It’s the season for gifts, sharing meals and spreading cheer but what if your festive generosity could do more? What if it could ripple through generations, perhaps shaping futures and maybe reducing your tax bill?
Giving isn’t just an act of kindness – it can also be a smart financial move. From helping loved ones today to creating a legacy for future generations, strategic gifting can align with your broader financial goals.
Australians are generous – we consistently rank among the most charitable in the world. A study showed that in the past year, 56% of Australians have donated money, and 31% have donated their time.
Although Australia is a wealthy but ageing nation with potential for charitable bequests, few people actually leave gifts to charity, and the size of the bequests falls behind international peers, according to The Bequest Report by JBWere.
Why planned giving matters
Often, giving is reactive rather than planned. We might respond to a donation drive, an emotional TV ad, a friend’s fundraiser or gift property or shares to a family member.
Giving can also be intentional – some people choose to set aside a portion of their annual income, commit to monthly donations or include charities in their wills. Others join workplace giving programs or support causes that reflect their values. In this way, generosity becomes less about impulse and more of a conscious decision.
There may be advantages in taking a more strategic approach. It can amplify your impact, build your reputation, open doors to new networks and potentially deliver tax benefits. Donations to organisations with deductible gift recipient (DGR) status can help to manage your tax position by reducing taxable income. If you give more than $2 to an organisation with DGR status, you can claim a 100% tax deduction for your donation.
Planned giving can help to create a lasting impact, building a legacy for family and community. It integrates generosity into financial planning, ensuring investments reflect personal or family values. In this way, it becomes a tool for involving younger generations in financial governance, teaching responsibility and shared purpose.
Strategic gifting can include early inheritance, education funding or contributions to a family trust. These approaches can reduce future estate taxes.
Structured giving options for lasting impact
For those looking to make a lasting impact on their communities, structured giving vehicles offer flexibility and control.
It can create long-term financial stability for favourite causes, providing charities with predictable funding. It can potentially reduce complexity in estate planning and ensure your wishes are carried out, and donating assets may offset capital gains tax liabilities.
Unlike mass market or other forms of giving, such as direct donations to charities, crowdfunding and volunteering, structured giving involves using a vehicle designed to enable giving, such as:
- Private ancillary funds – often used by families and individuals able to make a minimum initial contribution of $500,000 with a plan to grow the fund beyond $1 million.
- Public ancillary funds – suitable for those with a lower entry point of $20,000
- Community foundations or giving circles – enable donors to pool resources for local impact. Entry levels can be as low as $2,000.
- Donor advised funds or sub funds – a simpler, more flexible structure allowing donors to distribute funds over time. They can be established relatively quickly with some recommending an initial donation of a minimum $20,000.
Structured giving can also occur without using a dedicated vehicle, for example, through corporate cash donations or larger-scale, planned contributions from individuals and families.
Next steps
Giving isn’t just about generosity, it can be about creating a lasting impact.
Speak with your local Nexia Adviser to develop a giving strategy that strengthens your family whilst also supporting the causes you care about.
