Simon Mumme says that affluent Australians have much to learn from their North American and European counterparts about giving, according to a new report.
Australians riding high on recent economic boom years are not well attuned to the practice of philanthropy, a report from specialist researchers has found.
But as domestic philanthropists emerge, opportunities exist for financial advisers to help them achieve these social, rather than economic, goals. The Financial Planning Association recently published on its website a guide to philanthropy, which includes product knowledge and “soft skills” training, and can provide continuing professional development points.
A report by the Centre for Philanthropy and Nonprofit Studies (CPNS) at the Queensland University of Technology, entitled Good Times and Philanthropy: Giving by Australia’s Affluent, finds that wealthy Australians are donating less than their counterparts in the US, Canada and the UK.
Daniel Petre, head of the Petre Foundation, a philanthropic vehicle that commissioned the report, says wealthy Americans donate much more of their incomes to charity than wealthy Australians do.
The report, authored by Dr Kym Madden and Dr Wendy Scaife from the CPNS, finds that this segment of Australia’s population is giving more than they did a decade ago, and a higher proportion of this population is giving, but still “a sizeable proportion of those in the wealthy cohort give little, if anything, to charitable causes”.
“Whether the richest of the population gives commensurate with their wealth is a question worth asking,” the report says.
The report defines an affluent individual as one receiving between $100,000 and $500,000 in annual taxable income, or owning $1.2 million in assets outside the family home. However, since many wealthy people store assets in tax-efficient, private vehicles such as family trusts, the true number of affluent people in Australia is not known.
Good Times finds that from 1994-95 to 2005-06, household income for the affluent rose, in real terms, by 36 per cent, while for middle and low wage earners, incomes climbed by 31 per cent.
Approximately six out of 10 people from the wealthy demographic make, and claim tax deductions for, donations to charities.
These donations, measured as the tax-deductible donations expressed as a percentage of taxable income, are marginally higher than those made by Australians overall: the wealthy give 0.45 per cent of annual income while the rest of Australia donates 0.33 per cent.
And while the mean household income for the affluent has grown by 36 per cent, their donations have risen from 0.36 per cent to 0.45 per cent.
“The available data indicates that the rising level of giving by the affluent segment overall has not kept pace with wealth trends,” the authors state.
“Indeed, the gap is widening.”
Speaking at the launch of the report in March, Petre said affluent Australians were capable of donating 20 per cent of their annual income without inhibiting their lifestyles.
If Australia’s 20 wealthiest families set aside 20 per cent of their wealth to a private foundation, it could form an $11.7 billion pool, generating an income of $560 million each year, Petre said.
Extending this to the BRW Rich 200, a $25 billion pool would be formed, yielding $1.3 billion each year.
Wealthy Australians are in a “compelling position to make a substantial social impact”, he concluded.
Petre himself has allocated more than 20 per cent of his wealth to his eponymous foundation, a spokesperson says.
Among the methods of engaging the affluent in philanthropy listed by Madden and Scaife is the training and support of professional advisers, such as financial planners, accountants and estate planning lawyers, about how to select and use appropriate philanthropic vehicles to meet clients’ objectives.
These “giving intermediaries” can “breed more philanthropy, especially among the high net-worth”.
But limited knowledge of philanthropic instruments prevents many Australian planners from offering this dimension of advice to clients.
However, awareness of advice on strategic giving is slowly growing among financial advisers. Ongoing surveys by the CPNS about planners’ willingness to advise on philanthropy is increasing. From a survey of 115 planners, 14 per cent in 2002 said they advised high net-worth clients on philanthropy. In 2005, 44 per cent said they did.
Tim Hardy, an adviser with Enrich Australia, a philanthropy consulting firm to the financial and charity sectors, says there is increasing demand that planners receive an accredited training in philanthropy. There is also much scope for new product development in Australia.
Madden says that philanthropy is a largely unexplored area in Australia.
“New philanthropists want to use their wealth and acumen,” she says.
“They are testing the waters.”
