For individuals and families seeking a structured and tax-effective approach to charitable giving, Private and Public Ancillary Funds offer compelling solutions. This white paper outlines the key features, benefits, and differences between these two philanthropic vehicles in Australia, highlighting how Leyland Private Asset Management can assist you in establishing and managing a fund that aligns with your charitable objectives.
Introduction to Ancillary Funds
Ancillary Funds are special types of trusts recognised under Australian tax law, designed to facilitate philanthropic giving. They act as an intermediary between donors and Deductible Gift Recipients (DGRs) – organisations authorised to receive tax-deductible donations. By establishing an Ancillary Fund, donors can consolidate their charitable giving, benefit from immediate tax deductions, and strategically direct their philanthropic efforts over the long term.
Structured charitable giving can bring family members together, to collaborate and invest in causes which align with shared values. These conversations segue into clarifying expectations on inheritance and articulating the perpetual legacy that wealth founders desire to create, either individually, or together with their future generations.
Tax advantages may attach to charitable gifts made at time of death. If your estate holds assets with significant capital appreciation, incorporating a gift of these assets to your fund can provide potential capital gains tax relief.
Depending on the structure for giving adopted, charitable giving can train the younger generation to develop governance insights such as director competencies, how board meetings are conducted, reading financial statements including Profit and Loss Statements and Balance Sheets, and effective interaction with professionals including accountants, portfolio managers, investment advisers and lawyers.
Strategic giving can provide joyous satisfaction and educate givers in specific operating activities of charities and their challenges. Structured giving can help express core values and missions which family members hold, sustainably and with deeper impact.
We make a living by what we get, but we make a life by what we give – Winston Churchill
No one has ever become poor by giving – Anne Frank
Is the rich world aware of how 4 billion of the 6 billion live? If we were aware we would want to help, we’d want to get involved – Bill Gates.
There are two primary types of Ancillary Funds in Australia: Private Ancillary Funds (PAFs) and Public Ancillary Funds (PuAFs). While both serve the overarching goal of supporting charitable causes, they differ in their structure, governance, and suitability for different donors.
Private Ancillary Funds (PAFs)
A Private Ancillary Fund is a charitable trust established by individuals, families, or corporations to manage their own philanthropic activities. It offers a high degree of control over investment management and grant-making decisions.
Key Features of PAFs:
- Personalised Giving Programme: PAFs allow you to create a tailored giving programme that reflects your specific charitable interests and values.
- Long-Term Impact: PAFs are designed for long-term philanthropy, enabling you to build a legacy of giving that can extend across generations.
- Tax-Effective: Donations to a PAF are tax-deductible in the financial year the donation is made.
- Control Over Investment: Donors typically have significant input into the investment strategy of the PAF, allowing for capital growth to support future grants.
- Family Involvement: PAFs provide an excellent platform for involving family members and future generations in philanthropic decision-making.
- Minimum Initial Investment: PAFs typically require a minimum initial investment (often around $500,000) to ensure their long-term viability and cost-effectiveness.
Benefits of Establishing a PAF:
- Strategic Philanthropy: PAFs enable you to take a more strategic approach to your giving, aligning your donations with specific causes and organisations.
- Tax Advantages: Immediate tax deductions for donations can significantly reduce your taxable income.
- Investment Growth Potential: The ability to invest the fund’s capital allows for potential growth, increasing the capacity to support charities over time.
- Privacy and Discretion: PAFs offer a level of privacy over your giving compared to direct donations.
- Administrative Efficiency: Consolidating your giving through a PAF can streamline administrative processes.
Public Ancillary Funds (PuAFs)
A Public Ancillary Fund is also a charitable trust, but it typically pools donations from a wider range of donors and distributes these funds to multiple eligible charities. PuAFs are generally managed by independent trustees who have experience in managing and distributing funds.
Key Features of PuAFs:
- Broader Donor Base: PuAFs accept donations from the public, allowing for collective giving towards charitable causes.
