CHARITIES FACE CLOSURE
Written on the 21 January 2015
A BRISBANE estate litigation lawyer says hundreds of charities and social service providers across Australia face the prospect of closing due to Federal Government cuts.
Highlighting recent media reports on the matter, indicating charities may be left fighting in the courts to keep will bequests in contested will cases, Charlie Young (pictured) says organisations that no longer qualified for funding would feel pressured to pursue every fundraising measure possible.
The Government opened its Discretionary Grants Program to a competitive tender process, and reports claim that 5,500 existing and new charities and service providers applied for grants.
However, only 700 organisations, including 100 new organisations, were shortlisted and are now negotiating with the DSS for a share of the $800 million in available funding.
Young, a lawyer with Bennett & Philp, says cuts would effect a flow of changes to the Australian charity landscape.
"But the pressure's really on charities now with the Government last year saying it was cutting $271 million from the Department of Social Services (DSS) Discretionary Grants Program over the next four years," says Young.
"Charities will struggle to meet fundraising targets and some reports predict hundreds will shut down across Australia as the income tap is turned off.
"At present if someone contests a Will it's up to the parties to negotiate a resolution or the matter will need to go to trial. In negotiating a resolution, the parties will often agree for any amount bequested to a charity to be partly or even fully redirected to the person contesting the Will, then seek Supreme or District Court approval for the action.
"Charities are informed of the action but rarely object to it, but I think that's going to change."
Reports quote the Australian Council of Social Services as saying many organisations were advised they had been unsuccessful for Government grants just three days before Christmas, and that most would run out of money by the end of February.
Young says charities are often fearful of negative publicity or driven by moral obligation, and therefore have traditionally accepted proposed cuts to bequests under wills.
He thinks this will change.
"I know that some charities have taken steps in other states to try and protect their bequests but it is for the most part uncommon in Queensland," says Young.
"This is going to change as we move into the future, I believe.
"I expect to see more objections from charities to cuts to their bequests as they move to protect such intended donations.
"Many of the bequests are reasonably large and if you factor in the number of Wills that are challenged each year and the possible sums deducted from bequests to charities to resolve will disputes, then it adds up and charities now see they need to protect the donations intended for them as they could represent significant lost income if not challenged."