Inscribed on the sandstone walls of the Ted Noffs foundation headquarters in Sydney are the words “Easts House”.
For 22 years the foundation, one of the country’s leading addiction services providers, has called it home, helping countless young people while becoming a key advocate for drug law reform in New South Wales.
The building, in Randwick, was bought in 2000 for $1.2m by the Eastern Suburbs Leagues Club. Since then, Easts has provided the foundation its home rent-free as an in-kind donation through a program called ClubGrants.
First introduced in the late 1990s, the grants scheme goes a long way to explaining the extraordinary sway of the clubs lobby in NSW – and the long history of governments in the state failing to hobble the $3.8bn-a-year poker machine industry.
ClubsNSW says each year about $100m in donations are made via the scheme “to a variety of worthy causes”. All up more than $1bn has been handed out. Each year, in the state’s parliament, MPs line up to pay tribute to its charity efforts.
In October, Holsworthy Liberal MP Melanie Gibbons congratulated Moorebank RSL for a $25,175 donation to a charity supporting parents whose children are in the neonatal intensive care unit at Liverpool hospital in Sydney’s south-west.
Last year David Harris, the Labor MP for Wyong on the central coast, thanked a local leagues club for giving $4,400 to a group providing school supplies to disadvantaged children.
And yet, critics say some clubs give large sums of money to projects with direct links to the organisation, with little oversight or transparency over how the grants are awarded.
In some cases, the links are obvious. Last year, the ABC revealed that one of the largest clubs in the state, WestOne, better known as Rooty Hill RSL, in the city’s west, handed out $870,000 over two years to the Sydney Gymnastic Aquatic Centre.
Described as “one of the largest purpose-built gymnastics facilities in the southern hemisphere with Olympic-standard equipment”, the facility is owned by WestOne.
In other cases, clubs hand out grants to professional sporting organisations to which they are linked. In 2020, the Canterbury Leagues Club gave $421,109 in donations to local charities, religious groups and junior sporting clubs in Sydney’s west.
But its largest donation by far was to the Canterbury Bulldogs Rugby League Club – a professional NRL team and the leagues club’s holding entity. It granted the club $3.2m in funding that year, followed up by another $2.6m in 2022. Wests Newcastle last year declared $250,000 in grants to the Newcastle Knights, along with another $69,000 in in-kind donations. The club purchased the Knights in 2017.
Under the ClubsGrants scheme, there is nothing to stop clubs from donating money to their own entities, but groups linked to the scheme have begun to raise concerns about the lack of oversight or accountability with the grants.
Last year, peak welfare body the NSW Council for Social Service (Ncoss) said it would end its 24-year association with ClubGrants over concerns about the way funding decisions were made.
Among the litany of issues raised by Ncoss was the ability of clubs to gain “financial or other advantage” by awarding funds to organisations to which they were linked.
Joanna Quilty, the chief executive of Ncoss, said there was nothing in the guidelines governing the grants to stop money being funnelled back into the club.
“They can fund their own Christmas lunches, or provide funds to a bowling club or aged-care facility that the club might own,” she said.
“There’s ample opportunity for directing funds to their own projects and we found that goes on regularly.”
The grants allow clubs across NSW to gain a tax rebate off poker machine profit by donating money to causes that make a contribution to the “welfare and broader social fabric” of the local community.
For poker machine profits above $1m, clubs earn a 1.85% tax rebate by giving funds to projects aimed at improving “the living standards of low income and disadvantaged people”.
But that rebate is broken up into categories. Category one grants, which make up the bulk of money given to community groups, must make up 0.75% of the rebate.
A second category, which can be a maximum of 1.1% of the profits, can be distributed to “community development and support activities and projects”.
That definition includes NRL clubs and upgrades to club-owned buildings or facilities, provided they are not “primarily commercial in nature”.
That means in many cases the largest donations often go to the clubs themselves – while receiving a tax benefit at the same time.
This year the Toronto Workers Club, near Newcastle, donated $779,474 to what it described as “our local community” under the scheme. Of that, about $65,000 went to charities such as the Cancer Council ($1,890), Variety ($2,000) and the Mark Hughes Foundation ($7,500).
But the vast bulk – about $713,000 – was spent on what the club described as “direct costs” associated with the Toronto Bowling Club and Toronto Country Club, which it owns.
When Ncoss raised its concerns with the state gaming regulator, it promised to do a review of the scheme.
But, as the Guardian revealed this week, it only conducted a “brief update” of the grants, which did not consider compliance with the regulations, or consider whether clubs should be able to donate money back to themselves.
“It was not the comprehensive review we asked for and were told would happen,” Quilty said.
Yet the grants remain extremely popular among some community groups, playing a crucial role in bolstering the reputation of the clubs industry. In 2018, the then-ClubsNSW chief executive, Anthony Ball, cited “leveraging” the grants as key to establishing the sector “as an integral part of social and economic life”.
Matt Noffs, the chief executive of the Noffs Foundation, points out that, without the in-kind donation his group receives from Easts, his service wouldn’t have a home. His organisation is funded under a third category of the grants, through an in-kind donation.
“I think there are shades of grey. I appreciate that there is a debate on the moral position on gambling but does that mean the Noffs Foundation should give up our headquarters because 20 years ago Easts bought it for us? Forget about it,” he said.
“Do you think if you change it and I have to go to [NSW premier] Dom Perrottet and ask for [the funding] it’s going to happen? For all the crap clubs are getting, when governments didn’t want to put their hands up to help kids with addiction problems, they – to their credit – did.”
While Noffs agreed there should “absolutely” be transparency around the grants process, he also cautioned against what he sees as a “moral” argument about the role of poker machines in NSW.
“We can be fundamentalists about it and try to prohibit gambling but all we’ll do is create a black market and send everyone online, where none of that money comes back to the community,” he said.
“There are parallels with the drug debate, which I know a lot more about, and I think the answer is the same – regulation over prohibition.
“There’s no doubt that we broadcast the club’s name. It’s on the building. However, I don’t think there’s a correlation between having a name, talking about the Roosters, and promoting problem gambling.”
For its part, Ncoss believes the grant scheme could easily be changed to exclude the clubs themselves from the decision-making process.
Under the guidelines, clubs with a tax liability of more than $30,000 in category one grants are required to establish local committees to advise on where money is given.
But in some cases, those committees either do not exist, or can be overruled by the clubs themselves. In one case, in Fairfield in Sydney’s west, documents obtained by the Guardian show only 69% of applicants to the fund that were given a “high” or “medium” rating by the local committee received funds between 2016 and 2022. In the same period, 36% of applications given a “low” rating received donations.
There are also cases in which local councils are not involved at all, despite guidelines stipulating they must have a representative on the local committees meant to guide the grants. In Lake Macquarie, south of Newcastle, the council said it had withdrawn from a local committee eight years ago, in 2014.
In a statement, a spokesperson said the council left the committee “as the time and resources required for us to administer the program outweighed the value-add we brought to the process”.
Quilty said: “There is no reason that, after collecting the poker machine tax, the NSW government couldn’t administer the grants scheme itself without the direct involvement of the clubs industry.”
ClubsNSW and the individual clubs mentioned in this story were contacted for comment.
