DONATE: “It was a mixed bag” – a detailed analysis of giving in the 2019/20 financial year and what it means for fundraising


A QUT report, using ATO tax return data, shows a picture of Australian giving that is both fragile and full of potential.

DONATE: “It was a mixed bag” – a detailed analysis of giving in the 2019/20 financial year and what it means for fundraising

2019/20 financial year (FY) giving: marginally more people gave than in FY2018/19, but they gave less. This is according to the Queensland University of Technology (QUT) Australian Centre for Philanthropy and Nonprofit Studies (ACPNS)’s An examination of tax-deductible donations made by Australian taxpayers in 2019-20 report, published in September 2022 and authored by Myles Mcgregor-Lowndes, Marie Blaczun and Alexandra Williamson.

What QUT’s research does is reveal giving trends. And what do these trends show you? The pockets of opportunity. 

The report tells us that, according to Australian Tax Office (ATO) data, the total amount donated and claimed as tax-deductible donations in the 2019/20 financial year was $3.85 billion, compared to $3.93 billion in the previous income year.

Going down…

This decline represents a decrease of 2.11% ($83 million). On an individual basis, the average tax-deductible donation made to DGRs (deductible gift recipients) and claimed by Australian taxpayers in FY2019/20 was $886.75, compared to 2018/19’s $933.20, a decrease of 4.98%.

What is notable about this decline is that it occurred on the back of some of our nation’s – and world’s – greatest crises in recent history. The summer of 2019/20 brought with it some of Australia’s most devastating bushfires on record, destroying 46,030,000 acres of land and killing 34 people and more than 1 billion animals. At the same time, COVID-19 reached Australian shores in January 2020. Globally, an estimated 3,000,000 people died from the virus during that year alone (World Health Organisation (WHO), 2022).

Worldwide figures for generosity, income and the economy during this period are erratic: an estimated $500 million was donated globally to the bushfires, whilst the value of the ASX 200 (the largest listed companies on the Australian Securities Exchange) went down, unemployment went up, and household net savings more than doubled to $121.8 billion from $43.7 billion in FY2019/20 (Australian Bureau of Statistics (ABS), 2020).

Overseas, giving was on the up. Individuals, bequests, foundations and corporations in the US gave a record $US471.44 billion to charity in the 2020 calendar year. In the UK,  £11.3 billion was given in 2020, compared to  £10.6 billion for 2019. However, like Australia, fewer people (as a percentage of the tax-paying population) in the UK are giving, with those who do give, giving more. In the US, giving by individuals in 2020 was less than 70% of total giving – a low that has only occurred once before.

The individual giving pool is shrinking, meaning we must do everything we can to retain our donors and grow their generosity (and get pretty damn innovative when it comes to acquisition).

So, some worrying trends. Australian giving went down, even though there were plenty of factors and trends to suggest it should have gone up. And, as witnessed elsewhere in the developed world, the individual giving pool is shrinking (in proportion to population), meaning we must do everything we can to retain our donors and grow their generosity (and get pretty damn innovative when it comes to acquisition).

But it’s not all doom and gloom. What QUT’s research does – in meticulous detail – is reveal giving trends. And what do these trends show you? The pockets of opportunity. By truly grasping who is (and is not) giving, you can adjust your strategy and efforts to go where the money is, and you can understand where your organisation sits in terms of likelihood to receive donations based on your cause, geographical location, donor audience and fundraising programs.

Now settle in, this is a long read, but by the end we promise you will have a clearer picture of the giving landscape across Australia and what it means for your nonprofit.

KEY FIGURES (FY2019/20 vs FY2018/19):
  • Total giving: $3.85 billion, down by $83 million.
  • Average gift: $886.75, down from $933.20.

