Community groups deserve a tax break

Posted on 17 Dec 2021

By Denis Moriarty, group managing director, Our Community

16:9 Piggybank

Australia needs a reboot.

We need to rebalance the weight we allocate in our lives and our assumptions and our institutions to the three sectors – business, government, and community groups. We need to stop regarding the third sector as an afterthought.

Our Community group managing director Denis Moriarty

The Australian community sector is like Gulliver, tied down by a thousand tiny bits of string that prevent it from exercising its true strength – a historical network of ill-fitting rules and regulations that have accumulated in drifts over generations and are now treated as unchallengeable holy writ. It all bogs our community groups down in pointless bureaucratic make-work and, most importantly, saps their drive to achieve their mission.

Take, for example, tax deductibility for donations. In Australia, donations to charities are tax deductible. That doesn’t sound too bad, but that’s because it’s highly misleading. The old pea-and-thimble trick has vanished the word you thought of and produced another word from up the lawyer’s sleeve.

When the average woman in the book club talks about charity she means, essentially, doing good for others without thinking of herself. When lawyers use the term ‘charity’, they mean something very different and much more restrictive.

Essentially, our list of things that are tax-deductible is as old as Hamlet, dating from a 1601 law known as the Charitable Uses Act or the Statute of Elizabeth. In the intervening 420 years we’ve added a few things, if judges have thought they were sufficiently like the older things (internet reform, for example, gets in because it’s similar to repairing sea walls – no joke) but we’ve never started from a clean slate. Hell, we don’t even use slates any more. We’ve upgraded to iPads, and the law hasn’t noticed.

As a result, there are vast areas of the community sector that are not-for-profit and that promote the public good but that aren’t legally ‘charities’. Sporting clubs aren’t, and social clubs aren’t, despite the clear scientific evidence that belonging to social and fraternal organisations contributes immensely to the health of the individual and the state.

Let’s just tear down these stifling cobwebs. Let’s start over, with a commitment to putting community first. Let’s make all not-for-profit enterprises qualify to receive tax-deductible donations.

We have to do something. Australian giving, tax-deductible or otherwise, is pretty anaemic. Total giving is up, but that’s because fewer people are giving more. We have to boost our expectations of what Australians should give from 1.5% of income, as now, to about 5%, and we should as a nation support those taking on their public responsibilities.

Volunteering isn’t looking too healthy, either, and we’ve no idea how it’s going to look on the other side of COVID. Will we all have got out of the habit? Civil society, in all its aspects, needs all the help it can get.

I’m assuming here, of course, that when we put community first, that will bring wider ramifications. Other things have to change too. The reforms we need are simple, but as the Prussian military strategist Karl von Clausewitz nearly said, ‘Everything is very simple in politics, but the simplest thing is difficult.’

We don’t want billionaires getting tax deductions for buying political parties, but the way to fix that isn’t to fart about with deductibility, it’s simply to put a low-ish limit on political donations. If we don’t want rich schools to dominate ordinary schools – if we don’t want Geelong Grammar School to grow at the expense of North Geelong Secondary College – we can take their new possibilities into account when we’re passing out government funding.

Actually, if we’re really committing to community we could cut to the chase and discourage billionaires in the first place by implementing progressive taxation and solid death duties. It’s going to be difficult because the Australian polity is pretty far gone down the Russian road towards crony capitalism ruled by oligarchs and inspired only by dreams of national exclusivity. Our inequality is fractal: when every homeowner is a millionaire, the homeless (and that includes renters) are tumbled into an underclass without prospects.

We have to lift ourselves up by our own shoelaces. And that, luckily, is something that community groups are particularly good at.

Denis Moriarty is group managing director of, a social enterprise helping Australia's 600,000 not-for-profits.

You may also like...

We're proud to take a stand on progressive issues, which we're able to do as a social enterprise that's not tied to the purse strings of any government or corporate organisation. Here's a taste of some other recent commentaries.

Become a member of ICDA – it's free!