Research & Information

Strategies for Increasing High Net Worth and Ultra High Net Worth Giving - Final Report

17 February 2011

Prepared for the Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs

Prepared on behalf of Philanthropy Australia by Effective Philanthropy

In 2010, Philanthropy Australia was engaged by the Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to explore strategies to encourage greater levels of giving among Australia's high and ultra high net worth individuals (HNW and UHNW). The research was undertaken by Effective Philanthropy.

An initial aim of the project was to conduct a feasibility study into the establishment of a national foundation as a mechanism to strengthen HNW and UHNW giving, including potential models for such a foundation; however, it became clear early in the consultation process that the target group would not be interested in contributing to such a foundation. The scope of the feasibility study was therefore redefined by FaHCSIA to explore the broader question of what could be done to encourage HNW and UHNW giving in Australia.

The report found that overall giving levels as a percentage of GDP are slightly lower in Australia than in the UK and Canada, but that in general Australian HNW and UHNW individuals tend to give at a relatively low level. Measured as a percentage of taxable income, tax deductible donations across most of the HNW population are only marginally higher than those among lower income Australians. Australian HNW individuals give under 2% of their taxable income, compared to 3.2% in Canada and a range of 3.5% to 7% in the USA. The data shows that overall giving in Australia has increased steadily over the past decade; however, the giving of HNW individuals has failed to increase at the same rate as the 37% increase in HNW mean household income.

In examining the way in which HNW giving could be increased, the report identifies a number of factors influencing HNW giving, including personal preferences, legal and regulatory environments and cultural expectations.

The report makes a series of ten recommendations to form a strategy through which Government can promote HNW and UHNW giving. The recommendations fall into two categories: System Recommendations, which cover actions that aim to strengthen the underlying service system supporting the philanthropic sector to better enable and facilitate giving activity; and Program Recommendations, that cover targeted initiatives that aim to increase the number of HNW and UHNW involved in giving and increase the amount of money that they give.

System recommendations include: strengthening the philanthropic sector's capacity to promote and cultivate giving by supporting the development of a strong, sustainable national peak body; appointing Philanthropy and Giving Ambassadors; establishment of a national Registrar for Community and Charitable Purpose Organisations; and establishment of dedicated structures to improve communication between the ATO, Treasury and the philanthropic sector.

Program Recommendations include: a structured promotional program aimed at aspiring and next generation HNW and UHNW groups and professional advisors; a research program to map philanthropic activity; and the development of social investment products and markets.

The full report including detailed recommendations is available on the PhilanthropyWiki