A top-level look at the FY2019/20 numbers

What taxpayers claimed

In FY2019/20, individual taxpayers claimed $38.12 billion in tax deductions. Of this, 10.09% were tax-deductible gifts, compared to 56.76% for work-related expenses and 6.04% for the cost of managing tax affairs. To us, that says there’s a whole lot more education to be delivered on the benefits of giving – not least the tax benefit – and that task sits with us as fundraisers, with wealth advisors and tax accountants, and with peak bodies such as Philanthropy Australia. But that’s a whole other article!

The number of donors and donations

4.34 million Australian taxpayers (or 29% of the Australian taxpaying population) made and claimed tax-deductible donations in FY2019/20. This increased fractionally from the previous year when the number was 28.69%. It was the first time this figure had increased since FY2011/12, but the growth is modest and we should not assume an upwards trend just yet.

The chart below displays the total amount claimed as tax-deductible donations since FY1979/80. While there have been some decreases (most notably after the Global Financial Crisis (GFC) in 2007/08), the overall trend is for the total amount donated to rise each year. FY2019/20 is the first year since FY2015/16 where the total amount donated has fallen.

Percentage of income given

On average, those individual taxpayers who made tax-deductible donations to DGRs donated 0.40% of their taxable income in FY2019/20. This is a drop from 0.43% recorded in both FY2017/18 and FY2018/19.

KEY FIGURES (FY2019/20):
  • Total amount claimed by individual taxpayers in personal tax deductions: $38.12 billion.
  • Percentage of that figure that were tax-deductible gifts: 10.09%.
  • Number of taxpayers who made and claimed a donation: 34 million.
  • Average percentage of taxable income donated by taxpayers who made a gift: 0.40%.

Tax deductible gifts by…

Gender:

The numbers in the report back up what we already know – women donate more frequently but men donate larger amounts (and it is very probable that women would donate the same amount, or more, if they received equal pay).

In FY2019/20, 2.26 million (30.73%) female taxpayers made and claimed tax-deductible donations totalling $1.67 billion (43.33% of the total donation amount). The total amount donated decreased 6.23% from the previous year (from $1.78 billion), while the percentage of taxpayers donating rose from 30.06%. The average tax-deductible donation for female taxpayers dropped 10.36% to $738.93, compared to $824.32 in FY2018/19.

The message to nonprofits? Take female donors very seriously. The message to government and employers? If you pay women fairly and support resources such as childcare and paid parental leave, they will pay it forward in spades.

2.08 million (27.33%) male taxpayers made and claimed tax-deductible donations to DGRs totalling $2.18 billion (56.67% of the total donation amount). These figures are very similar to the previous year where 27.37% of male taxpayers claimed $2.15 billion in donations. Their average donation remained steady at $1046.86, compared with $1047.45 in FY2018/19.

On average, male taxpayers donated 0.38% of their taxable income, compared to 0.43% for women, and men’s giving is on a downwards trend, whereas women’s giving went up in FY2019/20.

The message to nonprofits? Take female donors very seriously. The message to government and employers? If you pay women fairly and support resources such as childcare and paid parental leave, they will pay it forward in spades.

Age:

The report shows that the average tax-deductible donation claimed in FY2019/20 by both male and female taxpayers generally increased with age (as demonstrated in the chart below). The dip shown at the 60 – 64-year life stage coincides with retirement age.

Claimants aged 55 – 59 years donated the largest percentage of the national total of tax-deductible, claimed donations (22.37%). They also had the largest percentage of donating taxpayers (35.56%). Claimants in this age group donated an average $1941.50 compared to the national average of $886.75. This is a decrease of 10.33% from $2165.08 in FY2018/19 (although the figure was up 29.79% from $1669.09 in FY2017/18).

Donors aged 75 and over gave the second largest percentage of the national total at 15.78%. Their average gift ($4188.96) was well above the average for all age groups ($886.75). The total value of gifts from this age group was $606.91 million.

The chart below shows that the number of total taxpayers is highest in the 18 – 24-years age bracket. Apart from those under 18, this age bracket has the lowest percentage of donating taxpayers with only 15.88% donating compared to the national average of 29%. This likely speaks to both level of earnings at that life stage and low-level awareness of opportunities to donate.

