The Foundation was established as an essential part of the Australian Sports Commission
History of Australian Sport Policy Series: Part 22
By Greg Hartung AO
Australian Sports Aid Foundation: the origin
The Parliamentary enquiry into sport funding, chaired by Labor’s Leo McLeay, threatened to turn the case against the introduction of a Sports Foundation promised by the Hawke Labor government in 1983. (Ref 1) The capacity to raise private sector funds for sport was central to the Australian Sports Commission’s raison d’etre. It was therefore vitally important for both sport — and the future of the ASC — that the Sport Foundation be given the green light.
A Foundation, accompanied by tax deductibility for donations, had been promoted as an essential reason for the establishment of the ASC which was the centrepiece of the government’s sport policy taken to the 1983 election. Any step back from this position would bring into question the need for a Commission to be established as a statutory authority.
History showed that the Hawke government did not agree with the Mcleay Committee opposition to the extension under the Taxation Act of the general gift provisions to cover sport donations. Instead, the government stuck to its election commitment and approved the creation of the Australian Sports Aid Foundation (ASAF) as a bone fide organisation allowed to receive donations attracting tax deductibility under the Income Tax legislation.
Stewardship of the ASAF was entrusted to a small Board of business professionals chaired by Ted Harris who appreciated the appeal of tax deductibility to donors. Over the next three years, Harris and the ASC would continue to advocate, albeit unsuccessfully, to the government to allow for an incentive rate of deductibility above 100 percent to provide additional encouragement for individuals and corporates to donate to sport.
Hand out or leg up
The question of Federal Government intervention to support fund raising appeals for sport was nothing new but this was the first time a formal instrument was installed to tap into opportunities for private sector donations. Requests for direct government assistance go back to the 1908 London Olympic Games and requests were regularly activated, with varying degrees of success, for future Games. (Ref 2) A companion notion to allow donations to the Australian Olympic Federation appeals to be tax deductible were raised, without success, by Members of Parliament at various times during the 1950s.
The change came with the election of the Hawke Government in 1983 and the establishment of the ASC and subsequently the ASAF. The ASC and its inaugural Commissioners were announced by Prime Minister Hawke and Sports Minister, John Brown, on 13 September 1984 with the first formal meeting of the ASC on 26 October 1984 which commenced the process to draft the operational framework for the Foundation.
In their public statement, Hawke and Brown said of the ASC and ASAF:
“It will have the flexibility and autonomy to generate additional funds from the private sector through a Sports Aid Foundation to supplement funds from the Federal budget. The Foundation will aim to attract additional private sector resources that can be used to support sports development programs that will benefit all levels of Australian sport, including assistance to Australia’s high- performance athletes.
“The Foundation will provide Australian sport with a valuable extra source of funds to complement Federal Government spending.” (Ref 3)
Essential part of the ASC
The ASAF was incorporated on 18 February 1986 at which time it was given deductible gift recipient status by the Australian Taxation Office. The name of the ASAF was changed to the Australian Sports Foundation Ltd (ASF) in legislation in 1989 when new ASC legislation was passed incorporating the AIS as part of the Commission.
Despite the original rationale behind the creation of the ASC and the ASAF, the Foundation has operated within different funding and administrative frameworks since inception. For instance, from 1986 to 1998, it received funding support from the ASC for its administration but from 1998 to 2001 it was self-funded. Then again in 2001, the Government determined that the Foundation should receive financial and administrative support from the ASC.
This dependence of the Foundation on the ASC for funding and administrative support was intended as part of the ASC’s brief. However, given that the Foundation was to be created as a company limited by guarantee with discreet responsibilities and accountability, the concept of it being effectively a subsidiary of the host organisation, the ASC, drew considerable debate within government.
There was no doubt what the government intended, underscored by the report of the Interim Commission in 1984 and further clarified in subsequent legislation and public statements by Government Ministers. The Interim Commission identified the Foundation as central to the on-going function of the ASC supporting the development of sport. It envisaged that the ASAF would be the specialist marketing and fund-raising arm of the ASC and would seek to attract funds from across the community. (Ref 4)
From the beginning of the ASC’s design and development it was clear that a core responsibility and function of the Commission was to raise money through the ASAF for the purposes of the Commission, a role which was reflected in its enabling legislation.
