Does Tax Really Motivate Us to Give?
It is true that the end of the financial year prompts many donors to think about their charitable giving. Whether it is because you have been asked to support a charity fundraising appeal, are making charitable distributions from your Foundation for the year or are considering setting up your own philanthropic fund as part of your end of year tax planning.
Interestingly though; while tax may be a common catalyst for generous Australians to set up their own philanthropic fund or make a donation to charity, it is not a common motivator for most givers. According to the Giving Australia 2016 Report, the main reasons we give are to make a difference, give back to the community, to set an example, support family or friends linked with a cause and to maintain family history and values.
This is further supported by donor behaviour in Australia, where over 80% of individuals give to charity in some shape or form. However, only around one-half of individuals claim a tax deduction for their donations.
Giving is also shown to provide as much benefit to the Giver, as it is for the recipient.
A recent Harvard paper Feeling Good About Giving found that gift giving and charitable donations were seen to enhance overall happiness. In another example, it was found that spending money on others, versus on oneself, led to higher levels of satisfaction.
Some of the biggest motivators that prompt wealthy Australians to set up their own philanthropic fund have nothing to do with tax. As experienced by our own clients and supported by the Giving Australia 2016 report, donors are motivated to set up a giving structure as a way to teach and transfer family values to other family members, leave a legacy, involve family in their giving and allow them to more engaged in their giving.
There is no argument that Australians are one of the most generous nations in the world. We are also one of the wealthiest.
With less than 6 weeks remaining until 30 June, you may be thinking about your own charitable giving intentions. Which charities should I be donating to? Is establishing a philanthropic fund worthwhile for me and/or my family? Can I afford to set up my own Philanthropic fund? What are the benefits?
If these questions are relevant for you, be sure to contact your trusted adviser or a philanthropic specialist, so you have the opportunity to take action this financial year...