Not For Profit Specialists presentation

Insights into Philanthropy in Australia
Presented by
Fiona Maxwell
Philanthropy Australia
experience. new thinking 2

About Philanthropy Australia
• Our role: to encourage The planned and structured
giving of time, information, goods and services, voice
and influence, as well as money, to improve the
wellbeing of humanity and the community.
• Membership organisation – how NFPs can be involved
• Policy and Advocacy
• Education and Professional Development

Philanthropy in Australia
• Earliest known trusts/foundations
• The Marvelous Melbourne era – death duties
• The establishment of PA
• Tax reform - the arrival of PPFs (PAFs)
• How does Queensland compare?

Are Australians generous?
Estimates as some PAF contributions from Companies

Competition for the
Philanthropic dollar
• Size of sector – 600,000 NFPs in Australia
• Concern about duplication or ineffective use of
resources
• Critical issues: Measuring impact and using data
to better track duplication
• Scope for collaboration, mergers and
acquisitions
• The growth of social enterprise and
diversification of income streams

Future Trends in Philanthropy
• Recognition that everyone can – and does – give, not just
wealthy
• New approaches to giving: giving circles (Women &
Change), affinity groups, workplace giving
• Impact Investing and Social Finance
• Corporate engagement and closing the gap between NFP
and corporate approaches

1
0
Tax Efficient Giving and Bequeath Strategies
experience. new thinking
Presented by
Jamie Towers
Hanrick Curran

Tax Efficient Giving & Bequeath
Strategies
• Understanding what can be claimed as a tax
deductible gift (inter vivos)
• Deceased Estates

Tax Efficient Giving – Inter-Vivos
• What can be claimed as a tax deductible Gift?
• Gifting Money
• Gifting Assets (in kind)
• Gifting as part of a fundraising event ticket
price

Inter-Vivos Giving
Type of Gift Deduction
Money $ spent
Property purchased < 12 months ago Lesser of Market Value** and Cost
Trading Stock If Disposed outside ordinary course of business &
no election made-Market Value**
Property Valued at > $5,000 and
purchased > 12 months ago
Commissioner's Valuation *
Listed Shares value at < $5,000 and
purchased > 12 months ago
Market Value**
Fundraising Tickets > $150# Cost of ticket less Market Value** of right to
participate in fundraising event
* Applies for private ruling to get Commission’s valuation
** GST inclusive market value on date of the gift
# Only deductible if Market Value of fundraising event does not exceed lesser or
$150 and 20% of cost of ticket

Bequeath Strategies
• Estate Planning – how to reduce tax on the
Estate
• Understand how Deceased Estate’s are taxed
• Have charities as ‘residuary beneficiaries’
• Ensure Executor and Tax Agent prepare the
Estate tax returns in most efficient manner

Bequeath Strategies
• Understand how Deceased Estate’s are taxed
• No capital gain on disposal of assets under a
legacy in the will
• Capital gain to estate if executor sells assets
• Estate is taxed on income if ‘no beneficiaries
are entitled’
• Residuary beneficiaries should be entitled to
income if all liabilities ascertained and provided
for and income not required

Bequeath Strategies
• Gift ‘tax inefficient assets’ to charities –
specific exemption for Deductible Gift
Recipients
• Make charities as ‘residuary beneficiaries’ so
no tax on estate income if they are presently
entitled to income

Bequeath Strategies
• Key to tax efficiency is ensuring the testator,
the executor and the tax agent preparing the
estate tax return understand the tax issues for
estates.
• Review opportunity for estates with Charity
beneficiaries – object to prior assessments to
get back money that should not have been
taxed.

1
8
Digital Disruption – the impacts on NFPs
Presented by
Damien Cramer
Westpac Social Sector Banking

SOCIAL SECTOR
BANKING.
About social sector banking
Westpac’s vision is to transform the way the Social Sector organisations are banked:
 Dedicated Bankers – a national team of Social Sector Bankers who are 100%
dedicated to not for profit organisations.
 Specialised products – cost effective products developed specifically for the social
sector.
 Social enterprises – helping you establish and run a social enterprise as a commercial
business with a social conscious.
 Beyond banking – connecting you with additional, non-banking services such as
organisational mentoring, promotional and educational opportunities or simply
networking via bank events.
Presented by
Damien Cramer

SOCIAL SECTOR
BANKING.
The Westpac Foundation
Presented by
The Westpac Foundation supports not-for-profits run by
community leaders who have the vision, courage and
determination to give disadvantaged individuals in our
community opportunity through education and employment.
Through our grants, we seek to address the root causes of social
disadvantage by investing in community-led programs that address
genuine social need in the communities where we live and work.
The approach of our foundations is not just about dollars; integral to
the sustainability of the programs we fund is the non-financial
support we provide - lending the skills and expertise of Westpac
employees to help build the capacity of the organisations we
support to ensure they are around for the long-term.
For more information about our approach and grant programs,
visit www.westpac.com.au/westpacfoundation
Damien Cramer

