The tax-time appeal works because of the deadline, not the deduction

Many Australian June appeals are written to the same brief. The subject line says "Give before 30 June", the first paragraph says the gift is tax deductible, and somewhere near the button is a line about claiming it back at tax time. The appeal goes to the whole list, and the deduction is the reason it offers every one of them.

For most of the people reading it, the deduction probably isn't why they give. Fewer than three in ten Australian taxpayers claim a gift on their return. The likelier reason a June appeal works is that 30 June is a deadline, and the tax pitch is worth keeping for the small group of large donors who use it.

Fewer than three in ten taxpayers claim a gift

The Australian Centre for Philanthropy and Nonprofit Studies at QUT analyses the ATO's taxation statistics on giving. For 2022-23, 27.81 per cent of taxpayers claimed a gift deduction, the fifth year in a row the figure sat under 30 per cent. The median claim was $150.

Giving itself is far more widespread than that. The Giving Australia 2016 study found that 80.8 per cent of adult Australians gave to a charity or nonprofit in 2015-16. The two figures come from different years and count different populations (adults against taxpayers), so they cannot be subtracted cleanly. Read together, though, they point the same way: if anything like four in five adults give and fewer than three in ten taxpayers claim, most people who give never put the gift on a tax return.

A donor file is not the general public. People who have given to a charity that holds a receipt on file are likelier to claim than the average giver, so the share on a given list probably sits above 28 per cent. It would have to clear half before the deduction could be the main reason for most of the list, and claiming a gift is not the same as giving because of it.

A deduction is only available for a gift to an organisation with deductible gift recipient status, so a donor to an advocacy group without it has nothing to claim. A $40 gift saves a donor on a 30 per cent marginal rate about $12, which is a small sum against the effort of finding the receipt. And a donor giving out of loyalty to a cause may never think of the gift as a deduction at all.

The large donors who do use the deduction

One group uses the deduction heavily. In the same 2022-23 figures, 23,009 taxpayers had a taxable income over $1 million, and 47.14 per cent of them (10,846 people) claimed a gift. That group accounted for 62.18 per cent of all gift deductions in Australia that year. For these donors the deduction is plausibly part of how a gift gets sized, often with an accountant involved, and June is when that conversation tends to happen.

The $1 million line is a proxy. An organisation's largest donors will not all be in it, and a donor on $90,000 who gives $2,000 can claim as well. The figures show where the deduction's weight sits, and that is a short list most organisations can name without opening a database. Those donors should hear about the deduction in June, in a personal note or a call that names the date and offers to get the receipt to them the same day. That's no reason to send a $50 donor the same pitch, scaled down.

What 30 June does for everyone else

For the rest of the list, the date is the likelier explanation for a good June result. That is an inference rather than a measured result: the figures show how few donors claim, not why the others respond. A deadline gives a donor a reason to act this week rather than someday, and the end of the financial year is a date most Australians already know, so the organisation does not have to invent any urgency.

With the deadline carrying the "now", the body of the email is free to say what the gift will do, which is the reason most donors gave in the first place. With cost of living pressing on household budgets, plenty of donors are likely choosing between causes at tax time, and the gift probably goes to the one that made a specific case: a named program, a cost, a result someone can picture. A paragraph about tax treatment takes the place where that case should be.

In practice that is two appeals. The large donors get the tax conversation personally, and the main list gets "before 30 June" in the subject line and the cause in the body, with the deduction mentioned once, plainly, near the receipt information, for the donors who will use it.

The donors who first give in June

A June appeal that works often brings in first-time donors, and the deadline that prompted them has a cost later. A supporter who gave because the financial year was ending has no obvious reason to give again until next June, and an organisation that only contacts them at tax time teaches them that this is a once-a-year relationship.

The weeks after 30 June are when that can change. A donor who gave on 28 June should get a welcome that changes how they give, rather than one that only says thank you, and a second ask well before the next financial year ends. Some of them will be open to a small monthly gift, which turns a once-a-year deadline donor into the kind of predictable income an organisation can plan against. None of that is guaranteed to work, and a June donor who only ever wanted to give once a year should be allowed to. But a donor who hears nothing from July to May has been given no other option.

Checking last year's June gifts

Last year's results show which kind of donor an appeal is reaching. A team can rank every gift from the June appeal by size and look at the top of the list: large, round gifts that arrived in the last fortnight are the likeliest to have been tax-planned, and those donors are the ones for the personal conversation. Everyone below them is most of the appeal, and next June's draft for them can open on the date and the cause, with the tax line sitting beside the receipt information. It is a rough sort, and anyone who knows their donors will correct it by hand, but it can be done before next year's brief is written, and it decides who gets a call and who gets the date in the subject line.