof“publicdonations”beforeafundwouldbeaDGR.
b. Gifts of Property over $5,000
From1July2001legislationwaspassedenablingdonorstoclaimataxdeductionforgiftsofpropertyheldbythedonorwhichwasvaluedatmorethan$5,000bytheCommissionerofTaxation.Thisdeductionwasbackdatedtoapplyfrom1July1999andextendstopropertydonatedtoapprovedenvironmentalandheritageorganisations.Previously,thedeductionwasonlyavailablewherethepropertywaspurchasedwithin12monthsofbeingdonated.
c. Averaging of Donations over Five Years
Donorsnowhavetheabilitytospreadthefollowingtypesofgiftsoveraperiodofupto5incomeyears:
• cashdonationsinexcessof$5,000(whichtookeffectfrom1July2003);
• propertyvaluedbytheCommissionerinexcessof$5,000(whichtookeffectfrom1July1999);and
• culturalgiftsmadethroughtheCulturalGiftsProgram(whichtookeffectfrom1July1999).
d. Deductions for Workplace Giving
Workplacegivingprograms(whichtookeffectfrom1July2002)aredesignedtogiveemployeestheopportunitytomakeregulardonationstoaDGRthroughregularpayrolldeductions.Employeesreceiveimmediatetaxbenefits,asemployersareabletoreducetheamountofPAYGwithholdingtaxfromthatemployee’spay.
e. Conservation Covenants
Certaintypesofconservationcovenantsoverlandenteredintoonorafter1July2002willbeeligibleforanincometaxdeductionandconcessionalcapitalgainstaxtreatment.
f. The Cultural Gifts Program – Capital Gains Tax Exemption
From1July1999,bequestsofpropertyandgiftsofculturalpropertymadethroughtheCulturalGiftsProgramarenowexemptfromcapitalgainstax,thusmaximisingtheappreciatedvalueofthesegiftsfortaxdeductionpurposes.
AppENDIx 6 NEW phILANThRopIc TAxATIoN INITIATIVES BY ThE AUSTRALIAN GoVERNmENT
��G I V I N G B Y A U S T R A L I A’ S A F F L U E N T
AppENDIx 6 NEW phILANThRopIc TAxATIoN INITIATIVES BY ThE AUSTRALIAN GoVERNmENT
ABS.(2006a). Household income and income
distribution, Australia 2005-2006 (cat
no 6523.0).Canberra.Accessedfromhttp://www.abs.gov.au/ausstats/abs@.nsf/1020492cfcd63696ca2568a1002477b5/f4bb49c975c64c9ca256d6b00827adb!OpenDocument.
ABS.(2006b).Voluntary Work Survey,Australia(ABScat.no.4441.0)Canberra.Accessedfrom<http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/C52862862C082577CA25731000198615/$File/44410_2006.pdf>.
AllianceRoundtable.(2004).WhatWouldItReallyTaketoGetGlobalPhilanthropyGoing?Alliance, 9(4):25-34,December.
Altman,D.(2005).WithInterest:GivingisAsia’snewclassact. International Herald Tribune,21October.
AsiaPacificCentreforPhilanthropyandSocialInvestment.(2004).How the Wealthy Give:
Comparisons between Australian and
Comparable Countries.Melbourne:SwinburneUniversityofTechnology.
AsiaPacificCentreforPhilanthropyandSocialInvestment.(2005).Encouraging Wealthy
Australians to be more Philanthropic: A
Report for the Petre Foundation.Melbourne:SwinburneUniversityofTechnology.
AsiaPacificPhilanthropyConsortium.(2001).Strengthening Philanthropy in the Asia Pacific:
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This report has been sponsored by the Petre Foundation.
The authors of this report are Senior Research Fellows at CPNS.
The Australian Centre for Philanthropy and Nonprofit Studies (CPNS) is a specialist research and teaching unit at the Queensland University of Technology
in Brisbane, Australia. Its aim is to promote the understanding of philanthropy and nonprofit issues by drawing upon academics from many disciplines and
working closely with nonprofits, practitioners, intermediaries and government departments. CPNS’s mission is to bring to the community the benefits of
teaching, research, technology and service relevant to philanthropic and nonprofit communities. Contact CPNS for a full list of publications.
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