Unlock DGR
Charities drive social and economic progress. But the tax system is holding them back. An incoherent DGR system is locking thousands of charities out of vital funding. Together, we can unlock opportunity, giving, and community impact.
The DGR system needs urgent reform
Deductible Gift Recipient (DGR) status is the tax status that enables charities to access critical funding from philanthropy, grant makers, and donors in the broader community. But, right now, around half of all registered charities miss out on DGR status and the vital community support that comes with it.
Under the current DGR system, a charity focused on preventing choking hazards for kids or a neighbourhood house delivering both food relief and community cohesion projects may not be able to get DGR status.
The DGR system is:
- Outdated and overcomplicated: The system has grown haphazardly over the past century, creating more than 50 confusing categories and complex rules that are hard to navigate.
- Locking small charities out: Most Australian charities are too small to afford the legal and administrative costs needed to access DGR status.
- Too rigid for modern charities: The system forces organisations to fit into narrow categories, disadvantaging those working across multiple causes or tackling complex community issues.
- Out of step with today’s values: The system doesn’t reflect modern causes or community expectations.
- An ongoing burden: The system’s red tape and compliance requirements drain time and resources that could be better spent making an impact.
We must Unlock DGR for a stronger, fairer future
Our vision is a simpler and fairer tax system that unlocks opportunity for the charity sector through reform of the DGR rules. The Productivity Commission’s Future Foundations for Giving report outlines a clear, evidence-based pathway to simplify the DGR system so that most charities are eligible for DGR endorsement.
We’re ready to work with the Government to make DGR fair, simple, and future-ready.
A solution for reform already exists
The Productivity Commission’s Future Foundations for Giving report provides a common-sense pathway for DGR system reform: a simplified system that is fair, modern, and transparent.
Using a principles based approach, the Productivity Commission recommendations include:
- extending eligibility for DGR status to most types of charitable activity based on the Australian Charities and Not-for-profit Commission (ACNC) charity subtype classifications
- restricting eligibility for government entities to those activities that would be eligible for DGR status if undertaken by a charity
- excluding some types of charitable activities based on the ACNC’s charity subtype classifications (for example, all activities under the religion subtype, certain activities under the education subtype and certain activities under the social welfare subtype)
- limiting the use of specific listings for DGR status in the Income Tax Assessment Act 1997 (Cth)
- implementing other complementary changes to improve clarity and administration of the DGR system such as legislating a definition of public benevolent institution, and
- ensuring transitional arrangements for a smooth and fair transition for all impacted.
The return on reform
Reforming the DGR system will open up fairer access to tax-deductible giving, and unlock opportunity for Australia’s vibrant and diverse charity sector by:
- Strengthening sector sustainability, helping charities access other sources of much needed funding.
- Unlocking philanthropy and new funding streams, supporting the Government’s goal to double philanthropic giving by 2030.
- Reducing reliance on limited government funding, enabling community needs to be met through more diverse and flexible support.
- Enabling charities to create more impact in their communities through creative and innovative solutions.
It’s an investment with long-term returns that will:
-
Unlock more philanthropy and community-driven funding.
-
Strengthen the financial sustainability of the sector.
-
Reduce pressure on government budgets.
-
Cut red tape for both charities and regulators.
Why now?
A sector in crisis
The charity sector alone is made up of over 60,000 registered charities. These organisations offer unique skills and expertise in the communities they serve. They are already embedded in and understand their communities, are linked to local networks, and have existing programs and services that are tailored to local needs.
But they’re grappling with increased demand for their services in the face of a cost-of-living crisis and rolling climate-fuelled disasters, and funding constraints. Many organisations are concerned about the sustainability of their services and organisation.
And with growing demand for services from their communities, organisations are taking on new responsibilities, such as food relief and mental health support, without the necessary financial backing to support these efforts, leaving them stretched thin.
Now is the time to expand access to DGR for more charities.
An evidence-based campaign
The call for DGR reform isn’t new.
The DGR system has been identified as a key area in need of reform in successive reports over the past three decades, including the sector endorsed Not-for-profit Sector Development Blueprint (2024), the Productivity Commission’s Foundations for Giving report (2024), the Not-for-profit Sector Tax Concession Working Group final report (2013), the Productivity Commission’s Contribution of the Not-for-profit Sector research report (2010), and the former Industry Commission’s Charitable Organisations in Australia report (1995).
Our work with tens of thousands of community organisations across Australia confirms what the evidence shows: Access to DGR endorsement is one of the most misunderstood and resource-intensive areas of the tax concession system for charities.
Subscribe to our campaign mailing list
We collect, store and use the information that you provide us in accordance with our privacy policy.
"*" indicates required fields
Who’s behind Unlock DGR
In the face of huge unmet legal need, Justice Connect’s vision is a world in which legal support is within everyone’s reach. We have been serving the community for more than 25 years. We are a registered charity and accredited community legal centre.
Not-for-profit Law is Justice Connect’s specialist program for community organisations and is a sector-led response that not-for-profits and their peak bodies trust. It’s the only service of its kind in Australia. Since its establishment in 2008, Not-for-profit Law has helped prevent and resolve legal, regulatory and governance issues for hundreds of thousands of community organisations across Australia.
Our partners:
The Unlock DGR campaign is supported by Minderoo Foundation, a modern philanthropy working to forge a fair future. Minderoo tackles tough, persistent challenges through evidence, partnership and practical solutions that create lasting change. Learn more at minderoo.org.