Introduction

TheSportsFoundationwasestablishedin1986bytheFederalGovernment,anditsMissionistoraisemoneyforthedevelopmentofAustraliansport.Itwasgivenauniquetaxdeductiblestatus,enablingprivateandcorporatedonorstoclaimataxdeductionfordonationstosportmadeviatheSportsFoundation.Giventhisuniqueroleandtaxdeductiblestatus,thissubmissionisfocusedoncertainkeyaspectsthatrelatedirectlyorindirectlytoincreasingtheamountoffundingtheSportsFoundationcanhelpaccessforsport.Thissubmissiondoesnotaddressotherareasegrelatingtothedeliveryofsport,whereorganisationssuchasNationalorStateSportingOrganisationsarebetter-placedtocomment.BelowissomebackgroundontheSportsFoundationbywayofcontexttothemattersraisedinthissubmission.BackgroundtotheSportsFoundationTheSportsFoundationworkswithalllevelsofAustraliansporttohelpraisefunds–fromthesmallestgrassrootsclubs,throughschoolsandcommunityorganisations,totheelitelevels.In2016individualathleteswereincludedinourfundraisingactivities,forthefirsttimeenablingcommunityandphilanthropicdonorstodirectlysupportathletesthroughtaxdeductibledonations.Sinceitsinception,theSportsFoundationhasraisedover$345mforAustraliansport.However,thisrepresentsonlyatinyfractionoftaxdeductibledonationsmadetoallsocialandcommunitycausesinthatperiod,andsporthaslaggedwaybehindothercomparablecauses. InAustralia,annualtaxdeductibledonationsexceed$3bnayear,andformostofthelast30yearstaxdeductibledonationstosporthaveamountedtolessthan1%ofthisfigure.ThisdoesnotreflecttheimportantrolethatsportplaysinthelivesoftheaverageAustralian,nor

doesitproperlyreflectthesocialandcommunitybenefitsofsporttosocietyasawhole–forexample:

• Thebenefitsofimprovedphysicalhealthdrivenbyincreasedactivitylevels• Thebenefitstomentalhealththroughsportsparticipation• Theimportantrolethatsportandsportsclubsplayincommunitiesthroughout

Australia

Inrecognitionofthis,in2014theSportsFoundationembarkedonatransformationdesignedtohelpsporttapmoreeffectivelyintocommunityandphilanthropicdonationsasasourceofrevenue.Keyelementsofthetransformationinthelastthreeyearshaveincluded:

• Improvingandsimplifyingprocesses,makingiteasierforsportsclubstopartnerwiththeSportsFoundationtoraisefunds;

• Developingabest-practiceonlinedonationandcrowdfundingplatform,enablingsporttotakeadvantageoftheincreasingimportanceofdigitalplatformsforfundraisingactivities;and

• Recruitingspecialistsanddevelopingonlineresourcestoprovideadviceandsupporttosportsandclubsonhowtorunsuccessfulfundraisingcampaignsandtoconnectmoreeffectivelywiththeircommunitiesandstakeholders

ResultsarisingfromthistransformationResultshaveclearlydemonstratedthatcommunityfundraisingandphilanthropicdonationsrepresentasignificantnewfundingopportunityforsport,withconsiderablepotentialforadditionalupsideintheyearsahead.InFY2014,donationstosportviatheSportsFoundationtotalled$17m.Sincethattime,donationshavegrownrapidlyasfollows:

• FY2015-$24.3m(growthof43%onprioryear)• FY2016-$32m(growthof32%onprioryear)• FY2017-$44.75m(growthof40%onprioryear)

Importantly,thenumberofsportsclubsandcommunityorganisationsfundraisingwiththeSportsFoundationhasalsoincreaseddramatically.In2014,therewerejustover600registeredfundraisingprojects,andinFY17thishadgrowntoover2,300.TheSportsFoundation’snewathletefundraisingprogramisprovingpopular,withmorethan170representativeathletesalreadyraisingfundstocovercostsoftraining,preparationandparticipation.TheSportsFoundation’sdigitalstrategyhasalsoprovedeffective–over80%ofalldonationsreceivedarenowmadeonline,andthisproportionisgrowingallthetime.Insummary:

• TheSportsFoundationisnowhelpingtoraisemoremoneyformoreathletes,schools,communitygroupsandsportsclubsatalllevelsofAustraliansportthaneverbefore;

• TheSportsFoundationhasraisedinexcessof$100minthelast3yearsaloneand,usingthe2014figureof$17masabaseline,thegrowthincommunityandphilanthropicdonationshascontributedanadditional$50mtosportinthatperiod;

• AnnualdonationstosportarealreadybroadlyequaltotheprojectedNationalLotteryfundingof$50m.

