Donating from super could raise $22b a year for charities

Seventy-five per cent of 2605 people surveyed by Redbridge Polling last November agreed they should be able to give a “simple instruction” to their super fund to direct some of their money to charity, without a tax impost.

Mr Heath said some superannuation funds said they would “love” to offer the ability to donate to charity, but noted the debate about the purpose of super, and added that any changes need to be the result of extensive consultation.

However, he believes that reforms allowing members to direct their super to charities would lead to cultural change. He hoped to have the reforms in place by 2026, following the Productivity Commission’s inquiry into doubling philanthropic giving in 2024.

“I would hope that over the course of 2024, we’ve embarked on the consultation process and the government is considering its response [to the Productivity Commission],” Mr Heath said.

“We don’t want to rush it, and we want to make sure that people are on board because if we get this right, it will transform giving in Australia.”

Peter Burgess, deputy chief executive of the SMSF Association said self-managed super fund members “value choice and flexibility”.

“Making it easier to leave a bequest to charity through super is something we would be open to considering.”

Report author and economist Angela Jackson said it gives upper and lower donation scenarios that reflect the changing way Australians are engaging with their super.

The assumptions are based on whether the government’s push to increase superannuation drawdown rates in retirement from 10 to 50 per cent is successful, and the extent to which an easier form of giving triggers increased donations.

In the lower range scenario, retirees increase the amount they draw down in retirement to 50 per cent, so they have less to give when they die, and the new form of donating leads to a 108 per cent increase in giving over 30 years. Giving through super increases by up to $4.8 billion annually to a total of $64.6 billion by 2060.

The upper range scenario assumes retirees’ drawdown rates don’t increase, so they have more to give when they die, while the new form of donating leads to a 267 per cent increase in giving over the same period. Under that scenario, annual giving grows by up to $21.9 billion annually and a total of $260.3 billion.

Meanwhile, abolishing the 17 per cent tax would cost the government between $6.4 million and $20.7 million in revenue by 2027.