SOCIAL SECTOR
BANKING.
The Disrupted Consumer
Presented by
Damien Cramer

SOCIAL SECTOR
BANKING.
It’s a scale game
Presented by
Damien Cramer Oct 2014 22

SOCIAL SECTOR
BANKING.
Reputation is Everything
Presented by
Damien Cramer

SOCIAL SECTOR
BANKING.
Things you should know. This information does not take your circumstances into account. Before acting on this information, you should consider its appropriateness. Before
making a decision about products mentioned in this presentation, you should read the relevant Terms and Conditions, which are available at westpac.com.au, and consider if
the product is appropriate for you. Seek independent financial advice before you make any investment decision. Unless otherwise specified, the provider of products and
services described in this presentation is Westpac Banking Corporation ABN 33 007 457 141, AFSL and Australian credit licence No.233714
Presented by
Name Surname XX MMMM YYYY 24

2
5
Common misunderstandings surrounding NFP
Reporting
Presented by
Michael Georghiou
Hanrick Curran Audit

Reporting issues and opportunities for NFPs
 Challenge the status quo of General Purpose reporting Vs
Special Purpose
 Key questions determine the level of reporting required
 Reporting and disclosure requirements
 Impacts of reporting decisions
 Material Adverse Effect – in practise
 Employee Benefits balance sheet categorisation
 ACNC and ASIC regulators
 Valuation of Assets – all or nothing
 Capital Funding Agreements

General v Special Purpose Financial Statements
 To decide which type of financial statement your charity needs to prepare under
the Australian Accounting Standards, your NFP must work out whether it is a
‘reporting entity’ or not.
 If people use and rely on your NFP's financial statements to help them make
decisions (for example, about how to spend money) then your charity is most
likely a reporting entity. The Australian accounting standard AASB 1053 includes a
definition of a reporting entity as:
'an entity in respect of which it is reasonable to expect the existence of users who rely on the
entity's general purpose financial statements for information that will be useful to them for
making and evaluating decisions about the allocation of resources. A reporting entity can be a
single entity or a group comprising a parent and all of its subsidiaries'.
 Ultimately, whether your NFP is a reporting entity or not is a judgment based on
considering a number of indicative factors (under Statement of Accounting
Concepts SAC 1 Definition of the Reporting Entity, which should be referred to for
greater detail in making this determination).

Questions to be answered
 Is there a spread of ownership/membership or is there a level of
separation between management and owners/ members/ others that
have an economic interest in your NFP?
 Does your NFP have economic or political importance/influence?
 Is your NFP large in size, or have a high level of sales/ assets/ debt/
funding from governments or other parties, or a high number of
employees?
The more your NFP answers 'yes' to these questions, the
more likely your NFP is a reporting entity.

Reporting and disclosure
 If your charity is a reporting entity it must submit to us a general purpose
financial statement that complies with all applicable Australian Accounting
Standards. The standards are issued by the Australian Accounting Standards
Board (AASB) and provide ways of accounting for and presenting the financial
information of your charity.
 Your charity can choose whether to report under a reduced disclosure regime
(RDR), which allows significantly less disclosure in the notes to the financial
statements.
 If your charity is not a reporting entity, it can submit a special purpose financial
statement to us.
 This means you must apply as a minimum the following six accounting standards
to the extent they are relevant:
AASB 101, Presentation of Financial Statements
AASB 107, Statement of Cash Flows
AASB 108, Accounting Policies, Changes in Accounting Estimates and Errors
AASB 1031, Materiality
AASB 1048, Interpretation of Standards
AASB 1054, Australian Additional Disclosures.

Impact of reporting decision
General Purpose
Reporting
Special Purpose
Reporting
Complexity Highly complex Less complex
Cost and Advice Costly and specialised Lower cost and less
advice requirements
Accounting Standard
adoption
All Accounting Standards
must be adhered to
No need to adopt all
accounting standards
Transparency and
information disclosure
High level of information
disclosure and
transparency
Simplified and more
summarised reporting

Material Adverse Events
 A lot of lenders (mainly banks) are inserting these clauses in loan documents.
 What the clause basically says is:
If there is a material adverse event the bank can call in the loan.
 A material adverse event is anything the bank thinks is “materially adverse” to
its position.
 In other words – the bank could call up a loan at anytime whether the loan is
fixed or variable for any reason.
 A lot of annual reviews give the bank the same powers.
 What does this mean?
 where the cause exists, all debt is current
 review all borrowing documentation

Employee Benefits
 There still appears to be some confusion about the current v non-current
classification of liabilities.
 AASB 119 deals with whether an employee benefit is a short term or long term
benefit.
 The classification issue is dealt with under AASB 101 - Presentation of Financial
Statements.
 Specifically paragraph 69.
 “Unconditional right to defer settlement". If your company does not have the right
to defer settlement and therefore the LSL to which an employee has a legal
entitlement to take (i.e. the 1st tranche for which the employee has meet the
service period) is a current liability - but described as "other long term liability"
within that class.

