Include a Charity advocates superannuation giving reform

Leaving superannuation to charity has been problematic, but there is a renewed push from various lobby groups to amend legislation so philanthropic giving can be done more easily and tax-free.

Helen Beeby, campaign director for Include a Charity, said enabling Australians to allocate a portion of their superannuation directly to charitable organisations upon their passing, alongside the removal of the associated tax penalty, has the potential to unleash billions of dollars in charitable donations in the future.

“Allowing a nomination in superannuation enables a supporter to easily provide their own ‘future legacy’ distribution for causes dear to them, underpinning donor support and charitable intentions,” she said.

“Even a small share of superannuation income nominated to a charity can significantly impact the charitable cause (or causes) that the person cared about and supported during their lifetime.”

Beeby said the charitable sector has been pushing for many years for change and the issue is once again on the table with the most recent Productivity Commission report recommending to the government that it find a way to help double charitable giving by 2030.

“There are now many more groups submitting to the government over this recommendation and there has been a big thrust for superannuation to be included,” she said.

“The Baby Boomer generation will pass down $2.6 trillion, and many are passing away with up to 90 per cent of their superannuation intact which currently must flow into their estates, so it gets taxed at least 15 per cent. Being able to donate directly from super to a charity can cut that tax out.”

Beeby said there has been a raft of recommendations in relation to the non-profit sector to increase philanthropic giving and it has been estimated that allowing superannuation to be directed to charitable causes could easily meet the 2030 target with between $130 and $260 million from super gifts.

“The Law Council of Australia is suggesting that people should be able to nominate more individuals, including charities, as a beneficiary in their superannuation and have stated that it could be as simple as adding a line in the super nomination form,” Beeby said.

She said that research shows despite arguments against the change due to fears of contestation that only 4 per cent of wills are contested.

“Superannuation funds are unfortunately reinforcing the government line and saying that superannuation is there for people to live on throughout their retirement but with up to 90 per cent of it still remaining for some people after the passing of members this argument is no longer viable,” she said.

“This small change to the superannuation regulations could make people think more about charitable giving. Trustees have their own practices but if they know that donating to a charity does not have to involve so much administrative red tape, they may be more willing to think about it.”

The recommendations regarding charity giving and superannuation have only recently been put before Parliament and Beeby said the long process of government may mean there will be no solid action on it for some time.

“In simple terms, superannuation funds can be one of the biggest sources of income for charities. It is a familiar choice to make for people who generally indulge in charitable donations, but also an easy choice for those who are unsure or unable to make charitable donations during their lifetime,” she said.

“It creates a feeling of ‘giving back to society’ and can even mean the same as leaving a legacy for some. With Australia’s total annual giving sitting at around $13 billion annually, this would mark a huge increase and can impact many lives, from ensuring children get a great start in life with good health and education and even go beyond humans to protecting our environment, natural resources, providing animal care and saving endangered species.”