Philanthropy
The outlook for philanthropy during COVID-19
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This report attempts to estimate the outlook for philanthropy and volunteering in Australia during the unprecedented combination of a major economic downturn and a significant global health crisis. We have looked at the past reactions of individuals, foundations and corporate donors during circumstances as close to rivalling this current situation as possible but, needless to say, a great deal of extrapolation is required.

In Australia, it is also complicated by the widespread and very generous support already given during the recent bushfires across most states only around four months ago. While it would be easy and potentially prudent to assume a major fall in philanthropy is to occur, that would also ignore the main historical driver of rises in philanthropy in Australia. That is, natural disasters.

There are also some timing differences for structured philanthropy that is likely to see a delayed effect and smoothing of support. Corporate giving has been affected when profitability has fallen, although the actual proportion of profits given has risen during these tough times. Volunteering, on the other hand, is being severely hampered by isolation requirements, regardless of how strong people's desires may be to help.

Australia last experienced a recession in 1991 when the Australian Taxation Office (ATO) was not collecting donations data. The recession prior was in 1983 when giving actually grew strongly, although it fell 4.5% in the following year.

Analysing each of the giving segments in Australia and looking at the main factors influencing their levels of support, we estimate total giving will fall by around 7.1% in 2020 after rising by almost 5% over each of the previous two years. The larger effect from the current crisis is likely to be felt in 2021 when giving is estimated to fall by a further 11.9%, back to levels not seen since 2012.

Figure 1. Australian philanthropy outlook ($m)

Source: JBWere Philanthropic Services

Analysis of the long-run giving trends in the US shows the slowdown (a fall in 2009 and 2010) in giving during recessions, mainly by individuals. From 2007 to 2009, giving in the US fell by the largest amount on record, 12% over two years as gross domestic product (GDP) fell 3.7% and corporate pre-tax profits fell over by 25%.

Figure 2. US charitable giving

Source: Giving USA, JBWere Philanthropic Services

The remainder of this paper looks at the different types of giving, and our outlook for each.

'Mass market' philanthropy

The factors affecting the level of donations from the broad public to charities between now and 30 June 30 2020 are dramatic.

Among the positive factors are:

  • Australians have always responded very generously to natural disasters in their own country (various bushfires and floods) and in other places where they have a connection (e.g. 2005 Asian tsunami)
  • There is extremely widespread media coverage of the evolving crisis
  • While private incomes will be uncertain and under pressure, the level of discretionary spending will also be lower
  • Many people's ability to help through volunteering will be severely curtailed, potentially increasing their desire to aid financially. Among the negative factors are:
  • We have just had a very generous level of donations for the fires across the country in the same financial year
  • This 'natural disaster' is accompanied by a likely very severe global economic downturn
  • The timing and ultimate health and economic/employment effects may not be known for many months
  • While people are often donating to another smaller subset of the population, there may be a feeling that this time, they are in fact the beneficiaries in need of assistance
  • Many larger fundraising events are already, or will be, cancelled. Figure 3 shows tax deductible giving in Australia both including and excluding donations into private ancillary funds (PAFs). Apart from the spikes seen during natural disasters in 2005, 2009 and 2011, there has been a consistent rise in donations not including donations into PAFs.

    Figure 3. Australian tax deductible giving, 1979-2017

Source: ATO, JBWere Philanthropic Services

In the first significant test of fundraising during the coronavirus (COVID-19) which usually involves a high level of community involvement across a whole state, the Good Friday Appeal for the Melbourne Royal Children's Hospital was forced to cancel a multitude of fundraising activities including the Kids Day Out, Run for the Kids, Cadbury Easter Egg Hunt, AFL Kick for the Kids match and many state-wide 'tin rattling' events. Even the usual all-day telethon was reduced to one hour. The annual event, conceived in 1931, concluded with just over half of the previous years' total being raised.

In a welcome development, also mirroring that being seen in many other areas of the economy, The Victorian government stepped in to provide the balance to match the previous year's total. While we do not expect all fundraising to drop by this extent, it is an indication of the current difficulty facing broad community event based activities.

Figure 4. Good Friday Appeal, Melbourne Royal Children's Hospital

Source: http://www.goodfridayappeal.com.au, http://www.premier.vic.gov.au, JBWere Philanthropic Services

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