If an organisation has deductible gift recipient (DGR) status, the organisation can provide tax deductible receipts to its donors. DGR status can also open the possibility of receiving grants from public and private ancillary funds. These ancillary funds are only permitted to provide funds to DGRs. Many government grants are also only available to DGRs. Clearly DGR status provides significant fundraising advantages to an organisation.
A handful of organisations are specifically listed by name in the Tax Act as being DGRs. However, most organisations can only obtain DGR status if they fall within specific categories detailed in the Tax Act and are then endorsed by the ATO.
Sometimes it is the whole of the organisation that receives DGR status, such as a public benevolent institution or a public university. In many instances, only a fund operated by the organisation will receive DGR entitlement, such as a school building fund.
Although the DGR groups in the Tax Act are very broad (eg health, education, etc), the categories within the groups are quite restrictive. The majority of charities do not qualify for DGR status. However, even where the entity as a whole is not eligible, it might be possible to establish a fund operated by the organisation that is a DGR. For example, churches will not be DGRs, but they may be able to operate a necessitous circumstances fund that is a DGR.
The government has recently added a new DGR category for promoting indigenous languages. They have also announced that from 1 July 2020 donations to Men’s and Women’s Sheds will be deductible.
If you are unsure whether your organisation might qualify for DGR status or whether a DGR fund might be available to you, please contact Shervy Dahliana or Cathy Braun.