While this was the first occasion that the Federal Government had taken on such an initiative, the concept of using a foundation structure to raise funds for specific purposes was not new. The Interim Commission had drawn from similar Foundations which had existed for many years in several countries – eg New Zealand, Great Britain and West Germany. In Australia, the concept had been gathering support since the 1970s largely promoted by the earlier Sports Advisory Council to the Federal Government and the Confederation of Australian Sport.
The Australian experience with Foundations included the long-established Rothmans National Sports Foundation which had provided a valuable service to sport since 1964. Its aim was to encourage participation in all forms of sport and was particularly active in developing coaching standards. The Rothmans Foundation was also active in assisting coaching development programs endorsed by the Australian Coaching Council.
The Victorian Government had established the Victorian Sports Aid Foundation in 1979 as a joint public-private enterprise involving the State Department of Youth, Sport and Recreation and the State Wide Building Society. This Foundation made modest grants to athletes to assist with travel and competition costs.
Another Foundation which had a connection with sport was the Sir Robert Menzies National Foundation. Established in 1980, its aim was to promote research and development in the fields of health and fitness. It was given the benefit under the Income Tax Assessment Act of tax deductibility for donations of $2 or more. This encouraged the Australian Sports Aid Foundation to seek a similar status.
The Interim Sports Commission strongly promoted the need for a Foundation provided it was made clear that the Foundation revenues were to be treated as supplementary funding for sport. Funding through the Foundation, by nature fairly unpredictable, was intended to be seen as an additional bonus for sport – not as a means to replace Federal budgetary commitments.
The Interim Committee examination of overseas Foundations noted that in Great Britain, for instance, a large proportion of the revenue came from marketing programs and from lottery sales. Unlike the New Zealand Foundation, donations to the British Foundation were not tax deductible.
It was envisaged that the Australian Foundation would always be the fundraising agency of the Commission. Hence it was central to the rationale for the need to establish the Commission in the first instance. The Commission was provided with other responsibilities and powers which its opponents argued could have been successfully delivered – albeit, perhaps not as well — through a departmental model with a Sports Advisory Council providing a direct connect with the wider sporting community, alongside a world class Australian Institute of Sport. The authority to act commercially through a Foundation gave it a legitimate private sector role which a traditional government department could not perform.
The Interim Committee concluded that sport was disadvantaged with respect to the then tax deductibility arrangements compared to arts organisations. A large number of non-profit arts organisations under the auspices of the Elizabethan Theatre Trust qualified for tax deductibility for donations of $2 or more under Section 78 of the Income Tax Assessment Act. Sport was not included. The recommendation was made to the Government that there was a strong case for tax deductibility to be extended to cover gifts of $2 or more to sport made through the Sports Foundation.
The Foundation was made a priority of both the government and the newly structured Sports Commission reinforced by promises made by Prime Minister Hawke during the November 1984 election campaign:
“Under present tax deductibility arrangements, sport is discriminated against compared with other areas of leisure activities such as the arts. At present, major sport sponsors can claim advertising costs as deductible tax concessions when they relate to sports promotion – but individuals who may wish to promote Australian sport and such individual endeavours as America’s Cup challenges and other major sporting events can claim no such deduction.
The provision of tax deductibility would also be important for the success of the proposed sports aid foundation. It is important that sufficiently attractive incentives are made available to maximise donations from individuals and corporations – all of which are vital partners with government in the Australian sporting ‘team’.
I undertake therefore to give favourable consideration next year to such a move.” (Ref 5)
Ambitious Target: 125 percent
Emboldened by the Prime Minister’s attitude, the Commission set its sights high and decided to advocate for a tax deductibility level not of 100 percent, but of 125 percent. Initially the Commission aimed for an even more ambitious target of 133 percent deductibility to match incentives schemes offered to other sectors. It was nothing if not optimistic.
The Commission established a Sports Aid Foundation committee of the ASC, chaired by the ASC Chair, Ted Harris in October 1984. It was left until July the following year, after the ASC legislation was in place, for the formal outline of the Foundation to be presented to Minister Brown. While legislation to establish the Foundation was not necessary, Cabinet approval was required for the necessary amendment to the Taxation Act to allow for tax deductibility. It was to be established as a company under the powers vested in the ASC by its legislation and would have as its core objective to “raise money for the development of sport”.
In advice to the Minister in July 1985, the ASC made it clear that it was proposing a “kick start” level of tax deductibility at the rate of 125 percent for donations to the Foundation from all sources – corporate or individual.
