Eighty per cent of Australia's philanthropic foundations are based in Melbourne, and the national co-ordinating body, Philanthropy Australia, has its office in the city. The voluntarism that sustained the colony's charitable and cultural institutions reflected the acceptance of the concept of 'giving back' among many of those who benefited from the economic boom of the gold-rush years and beyond. The bequest or foundation provided a mechanism for this giving to continue in perpetuity. While the most famous is undoubtedly the Felton Bequest, many other smaller funds established by individuals in the 19th century continue to be administered by the city's trustee companies.
The endowment of individual or family foundations continued into the 20th century, with leading city businessmen embracing the tradition. Department store owner Sidney Myer is perhaps the most famous, continuing a lifetime practice of philanthropy by establishing the Sidney Myer Fund through his estate. His sons followed in his path by establishing, some years later, the Myer Foundation. However, there were many others. The widow of mining magnate Walter Hall used part of his estate to establish the Walter and Eliza Hall Bequest, a major contributor to medical research in the city. Helen Macpherson Schutt (nee Smith), who lived much of her life outside Australia, chose to use her substantial estate to benefit her childhood home.
Taxation changes in the 1960s have made such foundations an attractive vehicle for an increasing number of Melbourne families. In 1964 Sir Ian Potter established his family foundation with shares to the value of $1 million, which, with the $50 million gifted on his death 30 years later, has made it a major donor to medical research and the performing and visual arts, endowing two of the city's major art galleries. Other successful businessmen, such as meat processor William Angliss, biscuit manufacturer Jack Brockhoff, quarry-owner R.E. Ross and manufacturer Lance Reichstein, have followed in his path, but the most outstanding contributions have been made by the Jewish community, led by the various branches of the Smorgon family, the Besen family and Richard and Jeannie Pratt.
Philanthropic foundations have also proved useful to incorporated bodies wishing to combine tax advantages with community service. For the Melbourne Newsboys Club and the Invergowrie domestic arts school, the establishment of a trust was a way of redirecting assets once the immediate call for the services had passed. For businesses it provides a way of both managing charitable distributions and building a reputation as a good corporate citizen. More recent community foundations - such as the Greater Melbourne Foundation, established by the Lord Mayor's Fund in 1997 - function as umbrella bodies, collecting and distributing funds contributed by individuals. Other organisations, such as the Education, Lighthouse and Starlight foundations, function as operating trusts, receiving donations, delivering services and making grants to smaller organisations working in their area of interest.
The tax advantage of such foundations, and their ability to define the nature of the beneficiaries, have left them open to accusations of self-interest and, even worse, self-glorification. Such philanthropy removes assets from the redistributive mechanisms of the tax system and perpetuates positive memories of the donor. Some of the limits placed on distribution have proved reactionary and, on occasions, quite obstructive over time. Most modern foundations, however, embrace the concept of socially progressive philanthropy, at least in principle, arguing that the availability of funding outside the strictures of the bureaucracy provides support for innovation and social change, contributes to practice and policy development, and promotes social pluralism while also preserving the tradition and culture of the city.