TheopportunityaheadWhiletheseresultsareencouraging,thec$45mdonatedtosportviatheSportsFoundationinFY17stillrepresentedlessthan1.5%ofalltax-deductibledonations.Thiscomparespoorlywithdonationsmadetotheothercharitableandsocialcauses–notablytheartsandculturalorganisations,whichareestimatedtoreceivearound8%ofalltaxdeductibledonations(c$240mpa).SportplaysatleastasimportantaroleinAustraliansocietyastheartsandculture,anddeliverssubstantialadditionalbenefitssuchastheimprovedphysicalhealtharisingfromregularsportsparticipation.Itisrealistictosuggestthatcommunityandphilanthropicdonationstosporthasthepotentialtoreachsimilarlevelstotheartsofbetween$200m-$300mayearwiththerightfocusandsupportfromGovernmentandotherstakeholders.

Inotherwords,ifpursuedasacorepartoftheAustralianGovernmentsfundingstrategyforsport,communityandphilanthropicdonationshasthepotentialtocontributeanamountbroadlyequivalenttotheFederalGovernment’scurrentannualsportbudget(around$280m).TheSportsFoundationhasdevelopedastrategywhichisaimedatgrowingcommunityandphilanthropicdonationstoaround$300mwithin10years,withthefirstkeymilestonebeingtoraiseatleast$100mayearfrom2020onwards.ProposalsforincorporationtotheNationalSportPlanToassisttheSportsFoundationinfulfillingitsobjectiveofdeliveringanadditional$300mtosportfromcommunitydonorsandfromprivateandcorporatephilanthropicsources,itisrecommendedthattheAustralianGovernmentshouldincorporatethefollowingkeyproposalsintoitsNationalSportPlan:1.ProvidetaxdeductiblestatustotheSportsFoundation’snewCharitableFundtoenablefundingtobeaccessedfromPrivateandPublicAncillaryFunds2.BroadentheSportsFoundation’spurposebeyondtraditionalformsofsport,toencompassotheremergingformsofphysicalandrecreationalactivityandsopromoteimprovementstophysicalhealthandfitnessthroughnon-traditionalsportsavenues3.AllocateaproportionofGovernmentfundingforsportasaformof“matchedgiving”conditionalonafundraisingcommitmentbytherecipient,toincentivisecommunityandphilanthropicgivingandobtaingreaterfundingleverage4.MakedistributionofanyfundsarisingfromtheproposedNationalLotteryconditionalonafundraisingcommitmentbyselectedrecipients.Eachoftheseproposalsisdiscussedinturnbelow.

Recommendation1:ProvideTaxDeductiblestatustotheSportsFoundationCharitableFundThisproposalisalreadyinprogress,andisincludedherebothforcompletenessandtoensurethatitremainsfirmlyontheagendafortheNationalSportsPlan.SincetheSportsFoundation’sestablishment,theAustralianphilanthropiclandscapehaschangeddramatically,notablywiththecreationandsubsequentgrowthofPrivateandPublicAncillaryFunds(PAF’s)inthelasttento15years.PAF’snowholdover$4.4bninphilanthropicassetsandarerequiredtodistributefundstoorganisationsthatarebothDGR’sandcharitable;in2013PAF’sdistributedover$550mtocharitablesocialcauses.Ofthis,10%($55m)wenttofundtheartsandculturalcauses–however,theSportsFoundationiscurrentlylargelyunabletohelpaccessthesefundsforsportingcauses.WhilsttheSportsFoundationisaDeductibleGiftRecipient(DGR),itisnotacharity,anditisthereforeunabletoaccessdistributionsfrommostPAF’s,evenwhereitisraisingfundsforcharitableprojects(ieprojectswheresportisusedtoachievecharitableoutcomes.)Over30%ofcurrentfundraisingprojectsregisteredwiththeSportsFoundationmeetcharitablecriteria.WiththesupportoftheMinisterforSportandTreasury,theSportsFoundationhasthereforeestablishedanewentity–TheAustralianSportsFoundationCharitableTrust–andisintheprocessofregisteringthiswiththeAustralianCharitiesandNotforProfitsCommission.Oncethisprocessiscompleted,supportwillberequiredfromtheAustralianGovernmenttoprovidealistingfortheCharitableFundasaDGRinsubdivision30-BoftheIncomeTaxAssessmentAct1997. Thisproposalisrevenueneutral,asitdoesnotinvolveprovidinganyadditionaltaxdeduction,anddoesnotinvolveanychangetoeitherthedefinitionofcharitablepurpose,ortherulesgoverningdistributionsfromPAF’s.ItsimplymodernizestheSportsFoundation’sstructuretoenableittoworkmoreeffectivelywithinthechangedphilanthropiclandscapesincetheestablishmentofsuchAncillaryFunds.