Those aged 35 – 39 years had the highest number of donating taxpayers, but those aged 55 – 59 years had the highest percentage of donors, compared to non-donors (35.56%).

State and Territory:

In all states and territories, the most common gift value was between $251 and $1000, contributing between 22.82% (Victoria) and 32.22% (Australian Capital Territory) of the total number of donations claimed. A more detailed breakdown of value and number of gifts by state and territory can be found in the full report.

New South Wales (Australia’s most populous state) gave most overall, with 1.39 million taxpayers claiming tax-deductible donations to DGRs totalling $1.3 billion; 33.91% of the total amount donated nationally. Victoria was next with donations totalling $936 million (24.34% of the national total). Western Australians claimed tax-deductible donations totalling $772 million.

But it was WA taxpayers who claimed the largest average tax-deductible donation of $1814.50 compared to the national average of $886.75. They also donated the largest percentage of their taxable income: 0.71%, although this was a decline on 0.89% in FY2018/19. Taxpayers in New South Wales made an average gift of $937.13 (median: $109), followed by taxpayers in the Australian Capital Territory with an average gift of $865.67 (median: $198). The median donation for all other states and territories was $100, except for Queensland ($80) and Tasmania ($70).

35.98% of total taxpayers in the ACT claimed tax-deductible donations in FY2019/20, the highest of all states and territories for a second year. Queensland was the lowest at 26.22%. The national average was 29% (a slight increase from FY2018/19 when 28.69% of taxpayers claimed a tax-deductible gift).

When it came to WA, one postcode in particular skewed the data. 40.61% of total donations in Western Australia came from the postal code WA 6011 (the highly affluent area of Cottesloe, Peppermint Grove). When data for this postcode is removed, the average donation and donations as a percentage of taxable income for WA come down significantly and are lower than the national average.

Continuing with this (skewed) theme, 75.98% of the total amount donated in WA came from just 558 taxpayers who claimed more than $25,000 each in donations. These gifts represented just 0.13% of the number of donations in the state.

Postcode:

The aforementioned Cottesloe, Peppermint Grove was the residential postcode with the highest total of tax-deductible gifts for FY2019/20, with $529,668,459 in claimed donations. This is a decrease of 19.94% from FY2018/19 when the area claimed $661,564,730 in donations. Not surprisingly, the highest average gift claimed also came from this wealthy postcode where gifting taxpayers claimed on average $266,298.87, although this was down 23.56% on FY2018/19.

Next, is Mosman, Spit Junction in NSW with donations totalling $56,871,840 ($472,796,619 below Cottesloe, Peppermint Grove). The second highest average gift came from taxpayers in the Victorian suburb of Portsea who claimed $44,219 on average.

For the fourth year in a row, the postcode with the highest percentage of taxpayers claiming a gift deduction was Joondalup DC in WA, with 68.89% of taxpayers claiming a gift.

A database of all deductible gifts claimed by individuals between 2005 and 2020, fully searchable by postcode, can be found on the ACPNS website.

Income band:

As previously mentioned (and returning to the theme of declining giving), the average tax-deductible gift in FY2019/20 for all taxpayers was $886.75, compared to $933.20 in the previous year.

The national average for taxable income was $63,882, and the average tax-deductible donation made by taxpayers in the $60,000 – $70,000 income band was $431.51, which was 0.25% of their taxable income. 36.87% of taxpayers in this band claimed a tax-deductible gift.

Median taxable income was $48,381, with 31.48% of taxpayers in the $45,000 – $50,000 income band claiming an average $375.45 in tax-deductible gifts, also representing 0.25% of their taxable income.

There was a smooth upwards trend from lower to higher income bands; with 6.22% of taxpayers in the income band less than or equal to $6000 claiming a gift, compared to 53.61% for those with over $1 million in taxable income.

