What not-for-profit leaders need to know in 2026
Posted on 12 Feb 2026
Our special NFP trends report distils the views of more than two dozen experts.
Posted on 05 Dec 2024
By Greg Thom, journalist, Institute of Community Directors Australia
The federal government will scrap the $2 minimum for tax deductible donations.
In its first response to the Productivity Commission inquiry into philanthropy, Charities Minister Andrew Leigh said ditching the $2 threshold, which has been in place since the introduction of decimal currency in 1966, would encourage more Australians to give.
“This will support greater participation in philanthropy, by encouraging small donations including rounding up purchases at the point of sale in store and online.”
The recommendation to remove the requirement that a gift must be at least $2 before a donor can claim a tax deduction was among 19 contained in the Productivity Commission’s 468-page Future Foundations for Giving final report handed to the federal government in May.
The inquiry was initiated as part of the government’s efforts to double philanthropic giving by 2030.
“The government recognises that prudent investment of assets held in giving funds increases the amount available for distribution to charities in the longer term.”
The government also announced it would accept the report’s recommendation to tweak the operation of ancillary funds.
Leigh said to better reflect the funds’ role in facilitating giving by connecting donors with charities, ancillary funds would be renamed giving funds.
Further changes include:
“The government recognises that prudent investment of assets held in giving funds increases the amount available for distribution to charities in the longer term,” said Leigh.
“This will be balanced with the need to ensure the gifts that donors receive a tax benefit for flow to charities sooner.”
The changes were welcomed by Philanthropy Australia CEO Maree Sidey, but she said the sector was still waiting to hear the government's position on what it considers the most significant recommendation in the Productivity Commission's philanthropy report – a reform or comprehensive overhaul of the deductible gift recipient (DGR) system.
"With the release of the Not‑for‑profit Sector Development Blueprint last week, we now have five reports in total, two of them from this year, that have recommended this reform," she said.
Sidey said Philanthropy Australia supported removing the $2 donation tax deduction threshold and also believed renaming "ancillary funds" as "giving funds" was a good idea.
"Many of our members have been raising concerns about a potential increase in the minimum distribution for ancillary funds, and we will do some further consultation in the coming days before providing a more detailed response to this particular proposal," she said.
"Ancillary funds help to encourage more and better philanthropy for the benefit of the many Australian charities active in our community, and the potential for unintended consequences from such a change is very high."
Leigh said the reforms to strengthen philanthropy in Australia were recommended by the Productivity Commission philanthropy report and by the recently released Blueprint Expert Reference Group in its Not-for-profit Sector Development Blueprint.
“These are our first steps in responding to the Productivity Commission’s work and builds on the significant work we’ve already done to double giving and boost the capacity and capability of Australian community organisations,” said Leigh.
“A smarter and stronger charity sector will support vulnerable Australians and build better connected communities.”
Posted on 12 Feb 2026
Our special NFP trends report distils the views of more than two dozen experts.
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