Should governments consider the introduction of an additional tax incentive to encourage philanthropy?
Governments could choose to accredit certain organisations, select priority areas and or strategies for support and provide a new tax incentive to encourage donations.
Tax incentives to support investment are not new. Australia’s R&D tax incentive program has successfully encouraged investment and research in Australia to drive outcomes and the commercialisation of home grown innovations.
Should social investments that look to deliver cost effective socioeconomic benefits be different? Sophisticated philanthropists and foundations look to leverage their giving with other programs and grants to improve their impact.
Would for instance a 120% tax deductable incentive for donations encourage giving and provide an increase in the third sector’s ability to deliver efficient and effective programs leading to greater community benefits?
Would people increase the amount and frequency of their giving and what impact would it have on workplace and corporate giving?
As we start to peek into Pandora’s box around such an incentive, questions abound. Would the tax incentive be for all donations or only eligible donations?
- Would there be threshold relating to the donation? Due to the imagined reporting required, you would anticipate that there might be a minimal and maximum donation amount.
- What priority areas may be eligible for such an incentive? Would this lead to a reduction in resources going to organisations that are supporting important areas not designated as a government priority?
- Would the strategy underpinning support be considered or more simply the purpose?
- Would some charities be more equal than others? What selection criteria (if any) may be used to designate donations deemed eligible?
- Which donors would be eligible for the incentives associated with tax-deductible donations?
- What impact would it have on the third sector more generally, who would grow, consolidate or not survive?
. . .
This is hopefully the start of a longer conversation. A conversation that will require considerable expertise and contributions from government, industry, donors and the third sector.
There is an obvious need for a cost-benefit analysis and consideration of other models that might encourage giving.
Governments and other organisations benefit from matched funding. This may provide a more systematic approach to partner with government who are realising the benefits of working with the third sector.