The data from the Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) review of tax deductible giving clearly says less people are giving, especially in lower income brackets. This reduction has been a trend for some time and parallels similar trends in the UK and the US. The entire fundraising industry is chanting in unison “less people are giving.” Fortunately, total giving in Australia has actually continued to increase which is why I’m putting a positive frame on the situation: People who can give more are giving more.
The cost of living and the fuel crisis are part of a bigger problem driving the economy and equitable access for all, which is also impacting who gives what. At the macro-level the redistribution of wealth mirrors the changes in those who are giving. Even in the best years, only around 35% of people claimed tax deductions for giving, recently falling to under 28%. Over the last decade the distribution of wealth has changed dramatically, so why shouldn’t the distribution of giving.
Wealth redistribution
I am not an economist. This is just a snapshot of data provided by the Australian Bureau of Statistics (ABS) and information from the Evatt Foundation. Wealth distribution has changed dramatically in the last two decades, resulting in less people having more money to give. To paint a picture, imagine Australian households represented equally by 5 people (A,B,C,D and E) and Australia’s wealth a pie cut into 10 equal slices. Currently the distribution of the wealth pie looks like this:
· Person A has 6 slices (and almost half of the 7th piece);
· Person B gets 2 slices;
· Person C gets 1 slice;
· Person D has the leftovers from the 7th slice;
· Person E has only the crumbs that are stuck in the dish after everyone else has finished.
Person E’s share has barely ever been more than the crumbs, yet over time, their wealth, and the amount of wealth held by Persons B, C and D has continued to decrease!
For the first time in more than fifty years, the richest 10% of Australian households now own more than half the nation’s private wealth. That’s the claim made by researchers at the Evatt Foundation, who combined Australian Bureau of Statistics (ABS) data with OECD and national accounts figures to estimate what official statistics alone don’t directly show. Over the last two decades the ABS has been tracking income and household wealth and the data is disheartening.
The ABS began formally surveying household wealth distribution in 2003–04, through its Survey of Income and Housing. In that first survey, the wealthiest 20% of households held 59% of total household net worth, while the poorest 20% held just 1%. By 2019–20, the top quintile’s share had climbed to 63% of total household wealth, while the bottom quintile’s share had fallen to 0.7%. In other words, in the space of roughly fifteen years, the wealthiest fifth of Australian households added several percentage points to an already dominant share, while the poorest fifth’s slice of the pie kept shrinking toward zero. The graph below shows the difference in income and household wealth between each quintile.
Over the last six years the expectation is that these differences have continued to grow on the back of the assets that those in the top 20% hold. Most commentators agree that even within the top 20% the wealth will continue to skew towards the top 5% or even 1% of Australians.
What happens over the next two is still an open question, however, it does and will continue to have an impact on who gives.
Giving
As detailed in Part 1 and 2 of this article, the ACPNS has tracked tax-deductible giving in Australia using Australian Taxation Office (ATO) statistics for well over a decade, and its reports reveal a participation problem that predates any single bad year or economic shock.
The proportion of Australian taxpayers claiming a tax-deductible gift has been in decline since roughly 2011–12. By 2014–15 it stood at 34.58%; by 2015–16 it had fallen to 33.40%. By 2022–23, only 27.81% of taxpayers claimed a tax-deductible gift, the fifth consecutive financial year in which fewer than 30% of Australian taxpayers had done so. Meanwhile, the total dollar figure of claimed deduction along with reported income from the ACNC has increased.
Put the wealth data and the giving data next to each other and a similar shape appears: participation at the base is thinning, while concentration at the top is intensifying. In wealth, this looks like a shrinking share of national net worth held by the bottom half of households, alongside an expanding share held by the top decile. In giving, it looks like a shrinking share of taxpayers who donate at all, alongside an expanding share of total donations attributable to a small number of very large gifts from the wealthiest Australians.
If wealth genuinely is concentrating, it follows that discretionary capacity to give would concentrate in a similar way. A household with little accumulated wealth and rising cost-of-living pressure has less room in its budget for regular charitable giving, regardless of its members’ generosity or values. Meanwhile, a small number of ultra-wealthy Australians and family foundations are increasingly able to make single gifts large enough to reshape an entire year’s national giving total on their own.
Where This Leaves the Conversation
Taken together, the ABS wealth data and the ACPNS giving data point toward the same underlying dynamic playing out in two different parts of Australian economic life: a country where growth in assets, and in acts of generosity is increasingly happening at the top of the distribution, while participation from the middle and bottom either stagnates or declines. Addressing one without considering the other risks missing the connection between them: a nation’s capacity for everyday, broad-based generosity is not separate from how evenly its underlying wealth is distributed in the first place.
People who can give more are giving more. With our effort as fundraising industry and philanthropic advisers directed towards those that can give more, I am confident they will continue to increase their contributions.
Sources: Australian Bureau of Statistics (Survey of Income and Housing, various years; Australian National Accounts: Distribution of Household Income, Consumption and Wealth); the Evatt Foundation; the Australia Institute; QUT Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) analyses of Australian Taxation Office statistics, including “Tax-Deductible Giving in 2022–23” and prior years; Philanthropy Australia; KPMG analysis of ATO Individuals statistics.
Leave a Reply