The Commission drew on precedent to mount its case to government, particularly the generous earlier support given to the Arts sector – for example, for donations to arts organisations such as the Elizabethan Theatre Trust and donations of works of art along with investments in the film industry. These were the beneficiaries of the Whitlam Labor government. The original film investment scheme allowed for a tax write off of 150 percent of capital expenditure and a 50 percent deduction for net earnings from the investment. This was reduced to 133 percent of capital expenditure and 33 percent of earnings from the original investment – but still an extraordinarily generous incentive to draw private funds into the film industry. Operationally, the ASAF looked to the Elizabethan Theatre Trust for guidance on how to control and manage donations.
The Commission also referenced the current government’s intention to provide tax write offs of up to 150 percent for investment in technology research and development. The Commission proposed that claims for tax deductions based on a receipt from the Foundation would be made by individuals through their normal tax returns. The incentive rate of tax deductibility was considered important as an appeal to corporations which already received 100 percent deductibility against taxable income for expenditures on advertising and promotions. The Commission argued the obvious – the increased rate would make it more attractive to corporations to substantially increase funds to sport through this new mechanism.
From the outset the ASC proposed that there be two types of donations from individuals and corporations: tied (or preferred) and untied (non-preferred). The Foundation would be the vehicle through which sports could conduct fund raising programs using the Foundation and from which donors would be entitled to claim a tax deduction. Donations would be made to the Foundation with the preferred sport or event identified by the donor. Unless a reason was found that the request could not be honoured, the funds would be passed through the Foundation to the beneficiary and the donor would be able to claim a tax deduction. It also proposed that the Foundation would accumulate a pool of untied funds which would be used for more generic sporting initiatives identified by the Foundation itself.
The Foundation was established under the terms identified in the ASC’s enabling legislation. It would be founded as a company limited by guarantee with a Board of Directors whose initial Chair would also be the Chair of the ASC. The Foundation was required to report to the Commission Board on its activities. The intention was that the ASC would always have the majority membership of the Foundation Board which would number not less than five nor more than 12. It was anticipated that the Foundation would also have the capacity to appoint an advisory committee of people with specific sponsorship and fund-raising skills.
In an address to the Annual General Meeting of CAS in Melbourne on 11 December 1985, the ASC Chair, Ted Harris, expanded on the role envisaged for the ASAF and sought to allay concern that the Foundation would negatively impact on the fund-raising initiatives of sport. He told the assembly representing the majority of Australian sporting organisations that the “only purpose” in establishing the Foundation was to make it easier to attract money from individuals and organisations for the development of sport. He explained that the Commission had been arguing with Government for approval of an incentive rate of tax deductibility of 125 percent to maximise its opportunity to achieve the best results.
“That would have meant that a donor contributing say $100, assuming that donor had a tax rate of 50 percent, would have received a 62.5 percent deduction. Not unreasonable, particularly when compared to other activities where special deductibility has been given for special purposes believed to be in the national interest. The government has not agreed to the 125 percent. It has however agreed to a 100 percent tax deduction. Whilst we shall continue to press for something better than 100 percent deduction, it is nonetheless an encouraging start for a project which I am sure will bring extra dollars for sports development.” . (Ref 6)
Harris called for a “great Australian crusade” to secure more money for sport “to build a regular cash flow of proportions significantly greater than ever before to avoid the ad hockery which has so much characterised the funding of sports programs throughout our entire history”.
He invoked the Confederation – previously a critic of the government’s intention to establish the Foundation on the basis that it would direct funds away from sport – to join in the crusade “with enthusiasm and with its full support”.
In a characteristic blunt message, Harris dealt with the critics: “I have been appalled to read comments made by those who should know better and who indeed, are paid to know better, that in some way the creation of the Sports Aid Foundation will siphon money from sport and such money will, in some curious and unexplained way, finish up in the hands of the Minister or the Government.
“This is such a sad commentary of ignorance as to be unworthy of reply.” (Ref 6)
Category of Donors
Harris explained how donations could be made to the Foundation:
1: a donor giving money to a specific sport would be able to still give those funds to that particular sport but through the Sports Foundation. The money would reach the sport and the donor would be able to claim a tax deduction. By “going through the front door and out the back door of the Sports Aid Foundation, the donor will in effect have a cost of a net $500 (assuming a tax rate of 50 percent) and Basketball will still receive $1000.