Onceenacted,thisisexpectedtohelptheSportsFoundationraiseanadditional$25-$30mayearforcharitablecommunityprojectsinvolvingsportby2022,andtoreachalevel

equivalenttofundingdistributedbyPAF’stotheartsandculturalcauses(c$55mayear)within10years.AfurtherbenefittothisapproachisthatitwillavoidtheneedforindividualsportsandclubstoestablishtheirownregisteredcharitiesandobtainDGRstatusforanycharitableprojectstheymayseektofund.TheSportsFoundation’sCharitableFundwillprovidealow-costandefficientmeansforsporttoaccessthisadditionalsourceofphilanthropicfunding.Recommendation2:BroadentheSportsFoundation’spurposetoincluderecreationalorphysicalactivityOneofthekeydriversfortheSportsFoundationtoraisemoremoneyistohelpdeliverthehealthandcommunitybenefitsofincreasedparticipationinsportandphysicalactivity.Inthe2017IntergenerationalReviewofAustralianSport,conductedbytheAustralianSportsCommissionandBostonConsultingGroup,theenormouseconomicandsocialvaluethatsportcontributestoAustraliansocietywasquantified.Keybenefitsinclude:

• Increasedproductivity–afittermoreactivepopulationwouldcontributeanestimated$8bntotheeconomythroughincreasedemployeeengagementandreducedabsencesforsickleave;

• Improvedhealth–inactivityandobesityleadtomanyhealthproblems,includingheartdisease,type2diabetes,strokes,cancersandmentalhealthissuessuchasstress,anxietyanddepression.Anestimated$29bnofhealthbenefitswouldaccruethroughincreasedparticipationinsportandregularphysicalactivity;

• Enhancededucationaloutcomes–studiesshowthatsportsparticipationleadstoimprovedcognitivedevelopmentandenhancedlifeskillsthatwouldtogetherdeliveraround$5bnayearineducationalbenefits.

Atpresent,thecapacityoftheSportsFoundationtohelpisrestrictedbyits1980’sfoundinglegislation,whichdefinedit’spurposeas“toraisemoneyforthedevelopmentofsportinAustralia”(Section10(3)oftheAustralianSportsCommissionAct1989).ThispurposeisreplicatedexactlyintheSportsFoundation’sgoverningdocuments.

Assuch,communitydonorsandphilanthropistsareonlyabletoclaimataxdeductionforadonationthatisforthedevelopmentofanactivitythatmeetscurrentlyaccepteddefinitionsof“sport”.Guidanceonwhatactivitiesconstitutea“sport”canbeobtainedfromthedefinitionusedbytheAustralianSportsCommission(ASC):“Ahumanactivitycapableofachievingaresultrequiringphysicalexertionand/orphysicalskillthat,byitsnatureandorganisation,iscompetitiveandisgenerallyacceptedasbeingasport.”

