Governments facilitate giving through the tax system, and philanthropists support government by funding innovation that would normally be deemed uneconomic or difficult for policymakers to navigate.
Philanthropy plays an important role in our society. In its purest form, it supports not-for-profit organisations and community groups to form social capital, which when invested, addresses unmet needs and strengthens community.
Often philanthropy also covers what government funding does not. This is because government has to be universal to serve the majority, and with finite economic resources, not every social issue can be funded effectively from the public purse.
Globally there is a fine balance between the needs that are addressed by government, by business, and by philanthropy.
Medical research and its translation into better health outcomes is one such universal need that is addressed by government, business and philanthropy through the combination of tax incentives, commercialisation and altruism.
Medical research and translation
Australia is a world leader in medical research.
However, we still have challenges in moving new ideas through the research pipeline to become new medicines, therapies and services that improve our health. This process is called ‘research translation’ and translation is needed to progress ideas in two stages:[i]
- From the laboratory to use in human clinical trials; and
- From the research setting to a commercial product or an improved way of doing things.
The Australian Federal Government supports medical research and translation via two vehicles:
- The National Health and Medical Research Council (NHMRC): Australia’s peak body for supporting health and medical research and championing the pursuit of better health outcomes for all Australians; and
- The Medical Research Future Fund (MRFF): a $20 billion long-term investment translating health and medical research and innovation into health system sustainability.
In both instances, the entire continuum of medical research, from basic research to research translation, is co-funded by philanthropy, to supplement the NHMRC’s and MRFF’s objectives. And in most cases, philanthropy funds the earlier, riskier stages of research – the stage where grant money is unattainable due to little or no data.
What, therefore, are the enablers that allow philanthropists to step in and support public health initiatives?
Australia’s tax system
Recognising the good philanthropy does for all, Australia’s tax system provides tax benefits for not-for-profits and people who donate.
The number and type of charities people can donate to has grown sharply as governments of all persuasions have sought to make it easier for the public to financially support good causes, namely through:
- Refundable Franking Credit Arrangements – a vital source of income for philanthropic trusts, foundations and private ancillary funds, enabling them to provide grant funding to charities.
- The Deductible Gift Recipient (DGR) framework allowing eligible organisations or funds to receive deductible gifts or donations.
- An effective Australian Charities and Not-for-profits Commission (ACNC) that regulates charities and provides assurance of good governance.
Which leads us to the new breed of philanthropists who fund significant public health initiatives.
Billionaire philanthropists
New data from the Australian Taxation Office suggests that Australia is becoming less generous, with the share of people claiming tax deductible donations falling yet again, now at its lowest level since the 1970s.[ii]
Despite the fall in the number of people making donations, the average donation size increased in 2018-19 to a record $933 per person, from $846.
That increase was driven in large part by extraordinarily generous donations by some of the nation’s wealthiest residents. The largest donation was $400 million by mining magnate Andrew Forrest and his wife Nicola who announced in mid-2017 plans to invest some of their wealth into areas ranging from cancer research to preventing modern slavery.
But there are no better examples of supporting large-scale public health initiatives than during the COVID-19 pandemic when Alibaba founder Jack Ma pledged more than $14 million for coronavirus research, while the Bill and Melinda Gates Foundation pledged up to $100 million to accelerate global vaccine development.
Donors can be motivated by anything from wanting to help eradicate a disease that has killed a loved one to betting on something that could bring long-term societal change. Either way, philanthropy supports government by filling the early-stage funding void and bringing together disparate partners.
It is a symbiotic relationship.
Governments facilitate giving through the tax system, and philanthropists support government by funding innovation that would normally be deemed uneconomic or difficult for policymakers to navigate.
If you’d like to find out how Global Philanthropic can assist in aligning philanthropists to your research objectives, please contact us on +61 2 8324 7585 or australia@www.globalphilanthropic.com
