Media Releases
Defence of Civil Society: The Virtue of Prescribed Private Funds
GOVERNMENT’S PLANS WILL HARM PHILANTHROPIC GIVING
‘The Commonwealth government is looking to change the rules governing charitable funds which may harm philanthropic giving and consequently, undermine civil society,’ says a report being released on Wednesday.
In the report, In Defence of Civil Society: The Virtue of Prescribed Private Funds, economist John Humphreys, from the Centre for Independent Studies, argues that ‘given the current economic climate it is especially important that we protect civil society.’
Prescribed Private Funds (PPFs) are a way for people and businesses to contribute tax-free money to the philanthropic sector. PPFs allow donors to put their money in an ongoing fund that can be used to distribute money in future years.
‘One key concern is the proposed requirement for funds to distribute a fixed minimum, possibly 15 per cent of their total capital, to deductible gift recipient charities each year.’
Humphreys’ report argues that one of the important benefits of PPFs is that they allow donors the flexibility to shift their distributions into future years, and this flexibility leads to an increase in the quality and quantity of philanthropy. By imposing a minimum distribution on philanthropic funds the government would undermine the flexibility and sustainability of PPFs.
PPFs provide the ability to ‘save’ philanthropic donations so that they can go to the best projects at the most suitable time.
‘In the current economic climate, it is possible that donors will spare less money for philanthropy. However, if donors were allowed to ‘smooth’ their distributions over time then they could donate more than they distribute during periods of strong economic growth and then distribute their ‘saved philanthropy’ in the lean years,’ says Humphreys.
John Humphreys is a Research Fellow at the Centre for Independent Studies.
He is available for comment.
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