How generosity can be part of your financial plan

It’s the season for gifts, sharing meals and spreading cheer. But what if your festive generosity could do more? What if it could ripple through generations, perhaps shaping futures and maybe reduce your tax bill?

Giving isn’t just an act of kindness; it can also be a smart financial move. From helping loved ones today to creating a legacy for future generations, strategic gifting can align with your broader financial goals.

After all, Australians are generous. We consistently rank among the most charitable in the world with a study showing that, in the past year, 56 per cent of Australians have donated money and 31 per cent have donated their time.

The Australian Charities and Not-for-profits Commission reports that the more than 52,000 registered charities received just over $19 billion in donations and bequests last financial year, up by $5 billion on the previous year. The amount represented 8.5 per cent of not-for-profits’ revenue.

Australia, as a wealthy but ageing nation, is well-placed to grow charitable bequests, but the reality is less encouraging. The number of people leaving bequests to charities is low and the size of the bequests also “falls far short of international peers”, according to The Bequest Report by JBWere.

JBWere estimated total inheritances were around $150 billion in 2024 and a total of $5.4 trillion to be inherited over the next 20 years.

Most inheritances will go to a partner if still in a couple (38 per cent) or the next generation if single (51 per cent), the report found. A further 10 per cent goes to other family and friends and only one per cent to charities, compared with around four per cent in the United States and United Kingdom.

The report noted that, at the current rates, charitable bequests alone are likely to grow to $2.6 billion over the next decade but even a small increase could make a big difference. “If we could improve the rate and value of charitable bequests to a level of three per cent, still below international standards, we could reach almost $8 billion annually by the end of that decade”.

Why planned giving matters

Often, giving is reactive rather than planned. We might respond to a donation drive, an emotional TV ad, a friend’s fundraiser or gift property or shares to a family member.

But giving can also be intentional. Some people choose to set aside a portion of their annual income, commit to monthly donations or include charities in their wills. Others join workplace giving programs or support causes that reflect their values. In this way, generosity becomes less about impulse and more of a conscious decision.

There may be advantages in taking a more strategic approach. It can amplify your impact, build your reputation, open doors to new networks and potentially deliver tax benefits. Donations to organisations with deductible gift recipient (DGR) status can help to manage your tax position by reducing taxable income. If you give more than $2 to an organisation with DGR status, you can claim a 100 per cent tax deduction for your donation. The amount you can claim as a deduction is uncapped but is limited by a taxpayer’s marginal tax rate, their taxable income and their capacity to give.

Planned giving can help to create a lasting impact, building a legacy for family and community. It integrates generosity into financial planning, ensuring investments reflect personal or family values. In this way, it becomes a tool for involving younger generations in financial governance, teaching responsibility and shared purpose.

Strategic gifting can include early inheritance, education funding or contributions to a family trust. These approaches can reduce future taxes on your estate.

Structured giving options for lasting impact

For those looking to make a lasting impact on their communities, structured giving vehicles offer flexibility and control.

It can create long-term financial stability to favourite causes, providing predictable funding for charities. It can potentially reduce complexity in estate planning and ensure your wishes are carried out; and donating assets may offset capital gains tax liabilities.

Unlike mass market or other forms of giving, such as direct donations to charities, crowd funding and volunteering, structured giving involves using a vehicle designed to enable giving such as:

Private Ancillary Funds – often used by families and individuals able to make a minimum initial contribution of $500,000 with a plan to grow the fund beyond $1 million.
Public Ancillary Funds – suitable for those with a lower entry point of $20,000
Community foundations or giving circles – enable donors to pool resources for local impact. Entry levels can be as low as $2,000.
Donor Advised Funds or sub funds – a simpler, more flexible structure allowing donors to distribute funds over time. They can be established relatively quickly with some recommending an initial donation of a minimum $20,000

Structured giving can also occur without using a dedicated vehicle through, for example, corporate cash donations or larger scale and planned contributions from individuals and families.

Giving isn’t just about generosity, it’s about creating a lasting impact.

We can help to create a giving strategy that supports your family and backs the causes you care about.

Steps to create a giving plan

What’s your focus – family support, charitable impact or both?
Assess your capacity What you can give without compromising your financial security.
Choose the right vehicle Work out the approach that suits your objectives .
Consider timing Giving at certain times may be part of your tax strategy.
Seek advice We can help you to integrate gifting into your overall investment strategy.