Amongst the 7943 individual taxpayers earning over $1 million, the average tax-deductible donation was $119,995.31. This decreased from $138,612 in FY2018/19. Over the past 10 years, this figure has fluctuated from a low of $40,606 in FY2010/11 to a high of $138,611 in FY2018/19.

In FY2019/20, taxpayers earning over $1 million donated 2.69% of their taxable income to DGRs, compared to the national average of 0.40%. Their combined gifts represented 24.78% of the total amount donated and claimed in FY2019/20.

In sobering news, the chart below shows the percentage change over the decade, from FY2009/10 to FY2019/20, in the ratio of donating taxpayers to total taxpayers. In every income bracket, the percentage claiming a tax-deductible donation has decreased significantly over the past 10 years, with the gap narrowing as income increases.

Occupation:

Consistent with previous years, the highest average gift deductions ($6430.85) were claimed by Chief Executives and Managing Directors. This decreased by 20.32% from the previous year, when the average gift claimed was $8071.21. The total pool of donations for this group fell from $399,823,586 in FY2018/19 to $339,407,260 in FY2019/20.

The table below shows the top ten occupations by the total amount claimed.

For the tenth year in a row, the occupation with the highest percentage of donating taxpayers was the police with 72.43% of individuals claiming a tax-deductible donation. This was followed by school principals (57.96%). We cannot find any research to suggest why this is the case, but one can’t help but wonder if those who most closely witness society’s highest highs and lowest lows have an inherent understanding of why giving back matters.

It is interesting to look at giving by occupation alongside donations made by sole traders (self-employed people who own and run their business as an individual). Whilst the amount of total donations sole traders gave was significantly higher than most employee-based gifts (see Chart 46 below and compare it with Table 21 above), none of the sole trader categories came close when it came to the percentage of taxpayers making a charitable gift: the sole trader industry category with the highest percentage of taxpayers claiming a gift were those working in ‘Professional, Scientific and Technical Services’ with 30.24% of individual taxpayers donating, compared to the police at 72.43% . What does this tell us? That there is capacity to give larger gifts when one owns their own (successful) business, but that those on the employee side are still more likely to give. This speaks to the opportunity both to get in the ear of the self-employed (via business partnerships and/or wealth advisors?) and to consider your nonprofit’s workplace engagement strategies.

KEY FIGURES (FY2019/20):
  • Number of female taxpayers who made and claimed a tax-deductible donation: 26 million. That number as a percentage of female taxpayers: 30.73%.
  • Number of male taxpayers who made and claimed a tax-deductible donation: 2.08 million. That number as a percentage of male taxpayers: 27.33%.
  • Women accounted for 33% of all tax-deductible donations made and claimed, and men accounted for 56.67%.
  • Average percentage of taxable income donated: Women – 43%, Men – 0.38%.
  • Age group who donated the largest percentage of the national total of tax-deductible donations and had the largest percentage of donating taxpayers: 55 – 59-year-olds.
  • Most common gift value across all states and territories: between $251 and $1000.
  • State/territory that gave most overall: NSW at $1.30 billion.
  • Largest average donation by state/territory: WA with $1814.50 (although this is heavily skewed by giving in the affluent area of Cottesloe, Peppermint Grove).
  • State/territory with largest percentage of donating taxpayers: The ACT with 35.98%.
  • Average taxable income, nationwide: $63,882.
  • Between FY2009/10 and FY2019/20, the percentage claiming a tax-deductible donation has decreased in every income bracket.
  • Percentage of taxable income donated by taxpayers earning over $1 million: 69%.
  • Percentage of nationwide donations given by those earning over $1 million: 78%.
  • Occupation with highest average gift deductions: chief executives and managing directors at $6430.85.
  • Occupation group with highest percentage of donating taxpayers: the police with 72.43%.

