Some Illawarra clubs are donating hundreds of thousands of dollars of their poker machine profits to themselves to get a tax benefit, which is legal under the state's ClubGRANTS scheme.
New data published for the first time by ClubsNSW shows who gain the most from the controversial community grants program, which is now under review by the NSW Government.
In the Illawarra, the figures show sports organisations run by clubs - and clubs themselves - are by far the region's biggest winners.
Overall, the amounts given to club-associated sports, community sports and club facilities outstrips those given to charity.
The region's clubs donated over $5.6 million in cash and in kind through the ClubGRANTS program in 2022-23.
The largest single donation given by an Illawarra club in the last financial year was $375,000, given by the Illawarra District Rugby League Football Club (Steelers) to its senior league.
The club also donated large amounts to its Harvey Norman women's league ($217,000) and junior reps ($199,000).
It gave about $32,000 to various charities and community organisations.
City Diggers and Wollongong Golf Club, both owned by the golf club, each donated $314,000 to the golf club so a total of $628,000 from ClubGRANTS money went to the golf club's facilities.
The golf club also donated $3285 to community organisations.
The clubs are allowed to do this under the rules of the community grants program, which gives them a 1.85 per cent tax discount on poker machine profits over $1 million.
The grants can be used for club sporting facilities and other "core activities", but a proportion must be set aside for community welfare-related services.
Releasing the new data, ClubsNSW said grants were allowed to be used to offset costs that would be raised through other means - like higher membership or entry fees to clubs - or for work carried out on facilities related to a club's core activities.
ClubsNSW CEO Rebecca Riant said the program ensured funds were reinvested in facilities and services that benefit club members and the broader community.
"That investment makes participation in sport, recreation and other activities more accessible and affordable for hundreds of thousands of community members - from junior footballers and netballers through to veterans and retired bowlers and golfers," she said.
"ClubGRANTS is a fantastic program that drives support for community organisations and activities within a club's local area and support for the core purpose for which clubs were established."
She also touted the support for charities, including domestic violence crisis care, homeless shelters, veterans' support and mental health programs.
"Without ClubGRANTS, many of these groups would not be able to provide the breadth of essential services that need continuous resourcing and financial certainty," she said.
The amount donated to Illawarra charities and community organisations makes up about 30 per cent of the region's ClubGRANTS donations - while sports and club facilities took up a combined 70 per cent of last year's donations.
The largest charity funded - both across the state and in the Illawarra - was the charity housie organisation Learning Links, which runs cash bingo at 45 clubs across the state to raise money for children with learning disabilities.
It received $108,000 from four Illawarra clubs, including Bellambi Bowling Club - which donated $54,590 to the bingo/children's learning charity.
Lifeline was given a total of $107,000 by 10 different clubs, while various branches of St Vinnies received a total of $70,000 from 10 clubs.
The Greens say the release of the new ClubGRANTS data shows the scheme - which has been criticised in the past for being a justification for poker machine gambling - should be scrapped as it does "more harm than good".
"When you consider that the people of NSW are losing more than $22 million per day to poker machines, it's beyond the pale for ClubsNSW to say they go 'above and beyond' in their support for local communities," Greens MP Cate Faehrmann said.
"They've continued to line their own pockets, including of their own wealthy sporting clubs."
"No amount of grants to community organisations can justify the pain that pokies cause to individuals, families and to entire communities. Poker machines are deliberately addictive and clubs know this.
She said the government should scrap the scheme and establish a permanent funding mechanism for community organisations and voluntary sporting bodies by taxing poker machines more.
Acting CEO of NSW Hospitality and Racing Tarek Barakat said the government was doing a root and branch review of the grant scheme.
"In the past, organisations like [the NSW Council of Social Service] raised some concerns about the operation of the scheme, so given those concerns and the fact that [its] been a while since the scheme has been looked at, the government has decided to take a look at it," he said.
"Looking at how the funds have been spent would form part of any kind of review of the scheme."
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