ACNC is now your Regulator
 While the ACNC will now be your main regulator, ASIC
continues to have responsibility for a number of areas,
including:
 the registration (incorporation) of companies
 winding up (closing)
 insolvency, and
 raising funds.
 Any changes to your company apart from those 4
exceptions above are to be notified to the ACNC.

Governance Standards
 From 1 July 2013, some requirements under the Corporations
Act have been replaced by the ACNC governance standards.
These standards are principles-based and allow for greater
flexibility.
 1 Purposes and NFP character of a charity
 2 Accountability to members
 3 Compliance with Australian laws
 4 Suitability of Responsible Persons
 5 Duties of Responsible Persons

Valuation of Assets
According to AASB 116 Property Plant and Equipment, if the
Company considers revaluing an asset, it will be required to
revalue the entire class of assets to comply with the Standard.
The valuation of the assets would also be required to comply
with AASB 13 Fair Value Measurement to have the assets
measured using the asset in its highest and best use or by
selling to another market participant that would use the asset
in its highest and best use.
It’s all or nothing and instructed for highest and best use

Capital Funding Agreements
 Usually granted by the State Government for the purchase of
land and building
 Two types – repayable and non repayable submit to release
condition
 Significant difference as one is a liability and one is only
contingent
 Detail about repayment is often difficult to locate

3
7
Topical Legal Considerations for NFPs
Presented by
Melissa Sinopoli
MacDonnells Law

Overview
• Board Governance
• Directors and Officers Liability – Insurance and
Indemnity Deeds
• Consolidation in sector – issues to consider in a merger
or acquisition

Board Governance
The main issues with Board governance:
• Conflict of interest
• Lack of diversity/succession planning.

Tips for managing real and perceived
conflicts of interest:
Directors who have either a direct or indirect interest in a matter should:
• Disclose the possible conflict. If unsure, err on the side of caution
and disclose.
• Not take part in any deliberations on the contract or matter. The
person should step out of the meeting for that part of the discussion.
• Not vote in relation to the contract or matter.
• Communicate with the shareholders.

Tips for Board diversity/succession planning:
• Structure the Board to have an effective composition, size and commitment of
persons on the Board in order to discharge responsibilities and duties.
• Admit Board members such that the collective Board understands the business’
issues, exercises independent judgment, encourages enhanced performance of the
company and reviews the performance of management. The ASX recommends that
most members of the Board, as well as the Chair, be independent directors
• A Board, if it does not have a formal nominations committee, should have processes
in place for selection and appointment of directors, determination of desired
competencies of directors, creation of succession plans and methods for evaluation
of performance.

Tips for Board diversity/succession planning:
• It is recommended that Boards develop a skills matrix, which is used to identify any
gaps in the skills and experience of current directors. Then create a role description
and seek to appoint directors who ‘fill in’ these skill gaps when selecting new
directors.
• A Board should be large enough that it comprises a wide range of skills and
experience, and allows the best interests of the company to be represented, without
being so large that effective decision-making is hindered. Most Boards have less than
ten members, with research suggesting that decision-making efficiency is decreased
by 10% for each person added to the Board above that.
• Early identification of potential Board members with desired skills, as well as strategic
planning on future Board needs and the direction of the company, assist in
streamlining succession planning.
• Current Boards need to be actively planning for the recruitment of directors to future
positions in order to provide continuity in the Board and the correct skill set.

Directors and Officers Liability –
Insurance and Indemnity Deeds
A Deed of Indemnity should contain provision for the following (which are not
automatically covered by legislation):
• That the company only has the right to settle a claim on the director’s behalf if it
has gone through a specific process
• That the director has an entitlement to access company documents to ensure an
adequate defence can be conducted by the director.
• That the company be required to maintain Directors and Officers Insurance for
the director during the time that the director holds office and for seven years after
the director ceases to hold office.