TheAustralianTaxationOffice(ATO)acknowledgesinitsRulingontaxexemptsportsclubs(TR97/22)that“usefulguidelines”areprovidedbytheASCdefinition,howeveritemphasisesatParagraph29thattheASC’sdefinition“doesnotcoverallofthemeaningof…sportforthepurposesofsection50-45.”Analysisshowsthatthereisagrowingtrendfor

sportsparticipationtomoveawayfromtraditionalstructureswhereparticipationtakesplacewithinaformalleagueand/orcompetition.Consumersareincreasinglytime-poor,withmanycompetingdemands,andareincreasinglylikelytoparticipateinmoresocialorrecreationalversionsofsport(suchasafunrun,socialcyclingoroceanswimminggroupsetc).Coupledwiththis,thereisthecontinualemergenceofnewformsofsportingactivity,heightenedbythedevelopmentoftechnologythatisleadingtotheemergenceofnewtypesof“sports”–includinge-sports.Asanexample,VirtualRealityTechnologycannowintegratevideogamingwithphysicalactivityandexercise,sothataparticipantcanruninavirtualraceorhitavirtualball(similartothemorerudimentaryWiisystem).Usersofthistechnologywillbeparticipatinginaphysicalactivity,andbegainingmanyofthehealthbenefitsofthetraditionalversionoftheactivityinquestion–butpotentiallywouldnotmeetthecurrentdefinitionof“sport”.Finally,itisnotedthatatStateGovernmentlevel,Departmentstendtobeorganizedas“DepartmentsofSportandRecreation”–immediatelybroadeningtheirmandatetocovernon-traditionaland/ornon-competitiveformsofsport.

Itisrecommended,therefore,thattheSportsFoundation’spurposeisbroadenedtohelpitmeettheseemergingtrendsandtobettersupportparticipationinabroaderrangeofbeneficialphysicalactivities.ItisproposedthatthepurposeoftheSportsFoundationshouldbeexpandedasfollows:“Toraisemoneyforthedevelopmentofsport,andforthefurtheranceofphysicalandrecreationalactivity,inAustralia”Ifthisproposalreceivessupport,itwouldneedtobeincorporatedintoanamendedConstitutionfortheSportsFoundation,andmayalsorequireminorlegislativeamendment.Recommendation3:AllocateaproportionofexistingGovernmentfundingforsportasaformof“matchedgiving”conditionalonafundraisingcommitmentOutsideofthemajorprofessionalsports,wheresponsorshipandtelevisionbroadcastingrightsgeneratethebulkoftherevenue,thevastmajorityofAustralia’s91NationalSportingOrganisationscurrentlyrelylargelyonGovernmentfunding.TheIntergenerationalReporthighlightedthatitisimportanttomaintainabroadanddiversebaseofsports,toprovideameansforpeopleofalldifferenttypesandpreferencestofindanavenueforparticipation,andtheSportsFoundationsupportsthis.However,aresultofthelong-standingrelianceonGovernmentfundinginmanysportsisthattheSportsFoundationhasnotedalevelofinertia,andinsomecasesa“cultureofdependency”insomeNationalandStatesportingorganisations.Thefocusintheseorganisationsisonmaintainingandobtaininggrantsandother“handouts”,andopportunitiestogenerateown-sourcerevenuesegthroughcommunityandphilanthropicfundraising,areneglected.Tocounterthis,theSportsFoundationrecommendsthataproportionofGovernmentfundingismadeconditionaluponrecipientNationalorStateSportingOrganisations,orotherrecipientsportsorclubs,raisingaspecifiedamountoftheirownfundsthroughcommunityandphilanthropicdonations.Therearetwomajorbenefitsofthisproposal:

• Thoseorganisationswouldbeencouragedandincentivisedtobecomemoreself-reliantandself-sustaining.Thiswouldintimereducetheoverallburdenofsportonthepublicpurse;and

• Equally,andobviously,thisapproachwouldmeanthatanyfundsgrantedwouldhave

a“multipliereffect”andhelpinjectadditionalfundsintosport.Forexample,byrequiringsportstoraiseanamountequivalentto,say,25%offundscurrentlygrantedbytheASC,thiswouldhelpgenerateanadditional$43.75mforsportviacommunityandphilanthropicdonations(basedontheASC’s2015grantdistributionof$175m).

Recommendation4:MakedistributionofanyfundsarisingfromtheproposedNationalLotteryconditionalonafundraisingcommitmentbyselectedrecipientsTheSportsFoundationsupportsanyproposaltoprovideincrementalfundingforsport,includingtheproposedintroductionofaNationalGoodCauseslottery.However,itisrecommendedthatdistributionofanyadditionallottery-relatedfundingislinkedto–andmadeconditionalupon-recipientclubs,communitiesandsportsraisingaspecifiedamountoftheirownfundsthroughcommunityandphilanthropicdonations.Aswithrecommendation3above,therationaleherewouldbetoincentiviseorganisationstotapintonewsourcesoffunding,andtoleverageanylotteryfundingthatismadeavailable.Therelevantamountcouldbedependentoncertainfactors,andmaybesetinarangeeg25%to50%ofamountstobegrantedvialotteryfunding.Basedontheestimated$50mofannuallotteryfundingthatmaybecomeavailable,suchanapproachcouldbeleveragedtothetuneof$12m-$25mpa.

