04 November 2019
We all know the challenges in finding and securing funding for the development of the sport we love. In the case of philanthropic funding, obtaining funds is a long and challenging road; it requires educating the general public on the need for funding, on the availability of tax deductibility for donations to sport, and providing resources and support for sporting clubs to be able to raise funds. Above all, it requires a cultural shift in Australian’s perception of sport as an endeavour worthy of philanthropic financial support.
The Australian Sports Foundation’s (ASF) recent work with national and state sporting organisations, grassroots sporting clubs and athletes has resulted in over $165 million in donations to sport over the last four years. It would have been difficult to raise this level of funds without the support the ASF provides many organisations who are struggling to run their operations, let alone develop and resource a fundraising campaign.
The Confederation of Australian Sport (CAS) recently provided national sporting organisations (NSOs) with a proposal arguing for ‘charitable status’ to be granted to sport or sporting organisations in order to grow the amount of philanthropic giving. The ASF recognise the positive intent behind this proposal. It’s great to see organisations so passionate in wanting to help sports raise more funds. However, we do not consider the approach outlined in the CAS submission as likely to be successful, nor in the best interests of Australian sport as a whole.
Tax law and the regulatory environment in this space is a complex area. Having sought independent legal advice, it is the ASF’s view that the CAS proposal does not address all the relevant factors that currently impact the ability of sports to raise funds, nor does it properly reflect the likely impact the proposed changes would have on the sporting community from a compliance and administrative perspective.
Current position concerning DGR and charitable status for donations to sport
National and state sporting organisations, sporting clubs and eligible athletes, currently have access to tax deductibility donations using ASF’s existing deductible gift recipient (DGR) status to offer to their members and supporters. The ASF handles the administration and regulatory compliance matters on their behalf. In addition, the ASF has recently obtained ‘charitable status’ through the establishment of the ASF Charitable Fund. This means that – for the first time – the Australian sporting community can have the benefit of charitable status to access funding from Private and Public Ancillary Funds. This represents a huge opportunity to generate more funds for Australian sport and the ASF intends to launch various initiatives to help the sporting community leverage this additional funding avenue early in 2020.
Australian sport has long had access to DGR status and can now use the ASF’s expanded ‘charitable status’ to generate additional funding opportunities.
The changes proposed by CAS — even if successful (which is considered highly unlikely in their current form) — would not materially alter the current position insofar as the availability of tax deductibility of donations for Australian sport is concerned.
(Note that the FBT benefits highlighted in the CAS proposal cannot be offered by the ASF, but there is a level of complexity involved that would render this impractical for many/most sporting clubs).
It is the ASF’s view however that there are other critical issues to address if philanthropic giving to sport is to grow to the levels needed, and as currently being experienced in the Arts sector at over $500 million.
Key issues and future plans
The ASF has engaged researchers to carry out extensive consultation with the sporting and philanthropic communities in recent months, in order to identify the best way to further increase philanthropic giving to Australian sport. This research has so far established that tax-deductibility and ‘charitable status’ - which are already available to, but not fully utilised by, Australian sport - are not materially going to increase the level of donations. Feedback indicates that the key barriers to further growth in philanthropic revenues in sport are:
In response to this research, the ASF – as the peak body for philanthropy in sport - is developing plans to address these issues for the benefit of the Australian sporting community. Several new initiatives will be communicated and rolled out in the first half of next year.
In addition, the ASF will be launching a major fundraising campaign in 2020, using its own fundraising experts, to raise new funding from the philanthropic sector that will be distributed to sport. In this way, ASF will be expanding its traditional role as a ‘facilitator’ of funding for sport, to become a significant new funder of the sporting community.
The ASF believes this will be the most effective approach to increasing philanthropic funding for sport, and is in the best interests of the Australian sporting community as a whole.
Implications of the CAS proposal as drafted – as viewed by the ASF
Tax and charity law is a highly complex area as indicated earlier. We acknowledge the positive intent behind the CAS proposal, but we consider it important that the sporting community fully understands its implications.
For example, even if ‘charitable status’ were to be granted to sport in the manner proposed in the CAS proposal, this would not automatically confer ‘DGR status’ to any individual sporting organisation or club. Each individual sporting club or entity would have to apply to the Australian Taxation Office (ATO) for its’ own DGR status, demonstrating to the ATOs satisfaction that they individually meet the relevant charitable criteria - a process that can take many months. If successful, they would then have to comply with various additional regulatory provisions (including annual compliance reports to the ATO and the Australian Charities and Not for Profits Commission (ACNC).
For a sector that is under-resourced and time poor at all levels and, outside the top tier, largely run by well-meaning volunteers, this is simply not a practical option. In addition, it would dramatically increase the compliance burden for the ATO and ACNC themselves – having to deal with many more individual DGR’s, rather than a single “umbrella DGR” as is the case with the ASF/ASFCF.
Next steps
Based on learnings from the research carried out, the ASF is finalising ambitious plans to increase philanthropic giving for the benefit of the whole sporting community. The ASF is also exploring certain legislative and/or policy changes that will potentially further incentivise philanthropic giving to sport, and will communicate further on these matters early in 2020.
In the meantime should any sporting organisation wish to understand these issues in more detail please contact ASF CEO, Patrick Walker on 02 5112 0990.
This article has been written by the ASF.