Consolidation in sector – issues to consider
in a merger or acquisition
Key issues to consider in a merger or acquisition:
• How the Board of the entity being acquired is to be represented on the
continuing Board.
• How the members of the entity to be acquired are to be dealt with – do they
all wish to become members of the other organisation? You also need to
consider whether they meet the eligibility criteria for membership of the
other organisation.
• The ability to transfer funding arrangements.
• Thorough due diligence into the entities and the people including
considering cultural fit.
• How the merger will structurally and practically be implemented.

45
© 2014 MacDonnells Law
This presentation is subject to copyright. No part of this presentation may be reproduced or copied by any process
whatsoever, electronic or otherwise, without the specific written permission of the copyright owner. No part of this
presentation may be stored electronically in any form without written permission of the copyright owner.
Enquiries should be directed to The Chairman of Partners, MacDonnells Law, Cairns, Queensland Ph: 07 4030 0600.
Contact details
For further information on this topic, please
contact:
Melissa Sinopoli, Senior Associate
Direct phone (07) 3031 9718
Email msinopoli@macdonnells.com.au

4
6
Establishing Social Enterprise
Presented by
Anthony Tuite
Hanrick Curran

Objective
• Highlight the key elements and considerations
required to establish social enterprise
• Illustrate this by way of case study

Introducing
Stepping Stone Clubhouse
• Brisbane based organisation providing support to adults
with a mental illness to rebuild their confidence,
stamina, concentration, social and vocational skills
• People suffering from a mental illness experience
disproportionately high levels of unemployment: as high
as 85%
• They have the desire and skills to work and with the
right support can successfully gain and maintain
employment

Barriers to employment
• Anxiety, a broken work history and stigma impact
employment opportunities
• Employment within communities for mental illness suffers
is linked to overall wellness and quality of life
• Stepping Stone Clubhouse have been supporting members
back to employment for 15 years.
• The mission for the Clubhouse is to breakdown these
barriers.

Dilemma
• Clubhouse members were accessing an
outsourced service for Transitional
Employment positions via Aftercare
• Change in policy resulted in onerous
paperwork for members to obtain positions

Clubhouse Cross Roads
• Do we continue along the same path – taking
assistance and being reliant on government
assistance?
• Do we take matters into our own hands?

Solution – Social Enterprise
A number of issues needed to be considered in
establishing the social enterprise.
- Physical structure and ownership of the entity
- Contracts and HR issues
- Pricing and ensuring profitability
- Insurance
- Record keeping and accounting
After consideration of these issues it was agreed to
create MHE Enterprises Pty Ltd.

The Future – Clubhouse
MHE Enterprises Pty Ltd was established in July
2014.
MHE Enterprises Pty Ltd combined with other
commercial projects will generate over 70% of
their income by the year ended 30 June 2017.

Key Message for NFPs
For NFPs to take a positive step towards self sufficiency and
reduce reliance on government funding, a number of initial
activities should be explored:
• Consider any outsourced functions that could be performed
internally
• Explore ways of further commercialising that capability to
generate revenue
• Seek advice to establish correct structure to preserve tax-exempt
status
• Perform forecasting and due diligence as per a normal
business establishment
• Maintain corporate governance standards as required by the
parent organisation

Hanrick Curran offers a diverse range of services for Charities and
Associations in the Not-For-Profit Sector. Please contact any of our
industry specialists for additional information.
www.hanrickcurran.com.au
Jamie Tower, Tax Partner
Michael Georghiou, Audit Director
Anthony Tuite, Business Improvement Consultant
www.hanrickcurran.com.au
Tel: 07 3218 3900

5
6
State Tax Exemption for Charitable Institutions
Presented by
Scott Pease
PPM Tax and Legal

© 2014 PPM Tax & Legal Pty Ltd
Overview
• Application to register an institution as a
“charitable institution”
• Potential exemption from:
• Payroll Tax;
• Land Tax; and
• Stamp Duty
• Requirements for registration
• Key opportunities for NFPs to access the
exemption

Requirements (Qld)
1. Charitable Object
2. Disqualifying Purpose
3. Pursuit of Charitable Object
4. Income and Property
5. Prohibition on Distribution
6. Transfer on Dissolution

Key Opportunities for NFPs
• Retrospective refund
• Exemption going forward following appropriate
amendments to the constitution

General information only
This presentation is provided as general information only and does not consider your specific objectives, situation or needs. You should not rely on the information in this presentation or disclose it or refer to it in
any document. We accept no duty of care or liability to you or anyone else regarding this presentation and we are not responsible to you or anyone else for any loss suffered in connection with the use of this
presentation or any of its content.
Our liability is limited by a scheme approved under Professional Standards Legislation.
Scott Pease
Director
Email: spease@taxandlegal.com.au
Tel: 07 3012 9254
Mobile: 0428 334 433

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