Australia’s peak bodies for Independent and Catholic schools have slammed the Productivity Commission’s report recommending excluding early childhood education and care, primary, and secondary education activities from Deductible Gift Recipient (DGR) status.
The draft ‘Future Foundations for Giving Inquiry Report’ – sent to Government on 10 May 2024 and publicly released on 18 July 2024 – sets out the Commission’s findings and recommendations “to provide firm foundations for philanthropy in Australia, so that the benefits of giving can continue to be realised into the future.”
From nearly 1,300 submissions, 917 (71%) opposed the recommendation to remove DGR status for education-related activities, including scholarships and School Building Funds. Of the 817 submissions from individuals such as parents, grandparents, alumni, teachers, and community members, 801 described significant detrimental impacts if DGR status for education activities was removed.
Report ‘blatantly ignores concerns’
The National Catholic Education Commission (NCEC) says the Productivity Commission has “blatantly ignored the concerns and needs of school and faith communities” in its final Philanthropy Report.
National Catholic Education executive director Jacinta Collins said school and faith groups raised serious objections to the draft report, which lacked thorough analysis and engagement with concerned groups by the Productivity Commission.
“The recommendations to withdraw the Deductible Gift Recipient (DGR) status of building funds and for religious and ethics education in government schools is a direct attack on school and faith communities and fails to acknowledge the enormous contribution of faith groups to the social fabric of Australia,” Collins said in a statement.
“As the NCEC highlighted in our submission, people of faith are more likely to donate and volunteer and contribute significant amounts to philanthropy to support the common good.”
‘A bitter blow for families, schools, and communities’
In a statement, Independent Schools Australia (ISA) said it also has grave concerns over the report, calling it a “bitter blow for families, schools, and communities”.
“It is extremely disappointing that after asking for feedback, the Commission has ignored the hundreds of schools and parents who provided input and recommended a tax change that would punish thousands of families and their school communities,” ISA Chief Executive Officer Graham Catt said.
“Schools rely on communities and parents to fund the building of classrooms and provision of scholarships. Over 140 schools and many representative bodies provided examples of the significant detrimental impact this would have.”
Catt said the submissions also “refuted the Productivity Commission's flawed arguments” supporting the recommendation, particularly the perceived risk that donors to school building funds could derive a private benefit from a tax-deductible donation.
“We still have not seen any real evidence to support the Commission’s views.”
The modelling indicates that increasing the value of the tax deduction over 100% of the amount donated is unlikely to be a cost-effective way of encouraging additional giving. However, the arrangements that determine which entities can access DGR status are poorly designed, overly complex, and lack a coherent policy rationale. This creates inefficient, inconsistent, and unfair outcomes for charities, donors, and the community.