So that’s a snapshot of who gave, how much they gave and to what extent their cohort/s influenced giving in FY2019/20. Up next, the report tell us about the factors that influence generosity.

What (tax-related) factors drive giving?

The power of PAFs

A Private Ancillary Fund (PAF) is a type of charitable trust – for which gifts are generally tax-deductible to the donor – designed to provide individuals, families or associations with an investment structure for philanthropic purposes.

PAFs cannot accept gifts from the public. In each financial year, a PAF must distribute to DGRs an amount equal to at least 5% of the market value of its net assets as at the end of the previous financial year. The sole purpose of a PAF must be to provide money, property or benefits to funds, authorities or institutions, which are DGRs.

This table shows the number of PAFs, donations received, distributions made and closing values since 2000.

There were 96 new PAFs approved in FY2019/20, bringing the total number of PAFs to 1,819. This was a 5.08% increase in the total number of PAFs from the previous financial year, but the lowest number of new annual PAFs since FY2012/13.

In FY2019/20, $805.79 million was donated to PAFs (compared to $546.39 million in FY2018/19), with $520.74 million distributed to DGRs (compared to $564.58 million in FY2018/19). So, more money taken in, less money given out, but remember that distribution is based on 5% of the PAF’s market value.

KEY FIGURES (FY2019/20):
  • Amount distributed to DGRs by PAFs: $520.74 million.
  • Value of PAFs: $7,636.14 million.
  • Number of PAFs: 1,819.
Public Ancillary Funds

Public Ancillary Funds (commonly known as PuAFs, but referred to as PubAFs in the report) are a common structure for fundraising and community foundations. A Public Ancillary Fund is distinct from a Private Ancillary Fund (PAF) in that it must establish a public fund and raise funds from the public.

The table below shows figures for PuAFs from FY2011/12 through to FY2019/20. There were 45 new PuAFs approved in FY2019/20 (with several PubAFs closing), bringing the total number to 1,373. Donations received by PuAFs in FY2019/20 were up 54.88% from FY2018/19, and $349.80 million was distributed to DGRs. Chart 9, below, shows a decline in PuAF giving, despite their assets increasing to $3.95 billion, the highest amount since reporting began in FY2011/12.

KEY FIGURES (FY2019/20):
  • Amount distributed to DGRs by PuAFs: $349.80 million.
  • Number of PuAFs: 1,373.
Workplace giving:

The number of people employed by organisations that have workplace giving programs decreased by 2.04% to 4,144,719 in FY2019/20. However, the percentage of employees using workplace giving increased to 5.1%. This is the highest figure recorded since FY2011/12.

The total amount given using workplace giving was $53million in FY2019/20, an increase of 23.26% from the previous year. The average donation through workplace giving was $248 (up from $215 in FY2018/19).

The chart below shows the percentage of individuals employed who have made a donation through their organisations’ workplace giving program and the average donation made in each financial year. While the average donation has slowly increased, the participation rate has remained within a tight range from a low of 4.65% in FY2011/12 to a high of 5.1% in FY2019/20. The figures show great promise within the workplace giving space but beg the question of how more people can be inspired to give through their payroll.

KEY FIGURES (FY2019/20):
  • Percentage and number of employees using workplace giving: 5.1% or 211,541.
  • Total amount donated through workplace giving: $53 million.
  • Average workplace giving donation: $248.
Other tax-related giving incentives

The report provides an extensive list of other tax-related incentives that exist to encourage giving that benefits charitable initiatives such as educational scholarships, community sheds, and the support of pastoral care in secondary schools. To see the full list, refer to pages 16 – 25 in the report.

The overall picture

“Based on the data… our analysis reveals that Australia’s giving in [FY]2019/20 was a mixed bag,” concludes the report.

“The overall amount donated has decreased to $3.85 billion. However, the percentage of taxpayers donating has reversed the downward trend since [FY]2010/11, rising slightly to 29%, but at its second lowest percentage ever recorded.