2: a donor may provide a general donation to the Foundation without having any specific requirement as to which sport should receive it. This form of donation would be determined in its end use by the Board of the Foundation.
Sports Foundation becomes reality
The Foundation was incorporated on February 18, 1986 with the inaugural meeting being held on 12 March 1986 in Sydney. The Chair was Ted Harris (Managing Director and Chief Executive of Ampol also Chair of the ASC). Others in attendance were Sir Donald Trescowthick Deputy Chair, Company Director), Kevan Gosper (Chairman and Chief Executive, Shell and IOC member) and Kerry Packer (Chief Executive Nine Network, Company Director). Herb Elliott (Chief Executive, Puma Australia and Olympian) was an apology. Later, Nicholas Whitlam (Managing Director of the State Bank of New South Wales) and Sir Peter Abeles (Chief Executive of TNT) were also to be invited to join the inaugural Board. The meeting was attended, in part, by the Minister for Sport, John Brown, who gave an undertaking to take forward to government the request for a 125 percent deductibility level for non-preferred donations. Brown was not overly optimistic, but he felt that his case would be strengthened if it could be demonstrated that funds so raised would be targeted at special projects of social need, especially the development of projects and facilities for young people to be involved in sport.
Despite the urging of the ASC and Brown’s enthusiasm, he was not successful in winning support. The 100 percent target for preferred donations was endorsed and government would go no further. This became the standard for all donations processed through the Foundation. The government proceeded to amend section 78 of the Income Tax Assessment Act to include the Foundation as the central agency through which approved sporting organisations could seek the benefit of tax deductions for donations.
ASAF and ASC joined at the hip
The meeting of the ASAF was held at North Sydney hosted by Harris in the Boardroom of Ampol House. The meeting reaffirmed that all funds raised by and/or through the ASAF were to be transferred to the ASC for processing.
The first sporting organisation to take advantage of the fund-raising opportunities presented by the ASAF was the Australian Commonwealth Games Association which had launched a public appeal to send the Australian Team to the Edinburgh Commonwealth Games in July 1986. The Board also supported a recommendation for the ASAF to consider the various fund-raising appeals organised by the syndicates being established to vie for the opportunity to mount the Australian defence of the America’s Cup.
Lockstep with the ASC
Operationally, the ASAF Directors did not support the establishment of a separate administrative structure outside the Sports Commission. Instead, the cost and staffing requirements of the Foundation would be absorbed within the ASC structure, at least for the 1985/86 year. The ASAF was charged with four objectives:
1: raise money for the development of sport;
2: pay money and transfer property to the Australian Sports Commission;
3: encourage the private sector to contribute to the funding of sport to supplement assistance by the Commonwealth;
4: consult and co-operate with appropriate authorities of the Commonwealth, States and Territories and other organisations and individuals on matters related to its activities.
Specifically, it was the recommendation of the Interim Committee for the Australian Sports Commission that funds raised by the Foundation would be used for a range of purposes, viz:
- The promotion of excellence in sport and the identification and development of Australia’s high performance national and international athletes;
- Improve the technical expertise of officials and assist the work of high-performance coaches;
- Promote and develop sport at the junior level;
- Assist employers to provide ‘sympathetic’ employment conditions to athletes;
- Assist athletes on their retirement to complete their education or job training.
Unlike the debate on the earlier Australian Sports Commission Bill, the amendment to the Taxation legislation to provide for tax deductibility for donations to the Foundation won qualified acceptance from the Opposition when debated in Parliament in May 1986. The shadow minister for Sport, Recreation and Tourism, Mr Peter White (Liberal, McPherson), in the debate on the amendment (Ref 7) confirmed the Opposition’s support and emphasised three fundamental issues:
- That all donations to the Foundation would go to those sporting clubs and organisations nominated by the donor, provided they were bona fide organisations;
- There would be no deductions from donations for handling charges as the money passed through the Foundation;
- There would be no interference with the existing system of direct sponsorships between sponsors and sporting organisations – those donations and sponsorships which do not involve the Foundation.
The Minister, John Brown, explained that he could not for legal reasons agree to the first point because the Foundation always had to retain its discretion regarding donations but if, for some legal reason, the donation could not be provided to the intended recipient it would be returned to the donor.
