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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 [email protected] 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: [email protected]

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

vi

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


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


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


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.



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)


�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

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7

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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


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


% 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



��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

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re

Income Band

% o

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ng

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rs t

o

Tota

l Ta

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rs


�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

$)


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




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.


�2.00%


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


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.



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


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).



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;


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


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.



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


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


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


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

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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


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

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• 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).



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



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.



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


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


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.



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



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/



(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



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.

SUmmARY oF FINDINGS AND REcommENDATIoNS6


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


‘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


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


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)


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


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


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


AppENDIx 6 NEW phILANThRopIc TAxATIoN INITIATIVES BY ThE AUSTRALIAN GoVERNmENT

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REFERENcES

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: [email protected]

http://cpns.bus.qut.edu.au

CRICOS code: 00213J

© Queensland University of Technology 2008

Good times and PHILANTHROPY

Queensland University of TechnologyThe Australian Centre for Philanthropy and Nonprofit Studies

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March 2008

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The Australian Centre for Philanthropy and Nonprofit Studies Queensland University of Technology

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