Australia’s Small Grants to Rural Nonprofits: A Model for U.S.?

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July 4, 2013; Pro Bono Australia


It looks like rural communities face resource problems wherever one looks. In Australia, the Foundation for Rural and Regional Renewal (FRRR) reports that “communities across rural, regional and remote Australia are increasingly looking to the philanthropic sector to help them create and maintain basic community infrastructure needed to enable social connection and inclusion.” Having documented the limited philanthropic support for rural communities in the U.S., we were interested in learning about the FRRR, which describes itself “as a partnership between philanthropy, governments and business to stimulate rural and regional renewal in Australia.”

Established in 2000, the FRRR has distributed $25 million in its first ten years of operation. Among the topical areas it supports are rural education, tourism, care for the elderly in rural communities, and youth programs. Interestingly, although it supports nonprofit organizations with its grants, the FRRR website notes that “due to FRRR’s broad powers, there is no requirement that the organization receiving a grant must be a deductible gift recipient but their project must be charitable and promote rural and regional renewal, regeneration and development.” Unlike U.S. grantmakers, which are constantly focused on building their endowments, the FRRR operates as “a ‘get and give’ organization in so far as public funds raised in any given year are generally distributed within that year,” although elsewhere on the website, FRRR acknowledges that part of a grant from the Commonwealth Government has been retained as “corpus funds” to help pay for the foundation’s operations.

The Pro Bono Australia report describes the latest round of the FRRR’s “Small Grants for Small Rural Communities” program, through which the foundation will be able to fund $472,000 worth of $2.6 million in project applications submitted by 661 organizations. The foundation also reports that more than half of the organizations that applied for this round of rural funding were new to the FRRR, “demonstrat(ing) [that] the program is still reaching new community groups in need of support.” The Small Grants program’s grants range from $145 to $5,000 and average $3,000 in Australian dollars ($5,000 in Australian is about $4,570 in U.S. dollars).

Could the U.S. government work with private grantmakers to capitalize a fund dedicated to grantmaking for rural U.S. groups? Or would the U.S. government suggest, as it has with rural community foundations, that it would be interested in helping them raise money for local endowments, but not in helping to capitalize them? Is the establishment of a rural grantmaking pool to assist small rural groups and small rural communities a possible response to the needs of rural areas in the U.S. that need philanthropic support?—Rick Cohen

  • ChrisB

    The actual function of the FRR is to enable tax-deductible gifts to be given to projects that are otherwise not deductible.
    Quite a few kinds of things don’t come anywhere near qualifying for deductible gift recipient (DGR) status. Among these are groups that are run for the enjoyment or entertainment of the members, such as sporting clubs or choir groups. You can’t give to individual persons, either, not if you want a tax deduction.
    And here the problem starts. There are a lot of people out there who belong to the kind of groups that aren’t eligible, they want to get DGR status, they can’t see why they shouldn’t qualify, and they turn to the government to fix this.
    The government could change the tax act to make these groups eligible. Alternatively, it could create a way for the groups that complain to be treated as exceptions. The second way would seem to be cheaper, in tax terms; at least, it’s what they’ve done.
    The government has established at least four bodies – the Australian Business Arts Foundation (AbaF) for the arts,, the Foundation for Rural and Regional Renewal (FRRR) for country projects, the Australian Sports Foundation (ASF) for sports, and, in a related fashion, Ausaid’s Overseas Aid Gift Deduction Scheme (OAGDS) for overseas aid projects. All these allow projects to register with them; if the project is approved as falling within the terms of the Foundation’s aims, then donations to it are tax deductible despite the actual project not being a DGR in itself.
    There are two differences between these agencies and other Foundations. One is that, as the FRRR puts it, “One of the advantages FRRR enjoys, is that it is not bound by some of the legal limitations imposed on other philanthropic bodies e.g. many other funds can only give to other DGR or Income Tax Exempt organisations.“ The FRRR and ABAF can give to anything. The second is that you don’t just give your money to these Foundation for their own purposes and hope that they’ll spend it on the particular things you’re interested in; you can instead ask one to give a grant to a specific project, and if the project fits within the scope of the particular Foundation it will.
    It’s a passthrough – a government-encouraged scheme of tax evasion to boost giving to NFPs. It’s a bodge, though, a retrofit, and I can’t see it as a model.

  • Tim Brown

    I was wondering what agencies or offices are being referred to when the author says ‘US government.’ Would there be a single agency that would sponsor a US effort similar to the FRRR?

  • Alexandra Gartmann (FRRR)

    Chris B is correct that FRRR has special grant-making abilities that enable philanthropic funds to support groups in rural, regional and remote Australian communities that do not have a DGR status. Special provisions of Australian tax law recognise the inherent challenges and limitations of the isolation of these communities, which limits their ability to fund-raise locally. Our special listing tax status helps to address this disadvantage, and while it does give philanthropic organisations an incentive to donate, it is not a ‘bodge’. There are strict requirements on us to ensure that the projects we fund are for broad community benefit, and do not benefit an individual or just a few people. While we do have discretion regarding where to direct funds, we exercise that freedom with great diligence. FRRR is the only national organisation offering small, discretionary funds to small regional communities in all states and territories, and we would encourage US Funders to contemplate this unique model for overcoming rural disadvantage.