“The percentage of income given dropped to 0.40% [from 0.43% in [FY]2018/19]. In [FY]2019/20, the average donation was $886.75 [$933.20 in [FY]2018/19].”

In summary, we gave less than in FY2018/19, but more of us (4,337,321 donors) gave (compared to FY2018/19, but that number is still far behind the previous peak of 4,928,310 in FY2010/11). Both the number of donors, and the value of their gifts, teeter in a vulnerable state. So, what can we take from this report into our fundraising?

Key takeaways

  • As a percentage of their gender, women donate more than men. They also donate more frequently, but men donate more in aggregate. Women need to be presented with more opportunity to give – and this starts with equal pay, better parental provisions and a place at the philanthropic table.
  • When it came to age group, 55 – 59-year-olds donated the largest percentage of donations, followed by donors aged 75 and above. The latter group had an average gift ($4188.96) well above the overall average for all age groups ($886.75). If you need proof that your older donors and gift-in-wills programs are worth investing in, this is it.
  • That said, there is potential across all age groups and you should invest in cultivating your donors as they move through life. Whilst older donors give more, the number of total taxpayers is highest in the 18 – 24-years age bracket (although their earnings will be low) and 35 – 39-year-olds had the highest number of donating taxpayers (but those aged 55 – 59 years had the highest percentage of donors compared to non-donors).
  • In all states and territories, the most common gift value was between $251 and $1000. Think about this alongside giving history when you consider dollar handles.
  • Western Australian taxpayers claimed the largest average tax-deductible donation of $1814.50 compared to the national average of $886.75. The highest percentage of donating taxpayers was in the ACT (35.98% of taxpayers). It comes as no surprise that the report’s numbers relating to giving by state and postcode show that the largest gifts come from the most affluent areas; the challenge is incentivising these wealthy taxpayers – including those earning over $1 million (discussed below) – to give more. A good place to start is to utilise quality data analytics to help you understand where the tranches of wealth in the areas you operate exist. Read this article to learn more.
  • Taxpayers earning over $1 million donated 2.69% of their taxable income to DGRs, compared to the national average of 0.40%. Their combined gifts represented 24.78% of the total amount donated and claimed in 2019/20. So the rich contribute a lot, but imagine if they contributed more? Read this article to learn how a commitment by the 200 wealthiest Australians to donate 1% of their wealth to charity would generate an extra $5.55 billion for the nonprofit sector.
  • In every income bracket, the percentage of taxpayers claiming a tax-deductible donation has decreased significantly over the past 10 years. It’s all about retention, retention, retention!
  • PAF giving is growing (albeit at a slower rate than previously) – click here to learn more about securing PAF funding.
  • PuAF giving went down: a reminder to avoid an over-reliance on funding from public trusts & foundations who receive applications from an ever-growing number of nonprofits.

 

About the research

The study analysed published Australian Taxation Office (ATO) data for the 2019/20 financial year. Data for the 2020/21 financial year and beyond is not yet available.

Notes:

  1. This study is based only on the extent of charitable giving by individuals. The data does not include corporate and trust taxpayers.
  2. Not all charitable organisations qualify for DGR status, including many religious or educational institutions, and donations to these organisations are not deductible gifts.
  3. Expenses such as raffles, sponsorships, fundraising purchases (including merchandise or tickets to special events) or volunteering are generally not deductible as ‘gifts’.
  4. We must assume that not all tax-deductible gifts made in Australia each year are claimed and the figures may therefore be underreported.
  5. The ATO data is different to the overall charity revenue figure reported by the Australian Charities and Not-for-profits Commission (ACNC), which is significantly higher due to other sources of revenue such as fee-for-service and government funding.

Numbers of DGRs in Australia:

 

To read the full ‘An examination of tax-deductible donations made by Australian taxpayers in 2019-20′ report, click here.

Previous year’s working papers, and a detailed breakdown of tax-deductible donations by various cohorts, are available here.

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