Academic journal article Australian Journal of Social Issues

Giving and Identity: Why Affluent Australians Give-Or Don't-To Community Causes

Academic journal article Australian Journal of Social Issues

Giving and Identity: Why Affluent Australians Give-Or Don't-To Community Causes

Article excerpt

Introduction

The value of giving by individuals overshadows that of businesses and foundations in countries such as the US, the UK, Canada and Australia (Hall 2006; Hall, Lasby, Gumulka and Tryon 2006, ACOSS 2005). Moreover, giving by the affluent is of particular interest to both policy makers and the nonprofit sector. Three trends over the past two decades help to explain this interest: the need for nonprofit organisations to develop funding sources outside the government purse, the expansion of the affluent segment in the population, and a growth in giving by this group.

First, there is serious pressure on many community organisations (1) to complement traditional government funding with private revenue streams to fund their activities (Bendapudi, Singh & Bendapudi 1996; Leonard 2002). Indeed, funding is one of the sector's most pressing concerns as the nature of government funding changes towards a more competitive, short-term and prescribed funding environment (Fitzgerald 2003; ACOSS 2005;). Secondly, developed countries are witnessing an explosion in the number of affluent individuals and their level of wealth. Despite Australia's relatively small population, for example, its number of millionaires reached 134,000 in 2004, the largest number ever, and the rate at which Australians are joining this group is one of the fastest in the world (Merrill Lynch and Capgemini 2005). (2) The Australian Bureau of Statistics calculates that the wealthiest 20% of households in this country account for 59% of total household wealth, with an average net worth of AUD$1.4 million per household, compared to a mere $23,000 per household (or 1% of total household wealth) for the poorest 20% of Australian households (ABS 2005). While some volatility in asset classes is expected in the coming years, the wealthy are projected to become even more wealthy in many developed countries, including Australia, as a result of the transfer of wealth that will occur as the current older generation passes (AMP 2003; Gerloff 2003; Havens and Schervish 2003; TPI 2000).

Thirdly, the level of private giving in Australia, including amongst the affluent, has grown substantially over the past decade (ACOSS 2005), a pattern also seen in other developed countries such as the US, Canada and the UK (for example, see Hall 2006; Hall et al 2006; The Giving Campaign 2004). In this country, those in the high-income bands are more likely to give (that is, a higher proportion report making financial donations to community causes than those in low income bands) and they give, on average, substantially more (ACOSS 2005). In 2004, 90.5% of all those with incomes of higher than $52,000 pa reported one or more donations in the previous 12 months compared to 82.6% of all those on lower income bands, and their average annual donations were $769 and $264, respectively (ACOSS 2005). Such trends also emerge in Canada and the US (Hall 2006; Hall et al. 2006). McGregor-Lowndes and Marsden (2006) show that of Australians who claimed deductions for charitable donations in 2004, those with taxable incomes of over $1 million claimed annual donations totalling $73,355, on average, up substantially from $37,810 in 2000. This 2004 figure represented 2.4% of these donors' taxable income, more than eight times the national average of 0.29%. (3)

The bad news for nonprofit organisations is that cash giving by the affluent, in general, is low in Australia, the UK and arguably Canada too (Asia-Pacific Centre for Philanthropy and Social Investment 2004, 2005; Blackhurst 2005). For example, just over one third of Australians with $1 million plus incomes did not claim for any tax deductible giving in 2004, suggesting giving by more than 1,200 individuals in this income band was minimal (McGregor-Lowndes and Marsden 2006). Mso, the 60% of Australians in the $500,000 to $999,999 income bracket who did make and claim charitable gifts gave only 0.7% of their income. …

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