AAP General News (Australia)
08-01-2011
FED:Groups call for charity bonds to be set up
By Lisa Martin
CANBERRA, Aug 1 AAP - Australia should develop a bond market that provides socially
responsible investments to benefit the work of charity and community organisations, a
Senate hearing has been told.
The Productivity Commission has recommended exploring options to allow philanthropic
foundations and trusts to invest in social enterprises.
Under current deductible gift recipients rules this is not allowed.
Cheryl Kernot, from the Centre for Social Impact, said there was an appetite for a
new type of social investment.
"There is demand and there is supply out there at this stage from high-net wealth individuals,"
she told the Senate's economics references committee in Canberra on Monday.
"There's some interest from corporate foundations who want to move from that scattering
of grants to more engaged social investing."
The UK has social impact bonds.
YMCA Australia acting chief executive Peter Malone said he supported the idea of charity bonds.
If the bonds were given tax exempt status it would allow market-based mechanisms to
raise capital for social enterprises.
There were concerns over governments cost-shifting the delivery of community and social
services to the not-for-profit sector, Mr Malone said.
He said charity bonds were a win-win for the government and charity groups.
"The creation of this market can reduce pressure on government resources to provide
large grants," Mr Malone said in a submission to the inquiry.
Potential loss of taxable income collected from the tax exempt bonds would be offset
through a reduced government grants.
The hearing heard many not-for-profit organisations took "a conservative approach to
financial risk management" and were reluctant to leverage their assets to make investments
to help fund their activities.
Foresters Community Finance spokeswoman Therese Wilson called for the government to
support the growth of the community development financial institutions.
Charities' reliance on corporate social responsibility could be problematic.
"It can rise and fall on the whim of the CEO," Ms Wilson told the hearing, adding the
money was usually limited.
There are 600,000 not-for profit organisations in Australia competing for public donations
and government funding.
The Archerfish Foundation said some charity causes were able to attract a disproportionate
share of the charity dollar at the expense of "other essentially unfashionable causes".
"This has resulted in an not-for-profit sector that is overrepresented by organisations
where marketing and advocacy are a priority, channelling resources away from more socially
beneficial uses," the foundation said it in its submission.
AAP lpm/rl/goc/
KEYWORD: CHARITY
� 2011 AAP Information Services Pty Limited (AAP) or its Licensors.
