“If you captured 5 per cent to 10 per cent for charity, it would mean $130 billion to $260 billion.”
Under Philanthropy Australia’s plan, outlined in its submission to a Productivity Commission inquiry into how to increase giving in Australia, superannuation funds would be required to offer members an easy option to donate some of their unused retirement savings to charity when they die.
The Albanese government has a formal goal to double philanthropic giving by 2030 and asked the commission to recommend ways to encourage people to donate.
Backed by the likes of the Ramsay and Myer foundations, Philanthropy Australia proposes allowing people to make what is known as a binding death nomination to direct a proportion of their unspent retirement savings to charity.
According to the 2020 retirement income review, by 2059 around $1 in every $3 paid out in superannuation will be a death benefit.
At present, unspent super can only be directed to a charity through a will, but it’s estimated that around 50 per cent of Australians die without a will. Additionally, these funds directed to charity attract 17 per cent in tax.
Philanthropy Australia’s plan would allow Australians to list a charity as a benefactor in a binding death benefit nomination, in the same way a dependent can currently be listed, and remove the 17 per cent tax from charitable contributions made after death.
Stephen Meates, who will leave a bequest to Sydney’s Taronga Zoo, believes it should be easier to donate through his super. Louie Douvis
Former insurance executive Stephen Meates, 65, plans to leave $550,000 to Taronga Zoo Foundation and says having a simple process for donating through super would encourage more giving.
Without such an option, he will use his will to direct about 15 per cent of his estate to the foundation.
“When someone dies, [all your assets] are all thrown into a pot and divvied up, but that takes time. Whereas if you can organise for a nice letter to go to the superannuation manager [saying], ‘I’ve already approved it’, they can send the money within 24 or 48 hours,” he said.
“It’s a much more efficient way of doing it, as far as the charitable organisation getting their hands on the money.”
He said it could be similar to people nominating to become an organ donor when they take out, or renew, a driver’s licence.
“It could be one of those questions which you could [answer] in your super: ‘who do you want your money to go to, when you die?’ It’ll be just one of those questions that they add in,” he said.
Research by Redbridge for Philanthropy Australia in November 2022 found broad support for such a policy. Nearly 70 per cent of 2605 survey respondents agreed they should be able to give a “simple instruction” to their super fund to leave as much money to charity as they decide, without a tax penalty.
Superannuation funds warned such a policy should be carefully considered.
“Unintended consequences could arise in regard to financial dependents of a deceased person as it is likely they would have no scope to have a death benefit payment to a charity reviewed in light of their circumstances,” the Association of Superannuation Funds of Australia said in a statement.
Industry Super Australia said it did not have a view on the proposal.
Mr Rosevear said changes to super to make it easier to donate can’t be considered in a vacuum, and there are several policy areas that would need to be addressed.
He noted that, as it stands, superannuation can’t be passed to nieces or nephews.
“The government would need to decide … how fair would it be to be able to give to charity and not be able to pass on to your nieces or nephews?” he said.
However, these were “modest” issues that could be overcome through consultation with industry.
“I think it will, over time, become a national custom, where all Australians think to themselves, ‘am I in a position to give some of my super away when I die?’ A lot of them will say, ‘no, I’m not.’ … but others will say, ‘you know, we’ve done pretty well. I think we can do this’.”
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