However, he agreed with the second and third issues – the Foundation would not interfere with any current sponsorship arrangements with sports and the Foundation would not withhold any commission from the donations.
Brown: “…(you) asked for a guarantee that there would be no deductions for handling charges when the money passed through the Sport Aid Foundation……(you) may rest assured of that. The specified regulations say that there will be no deduction at all for handling charges.” (Ref 8)
Unsuccessful Divorce from the ASC…and re-marriage
The Foundation was fully funded and resourced by the ASC from the outset although the criticism was that it was never enough. This remained the situation until 1998. In that year, and following an external review and a Parliamentary enquiry, the Foundation was re-located from Canberra to Sydney. While partially funded by the ASC, it commenced charging a levy on donations to help cover its operating costs with the aim being to fully cover its own costs by 2001. The Parliamentary enquiry entitled “Rethinking the Funding of Community Sporting and Recreational Facilities: A Sporting Chance – 1997” recommended an immediate change to the structure and operations of the ASF. (Ref 9)
It was on the back of this report that the government determined the re-location. It also unbuckled the ASF financially from the ASC, moving away from the original intent, by allowing the Foundation to charge a two percent levy on donations to fund its operations. The ASC provided some seed funding for a period of three years after which the levy on donations was increased to five percent to fund operations.
The objective was for the Foundation to be independent of the Commission – an objective which, ultimately, proved elusive.
In April 2001, the Government released a new sports policy document “Backing Australia’s Sporting Ability” which recommended, inter alia, that the ASF be given more support to produce better outcomes. ( Ref 10) This resulted in the ASF business being transferred from Sydney back to Canberra and again being ensconced in the ASC which was to resume its funding and administrative support at a cost of some $500,000 a year.
The funding arrangements changed again in the 2019 budget when the Foundation secured its own direct funding from the Federal Budget. Throughout this on-again, off-again relationship and despite the uncertainty that came with it, the ASF did essentially the same job it was established to do – to act as a conduit for private sector funds to sports. It provided the attraction of tax deductibility provided the funds were authorised and channelled through the Foundation according to taxation law.
It was fundamentally an uncomplicated but effective method to raise funds while encouraging sporting organisations with the encouragement to help themselves. However, without the benefit of a tax deductibility rate above 100 percent the Foundation was never going to reach the heights of success to which its early pioneers in 1984 had aspired.
1.The way we p(l)ay: Commonwealth assistance for sport and recreation / report from the House of Representatives Standing Committee on Expenditure, November 1983, Canberra : Australian Government Publishing Service, 1983.
2. Greg Blood, The Relationship between the Australian Olympic Committee and the Australian Sports Commission, Sporting Traditions, V35 (1) May 2018
4. Australian Sports Commission Interim Committee. Report to the Minister for Sport, Recreation and Tourism, March 1984. Canberra, AGPS, 1985.
5. Prime Minister Hawke, Address to Sports Function, Eastern Suburbs Rugby League Club, 23 November 1984.
6. Ted Harris, ASC Chair Address to the Annual General Meeting of Confederation of Australian Sport Annual General Meeting, Melbourne on 11 December 1985 (Greg Hartung Collection at National Library)
7. Peter White, Taxation Laws Amendment Bill 1986, House of Representatives Hansard, 7 May 1986
8. John Brown, Taxation Laws Amendment Bill 1986, House of Representatives Hansard, 7 May 1986
9. Environment, Recreation and the Arts-House of Representatives Standing Committee Rethinking the funding of community sporting and recreational facilities : A sporting chance Report, October 1997
10. Backing Australia’s sporting ability: a more active Australia. Howard Government, 2001.
Greg Hartung AO brings great knowledge and experience to the development of sport in Australia. He was a sport & political journalist, Member of the Interim Committee of the Australian Sports Commission (1983-1984), inaugural CEO Australian Sports Commission (1983-1988), Commissioner of the Australian Sports Commission (1991-1996), 2006-2010), Chair of the Australian Sports Commission (2008-2010), President of the Confederation of Australian Sport (1989-1995) and Australian Paralympic Committee (1997-2013) and Vice President of the International Paralympic Committee (2009-2013) and Adjunct Professor, University of Canberra (2014-)
In relation to this paper, Greg Hartung was an Australian Sports Foundation Board Member 1995-1996 and 2006-2010 and Chair 2008-2010.