In the past, Australia has placed many roadblocks in the way of international giving.

In its assessment of cross-border giving frameworks, last year’s Index of Philanthropic Freedom placed Australia’s framework behind those of Georgia, Serbia and the Philippines, with the Netherlands, the United States and Sweden leading the pack.

According to Mark Cubit, an Australian philanthropist passionate about international giving, the finding is not surprising.

“I think that when foundations here start looking at international giving, and then find out just how complex and difficult it is for them to give money overseas, they give up. They want to do it, but they find themselves in a cul-de-sac with no way out,” Cubit says.

The difficulty revolves around the fact that income tax exempt charitable trusts can only distribute less than 50 per cent of their funds overseas, while private (PAF) and public (PuAF) ancillary funds are not able to directly distribute any funds overseas.

The only option for these funds is to give through other deductible gift recipients (DGR) which are approved under the Overseas Aid Gift Deduction Scheme (OAGDS).

According to Cubit, that creates duplication and adds costs.

“Depending on the organisation, they can charge a fee of up to 10 per cent of the amount granted. They do have to cover their costs and so they must charge us, but because we do our own monitoring or reporting, including in country visits to projects, it is often just added bureaucracy. All it means is that there’s less funding for the projects themselves.”

Various developments in the last three years have made things a little easier. In the 2014 case of Commissioner of Taxation v Hunger Project Australia, the full Federal Court held that public benevolent institutions (PBI) don’t need to directly provide relief themselves in order to be DGRs, as long as there is a sufficient link with other organisations which are providing the relief.

This helped prompt a re-think of the so called ‘In Australia’ requirement by the Australian Taxation Office. Previously, PBIs had to provide relief directly, and do it within Australia—but now this is no longer the case, with the ATO recently releasing some helpful guidance to clarify.

These developments provided an opportunity for Cubit to do his international giving in a different way, with less duplication and cost, and more flexibility and ease. According to Cubit, the recent changes are a great development.

“They’ve allowed the Cubit Family Foundation to join two other foundations to support the establishment of a new PBI through the Australian Charities and Not-for-profits Commission (ACNC). It’s called Partners for Equity, and is a separate corporate entity with its own board,” he explains.

Mark Cubit with St Jude's graduate Alex Elifas

Mark Cubit with St Jude’s graduate Alex Elifas

“The purpose of Partners for Equity is to support projects overseas. Our foundations can now make grants to that PBI which removes duplication in project monitoring and reporting, and ensures as much of the funds as possible can get to the projects.”

While setting up yet another structure may sound like an odd way to make things easier, Cubit says that it wasn’t particularly difficult to do, and was well worth the effort.

“The whole process of setting up was straightforward. It involved establishing a basic corporate entity, opening a bank account, appointing board members, and lodging an application with the ACNC who were very helpful throughout the whole process,” Cubit says.

“All up, the application probably took half a day of writing and perhaps 50 hours of volunteer time in total.”

“As a PBI, it’s regulated by the ACNC—we have to report to them annually so there’s full transparency and accountability. We understand that there needs to be safeguards and I think the ACNC provides that in a practical and effective way.”


Opening doors

Cubit wants to grow international giving within Australia’s philanthropic sector, and hopes that the loosening of restrictions will make more foundations think about dipping their toes into the water.

“We live in a global community,” he says. “We buy cars from South Africa, furniture from China, tea from India. Our giving needs to reflect that, because although there’s a lot of need in Australia, there is tremendous need in so many desperately poor countries around the world.”

“Partners for Equity will support a wide variety of projects, and if other PAFs are keen to get into international giving, these changes to the law do make it much easier now.”

But all this work could be in vain.

The Australian Government is proposing to introduce legislation to turn back the clock and reinstate the old ‘In Australia’ requirement and undertook consultation on a draft bill in 2014. According to the Government, progressing the bill is not a priority, but while it’s on the cards its shadow is creating uncertainty.

Cubit contends that the Government should scrap the proposed ‘In Australia’ Bill.Generosity_The-School-of-St-Judes

“It would cut Partners for Equity off at the knees, and we’d be back to where we started,” he says.

“It would also harm a lot of other charities active overseas, which are now setting up Australian-based entities to enable them to fundraise here. Previously, many of them couldn’t get through the OAGDS process because of some of the arcane requirements it imposed.”

But Cubit says scrapping the ‘In Australia’ bill also needs to be followed by other changes.

“Although things are much easier now, it’s still not like the US where foundations can give overseas directly provided they accept a higher degree of accountability for their funding—so called ‘expenditure responsibility’.

“If we really want to make international giving easier, we need to allow the same for PAFs. We’re happy to accept higher accountability requirements, if we can have more flexibility.”

So there’s still a way to go, and more opportunities to do things differently and make international giving even easier.


Generosity_Philanthropy-Australia-Krystian-SeibertKrystian Seibert is the Policy & Research Manager at Philanthropy Australia.






Read more from Krystian Seibert: 

Medical Research Future Fund can drive government and philanthropy collaboration

Rural and Regional Community Foundations Hamstrung by Tax Laws

Removing Barriers to Giving: PAF portability and easier share donation


Philanthropy Australia is proud to support this ‘Doing things differently’ edition.


Images courtesy The School St Jude, Tanzania.