Private Schools' Other Fat Income Stream

The leading private schools of Australia are not short of a buck, there are fees, extensive real estate holdings and government funding to boot, but many enjoy a large income stream that doesn’t receive as much attention

Fifty wealthy private schools brought in over $600 million in donations and investment income and this is largely ignored in assessing the need for government funding.

According to public schools advocate Save Our Schools, under the current Commonwealth funding method, private school funding is determined by the capacity of families to pay fees. This is measured by the adjusted taxable income of families as reported by the Australian Taxation Office, ignoring lucrative sources of income for private schools such as donations and investment income.

New figures obtained from the Australian Charities and Not-for-profits Commission (ACNC) show that 50 private schools received $611 million in donations and investment income over five years from 2017 to 2021. Donations totalled $461 million and investment income was $50 million.

Just 10 schools raked in $291 million, or nearly one-third of the total of donations and investments. The average income from these sources was $12.2 million per school over the five years. This is in addition to their income from fees and other charges.

The top 10 schools were: Melbourne Grammar (Vic) $43.2M; SHORE (NSW) $37.9M; Christ Church Grammar (WA) $36.3M; The Scots College (NSW) $33M; Geelong Grammar (Vic) $32M; Scotch College (Vic) $31.4M; Cranbrook (NSW) $21.4M; Brisbane Grammar (Qld) $20M; Moriah College (NSW) $19.1M and Caulfield Grammar (Vic) $17M.

The average privately sourced other income of Victorian public schools in 2020 was $279 per student. By contrast the donations and investment income of Melbourne Grammar was $5,055 per student and $5,784 per student at Geelong Grammar. The average such income of NSW public schools in 2020 was $154 per student. By contrast the donations and investment income of SHORE averaged $4,533 per student and $3,243 per student at The Scots College.

These 50 private schools also received $539 million in funding by the Commonwealth and state governments in 2020. This funding was determined without regard to their donations and investment income.

In addition to fees and other charges, these schools raise additional funds through multiple tax-exempt organizations such as foundations, building funds, scholarship funds and others. For example, SHORE raises funds through its SHORE Foundation which has assets of $42 million. The King’s School Foundation has building, scholarship and bursaries funds and has assets of $50 million.

Melbourne Grammar raises funds from its Foundation Endowment Fund with assets of $56 million and a building fund. Geelong Grammar raises funds from its Endowment Trust, with assets of $31 million, a Scholarship Foundation with assets of $40 million, a building fund and a foundation.

Scotch College (Vic) has numerous trusts and beneficial funds that provide funding for the school. Indeed, it has so many that it had a special Act of the Victorian Parliament passed in 2001 to enable it to pool the investment of those trust funds in one or more common funds to minimise administrative costs of operating each fund and increase its investment income. The Scotch College Foundation has assets of $100 million.

These donations also reduce the tax burden of the donors, so even more money goes to private, not public benefit according to Save Our Schools.

The failure to include donations and investment income in determining Commonwealth funding of private schools is a major flaw in the current funding model. It results in over-estimation of the financial need of private schools and massive over-funding by the taxpayer.

A major flaw in assessing government funding is the assumption that the parents of students pay the school fees and other charges, but many private school students have their fees at least partly paid by their grandparents. The funding model also ignores other income provided by grandparents such as money for house renovations, household assets such as whitegoods, furniture and IT equipment, cars, holidays and medical expenses that free up family income to be spent on school fees.

Trevor Cobbold National Convenor of Save Our Schools writes, ‘Income from donations and investments should be included in the assessment of the financial need of private schools. A more significant first step would be to end all government funding for wealthy, exclusive high fee private schools. They don’t need taxpayer funding. It is a complete waste and simply adds to their huge resource advantage over public schools. It is funding that would be better used to support disadvantaged students and schools where additional funding will have much greater impact on improving education outcomes than the taxpayer money being squandered on wealthy schools.

‘A comprehensive overhaul of the current system is needed to overcome other fundamental flaws. A new system should be governed by the principle that government funding for private schools should only fill the gap between private income and a revised SRS. The base SRS should be set as the cost of highly successful public schools with minimum disadvantage. Funding for private schools should be conditional on meeting social obligations and education standards. Private schools whose private income is above the SRS should not receive government funding because it extends their resource advantage over public schools.’