How new community charity laws are helping NFPs attract donations

The CEO of Australian Communities Foundation, Andrew Binns, said the federal government’s introduction of ‘community charity’ status for more than 30 community foundations was having a positive affect on donations.

Whereas previously only charities with DGR1 status could receive tax deductible donations, the new model allows non-DGR1 charities to accept tax deductible donations for activities recognised as “DGR1 charitable”.

What that means, Binns explained, is that charities previously ineligible for DGR1 accreditation can now accept donations for the parts of their work that fall under DGR-recognised charitable activity, even if their wider work disqualifies them from overall DGR1 status.

“I think this certainly provides the opportunity to really increase giving to other locations like rural and remote areas that don’t have DGR1 charities, or to things that don’t neatly fit one of these prescribed DGR categories,” Binns told the Community Advocate.

“It's a big opportunity for charities that can’t get DGR1 to think about what activities do they currently undertake that aligns, and then how do they utilise the community charity to support their fundraising,” he said. “I think there's a massive opportunity there for those organisations, although I think it’s probably a slow burn because there’s that sense of people needing to understand how to use it.”

Binns said work was required to make sure potential donors understood how they could now better spread their giving.

“People need to understand this does open the opportunity up to them giving to a broader range of causes, or organisations doing amazing work on the ground. That will just take a bit of time,” he said.

“By widening the pathways through which tax-deductible giving can flow, these new funds support more responsive ways of giving and help loosen the traditional boundaries between funders and those leading change on the ground.”

“There are 60,000 organisations in Australia that are charities or considered charitable, but only 30,000 of those have this very specific DGR status, which you have to apply for through the tax office,” he said. “You need to fulfil criteria, and the majority of what you do has to meet one of the DGR categories, which can be weird and wonderful – such as ‘public benevolence’. Some were created decades ago, through the politics at the time.

“What we at Australian Communities Foundation, or others who are community charities, can now do is give to any activity that is charitable in purpose and that aligns to a DGR category. You can be anyone undertaking charitable activities. As long as it meets one of those categories, then you can receive tax deductible donations.”

To use an infamous example, Equality Australia struggled for a long time to be recognised as eligible for DGR1 status. It was knocked back because while it operates dedicated programs to help the LGBTIQ+ communities in many ways, it also advocates for LGBTIQ+ people, and this advocacy work precluded DGR1 status. (The government eventually passed legislation that granted the organisation that status.)

However, if that situation were to occur now, a community foundation would be able to receive tax-deductable donations and pass them on to Equality Australia for the programs side of its work – recognised as DGR1 charitable activities – but not its advocacy work.

Binns also cited an example of a place-based foundation in Queensland that wanted to support the local community at a time when there were no DGR1-status charities in the region. None of the powerful charitable work going on in the area could leverage tax deductibility to attract extra donations. Now this has changed, thanks to the new regulations.

He said early indications were that rural charities, First Nations organisations and other who had struggled to win DGR1 recognition would be major beneficiaries.

Australian Communities Foundation offers funds that organisations or individuals can invest in for charitable purposes. Donors receive a tax deduction and can decide later what specific causes or charities they want to donate to. The new rules mean that money can go to any for-purpose organisation performing DGR1-recognised charitable work.