TheSportsFoundationsuggeststhiscouldpresentafundingsolutiontooneofthemostpressingproblemsfacingcommunitysportatpresent,namelythelackof–ortheneedtoupgrade–communitysportingfacilities.Currenthigh-profileexamplesoftheseissuesinclude:

• Therevenue-sharingdisputebetweenCricketAustraliaandtheAustralianCricketersAssociation,wheretheneedtoupgradegrassrootscricketfacilities(highlightedbytheNationalCricketFacilitiesAudit)andhowtofundthisisatthecoreofthepublicdebate;

• Thegrowthofwomen’ssport–notablyWomen’sAFLandSoccer–whereamajor

barriertoparticipationisthatmany/mostchangeroomslackfemale-friendlyfacilities-see,forexamplehttp://www.theaustralian.com.au/sport/afl/calls-for-changeroom-action-to-cater-for-womens-afl/news-story/88e6fe74756539ac23e99ba0f177f74e);

• Lackofsoccerpitchesinmanyareas,leadingtohigh-profilecasesofwomenandgirlsmatchesbeingmovedtogivemenaccesstobetterpitchesortimeslots–seeforexamplehttp://www.dailytelegraph.com.au/newslocal/manly-daily/female-athletes-forced-from-sport-fields-to-make-way-for-men-due-to-grounds-shortage/news-story/08a052f82af42c53c32668acf3526995

TheSportsFoundation’sexperienceisthatlocalcommunities,whostandtobenefitmostfromimprovedfacilities,orimprovedaccesstofacilities,arethemostlikelytodonateinsupportoflocalfacility-basedcampaigns.AroundhalfofallfundsdonatedviatheSportsFoundationareforfacilityprojects.TheSportsFoundationthereforerecommendsthatallfuturefundingapproachestoimprovingorupgradinglocalgrassrootsfacilitiesshouldincludecommunityandphilanthropicfundraisingasacorerequirement.Thiscouldinvolveapartnershipapproachwithamixofsources,suchas:

• AnationalfundingpoolprovidedbytheAustralianGovernment(vialotteryorothersources);

• AfundingcommitmentfromtherelevantNationalorStateSportingOrganisation;• Aproportionoffundsprovidedbythebeneficiaryclubororganisation,fundedbya

community/philanthropiccampaigninpartnershipwiththeSportsFoundation;plus• AnyavailablefundsaccessiblefromStateorLocalGovernment

SummaryandconclusionTherapidgrowthincommunityandphilanthropicdonationstosportoverthelastthreeyearshasshownthatthehealth,socialandcommunitybenefitsofsport,coupledwithAustralia’straditionalpassionforsport,ismotivatingpeopletodonateprovidedtheyarepresentedwithanengagingandmeaningfulprojectorcampaign,wherethebenefittotheircommunityorsportisclearlyarticulated.

Comparisonwithothersocialandcommunitycausesshowsthatthereremainsconsiderableupsideandthereisthepotentialforphilanthropicdonationstodeliverupto$300mayearinadditionalfundingforsportwithin10years.Thefourrecommendationshighlightedinthissubmissionareallkeytoprovidingadditionalcommunityandphilanthropicfundingforsport.Ofthefourrecommendations,perhapsthemostcriticalarethelasttwo,namelymakingcurrentorincrementalGovernmentfundingconditionalonraisingacommunityphilanthropiccontributions.Thiswill:

• helpaddressthecurrent“cultureofdependency”prevalentinmanysports;• provideleveragetoanyGovernmentfundingprovided;and• reducethedependencyonpublicfundinginthelongterm.

Together,thesestepswillplacecommunityandphilanthropicfundraisingasacorepartofthefuturefundingmixforsport,andalignitwithothercomparablesocialcausessuchascultureandthearts,whereitalreadyholdsthisposition.

PatrickWalkerChiefExecutiveOfficerTheAustralianSportsFoundation