A new report by the Productivity Commission on Philanthropy has highlighted defects in the funding of private schools. The report shows that private schools receive millions of dollars in donations to school building funds that are heavily concentrated in highly privileged schools. It says these donations are not based on need and are not considered in determining the financial need of these schools for government funding. Schools in receipt of millions in donations serve the richest families in Australia who get a double benefit – lower taxable income because donations to school building funds are tax deductible and lower school fees as a result of the donations.
Private school building funds and other funds supported by donations have Deductible Gift Recipient (DGR) status which allows donations to be deductible from the donor’s income tax. As such, it is an indirect government subsidy to private schools. The Productivity Commission estimates the tax deduction costs about $100 million a year.
The Commission examined the total donations to school building funds only and also to multiple funds covering donations for school buildings, scholarships and library funds as well as funds operated by private school systems. It estimated that donations to school building funds only amounted to $69.4 million in 2020-21 across 719 schools. Donations to multiple funds amounted to $160.6 million across 736 schools. In total, donations to school building funds in 2020-21 and other funds amounted to $230 million across 1,455 schools.
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