- Experienced Management: PuAFs are usually managed by experienced trustees with expertise in philanthropy and grant-making.
- Established Processes: PuAFs have established processes for identifying and supporting eligible charities.
- Lower Entry Point: The initial investment or donation required to contribute to a PuAF is typically lower than for a PAF.
- Two Portfolio Options: Some PuAFs like the APS Foundation, offer different portfolio options with varying risk and return profiles.
Benefits of Donating to a PUAF:
- Tax Deductibility: Donations to PUAFs are also tax-deductible.
- Access to Expertise: Donors benefit from the expertise of the fund’s trustees in identifying and supporting effective charities.
- Simplified Giving: PUAFs offer a straightforward way to support multiple charities through a single donation.
- Transparency and Regulation: PUAFs are highly regulated, ensuring transparency and accountability in their operations.
- Reasonable Fees: Compared to some other financial institutions, PUAFs often have more reasonable management fees, allowing more funds to reach charities.
Key Differences Between PAFs and PUAFs
| Feature | Private Ancillary Fund (PAF) | Public Ancillary Fund (PuAF) |
|
Donor Base |
Primarily individuals, families, or corporations | Broader public, individuals, families, corporations |
|
Control |
High degree of control over investment and grant-making | Less direct control, decisions made by independent trustees |
|
Management |
Often involves the founders and their advisers | Managed by experienced, independent trustees |
| Minimum
Investment |
Typically, higher (e.g., $500,000+) |
Typically, lower (~ $40,000) |
|
Personalisation |
Highly personalised giving programme |
Supports broader charitable causes through established processes |
| Administrative Burden | Can be more complex, requiring establishment and ongoing management | Generally lower, as the fund handles administration |
Regulatory Developments
As of July 2025, the Labor Government is considering adopting a Productivity Commission plan which requires these fund structures to distribute a greater share of their net assets each year. This is in part reflective of a concern that these tax advantaged vehicles are not benefiting charities at the pace and level as intended.
These proposed changes are still early in in their drafting and are likely to change following a comprehensive consultation process.
How Leyland Private Asset Management Can Assist You
At Leyland Private Asset Management, we understand the importance of aligning your financial goals with your philanthropic aspirations. We offer expert guidance and support to individuals, families, and corporations interested in establishing private ancillary funds, foundations or contributing to charities under any available structure.
For Private Ancillary Funds:
- Establishment: We can work with your legal and financial advisers to establish your PAF with the appropriate governance structure and documentation, ensuring compliance with all regulatory requirements.
- Trustee Services: We can act as a trustee for your PAF through our specialist trustee company, providing responsible and compliant oversight.
- Investment Management: Our experienced investment team can work with you to develop and implement a tailored investment strategy for your PAF, aiming to grow the fund’s capital over time.
- Grant-Making Guidance: We can provide advice and support in identifying and evaluating eligible charities that align with your philanthropic goals.
- Ongoing Administration: We manage the ongoing administration, compliance, accounting, and reporting requirements of your PAF, allowing you to focus on the rewarding aspects of giving.
For Public Ancillary Funds:
- Facilitating Donations: We can assist you in identifying reputable Public Ancillary Funds that align with your charitable interests and facilitate your donations.
- Strategic Advice: We can provide advice on incorporating philanthropic giving through PuAFs into your overall wealth management strategy.
Conclusion
Private and Public Ancillary Funds provide powerful tools for effective and tax-advantaged philanthropy in Australia. Choosing the right structure depends on your individual circumstances, philanthropic goals, and desired level of control.
Leyland Private Asset Management is committed to helping you navigate the complexities of charitable giving. Contact us today to discuss your philanthropic objectives and explore how we can assist you in making a meaningful and lasting impact through an Ancillary Fund.
Note: Leyland Private Asset Management are not tax advisers, and work alongside specialists in this field for the establishment of appropriate structures and tax component of our advice.