May 10, 2024  | Tags: Philanthropy, wealth

Our insights

Philanthropy is not dead in Australia but nor is it thriving.

Research by the Centre for Social Impact indicates Australians are a lot less giving than some of their western neighbours.

It revealed Australians donate just 0.81% of their GDP compared to 1.84% by New Zealanders and 2.1% by Americans.

High-income earners have the opportunity to make a difference on a grand scale.

They can do so for the betterment of others or the benefit of a cause they believe in.

And they can be rewarded with significant tax advantages in the process.

Let’s start by taking a closer look at what it means to be generous in Australia.

General principles of generosity

Generosity does not necessarily mean giving away money.

It may mean giving up your time, expertise or resources to support people or causes you care about and make a meaningful difference.

This can be done by:

• volunteering
• pro bono work
• sharing knowledge
• advocacy for social change

Ultimately, generosity in Australia is about making a tangible impact on the lives of individuals and communities.

It’s about fostering social inclusion and cohesion and creating a more equitable and sustainable future for all Australians.

High net worth individuals who choose to donate a proportion of their wealth have the ability to leave a lasting legacy.

But to do so effectively and help drive positive social outcomes, there needs to be transparency, accountability as well as collaboration with relevant stakeholders.

Getting started in philanthropy

Consider what causes are close to your heart.

Think too about what issues resonate with your local community and try to address pressing social challenges.

It might be homelessness, hunger relief charities, health initiatives for disadvantaged groups, environmental conservation or education equity.

Begin meaningful conversations with family members to learn what issues are important to them.

You may be drawn to impact investing like establishing affordable housing projects, social impact bonds or conservation initiatives while potentially still making a financial return.

Philanthropy in Australia requires a strategic approach, giving back to society through charitable donations, grants, investments and community initiatives.

If you are a high net worth individual that is serious about philanthropy, start with a conversation with an experienced accountant as well as a financial adviser.

From there, you may be advised to utilise a public ancillary fund or set up your own private ancillary fund to formalise your giving strategies and maximise your impact.

Public and Private Ancillary Funds

Public and private ancillary funds are like superannuation funds.

The money is deposited within a fund, invested and can only be withdrawn by a desired charity.

A public fund can be accessed by anyone.

A private fund is a charitable trust set up by an individual, family or association for their sole access.

To make it worthwhile, a Private Ancillary Fund really needs a minimum balance of $1 million.

There are significant tax advantages for donations made to both types of funds.

Funds are regulated closely by the Australian Tax Office and both public and private funds are subject to a raft of rules and regulations. 

High net worth individuals can then make tax advantageous donations including capital gains tax exemptions for appreciated assets such as:

• stocks and securities
• real estate
• art
• collectibles

Values-based and sustainable investing

High net wealth individuals may choose to align their investments with their values by incorporating ethical and sustainable investment strategies.

This may entail investing in companies that prioritise environmental sustainability, social responsibility and good governance practices.

Examples of sustainable investments in Australia include:

• renewable energy projects
• sustainable agriculture ventures
• socially responsible investment funds
• impact investments focussed on community development and social inclusion

These types of investments contribute to positive social and environmental outcomes. 

Impact investing may also qualify for tax offsets or deductions.

Get advice today

Philanthropy has the dual benefit of being a noble, feel good cause to leave a lasting legacy in society.

It also allows high net worth individuals to leverage significant tax advantages.

But whatever your motivations in philanthropy, you should always consult with an experienced accountant and financial adviser to ensure you are maximising all of the opportunities.

Calder Wealth Management boasts an experienced team of financial advisers who know how to help you grow wealth and make an impact.

We have built a rock solid reputation over several decades working with successful and satisfied clients.

If you are curious about philanthropy and keen to get started, let’s talk.

With the support of your accounting and legal team, we can help build philanthropy into your wealth strategy, as well as reviewing all of your investments to keep them aligned with your goals, needs and ever changing circumstances.

No-one should go without quality financial advice from a team personally invested in their wealth accumulation.

At Calder, we pride ourselves on leading our clients into the future with structure, financial stability and confidence. 

Contact us today.

Written by Ben Calder

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.