Celebrating going above and beyond to give


Perpetual Private Insights

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The COVID lockdowns across many parts of the country in June and July this year have shown how fragile our economic recovery really is, and how the revenue streams for many charitable organisations remain vulnerable to broader economic and market forces.

For philanthropists, FY21 was a challenging year on many fronts. Record low interest rates and companies cutting their dividends in the early days of the pandemic continued into FY21. While there has been some recovery in dividends from the early days of the pandemic, they are still below FY19 levels and reducing the income available to distribute to the community.

At the same time, the needs of the community sector that rely so deeply on our philanthropists’ giving has rarely been higher than during the pandemic and the bushfires that preceded it. 

For many of the philanthropists we work with, there was a clear eyed view that given the unique health and economic emergency we are facing, philanthropy really needed to step up and play a role,” says Jane Magor, Perpetual’s National Manager of Philanthropy. 

The challenge for Private Charitable Trusts

"For philanthropists, who are so passionate about supporting communities in their times of greatest need, the squeeze on income in FY21 has been particularly challenging" says Jane.

“This has been particularly the case for many Private Charitable Trusts which are restricted in what they can distribute,” Jane added, “that is, capital is restricted and according to the trust deed, it’s only income that can be distributed.”

“For the beneficiaries of many Private Charitable Trusts, this means that this year, they will have to do more with less, which is going to take extra planning and consideration.”

Private Charitable Trusts (PCTs) made up 33% of the funds committed through Perpetual’s IMPACT Philanthropy Application Program (IPAP) in FY21. For these philanthropic structures, the low-income environment and reduction in dividends saw income drop on prior years, this in turn lead to less funds being available to get into community. 

How have our other philanthropists responded?

At Perpetual, around 44% of IPAP commitments in FY21 came from Private Ancillary Funds (PAFs), providing an opportunity for these Foundations to play a role in getting more funds to the community sector. PAFs have a minimum mandatory annual distribution rate of 5% of the value of the fund at the previous 30 June (this was originally established so that funds could broadly rely on dividend income to fund distributions, leaving capital intact to grow over time), but trustees have the flexibility to do more should they wish. Unlike many PCTs, many of which have deeds enabling trustees to only access income, PAF founders, trustees and family advisers could look holistically at the total return of their portfolio to fund distributions and utilise capital. In an unprecedented year of community need, we worked with many philanthropists to identify funding mechanisms that would help maintain funding levels for not-for-profits and the programs they run,” added Jane. 

Overall, the generosity of our clients has seen an extra $7.2 million committed to IPAP this year, above and beyond their statutory obligations, keeping it in line with distributions from FY20 despite fears of a significant drop off.

John Etherington is a Co-Trustee, with Perpetual, of The Ian Rollo Currie Foundation. They were able to contribute more this year.

"I was happy to work with Perpetual to commit extra contributions to the sector supporting older Victorians, especially considering the vulnerabilities of those communities through these difficult times. At the end of the day, philosophically, these funds are community dollars, and we exist to support the community,”

“While we always have the obligation to manage our funds in the right way prudently, our obligation as trustees to implement our charitable purposes was more important this year,” John added.

One way we’ve helped philanthropists increase their commitments this year is by taking advantage of ATO changes to ancillary fund guideline changes. Under the changes introduced for late FY21, PAFs could increase their contributions this year above the minimum 5% and receive a credit which would allow lower contributions in future years.   

Making a difference

Investing in NFPs as they respond to the impact of COVID-19 has been critical. For Metro Arts in Queensland, they not only underwent major organisational change, but they have committed to deliver key new projects to keep Queensland artists working at a time when the sector is still reactively struggling with challenges presented by COVID-19.

“The funding that we have received from philanthropists through IPAP will cover new organisational staff costs, which are critical for these projects to be delivered. As a leading Australian contemporary art incubator, we will be able to continue to target programs for graduate and early career artists which is an area that often lacks investment.’ says Jo Thomas at Metro Arts.

As we emerge from COVID-19 and see markets in FY21 record very strong gains, the prospects look brighter for income – and capital – for philanthropic funds. For NFPs, this allows planning for programs and services for the year ahead, but more importantly confidence that when challenging times comes, philanthropists will go above and beyond to give. 

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Perpetual Private advice and services are provided by Perpetual Trustee Company Limited (PTCo) ABN 42 000 001 007, AFSL 236643. 

This publication has been prepared by PTCo. It contains general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial or other adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. To view the Perpetual Group's Financial Services Guide, please click here