A Private Ancillary Fund, or PAF, is one of Australia’s most effective ways to create a lasting charitable legacy while maintaining control over how and when donations are made. It’s a giving structure designed for individuals, families, and businesses who want to combine philanthropy with financial strategy.
What Is a PAF?
A PAF is a type of charitable trust set up to make structured, long-term contributions to eligible charities. It enables donors to contribute money or assets, invest those funds, and distribute a portion annually in line with the Private Ancillary Fund Guidelines 2019.
If you’re looking for a more detailed breakdown of how they operate, what is a paf is explained in depth, including its rules, tax benefits, and compliance requirements.
Key Features of a PAF
Structured Giving
A PAF allows donors to plan and manage charitable giving over time. This means you can support multiple causes in a sustainable way, rather than relying on one-off donations.
Tax Deductibility
Donations made to a PAF are generally tax deductible. You can claim the deduction in the financial year you make the contribution, or choose to spread it over several years.
Investment Strategy
PAF assets can be invested to grow over time. The income generated helps increase the fund’s capacity for annual charitable distributions.
Annual Distribution Requirement
By law, a PAF must distribute at least 5% of its net assets to eligible charities each year. This ensures funds are actively used for community benefit.
Who Can Set Up a PAF?
PAFs can be established by individuals, families, businesses, or even existing trusts. Every PAF must have at least one responsible person, an individual with recognised standing in the community, such as an accountant, lawyer, or senior professional. The PAF must also be endorsed as a deductible gift recipient (DGR) to receive tax-deductible donations.
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What Charities Can a PAF Support?
A PAF can only distribute funds to charities endorsed as DGRs. These might include organisations focused on education, medical research, environmental protection, social welfare, or cultural initiatives.
Benefits of a PAF
- Long-Term Impact – Contributions are invested and can grow over time, increasing the scale of future donations.
- Family Involvement – Encourages multi-generational engagement in philanthropy.
- Flexibility – You decide which charities to support and when to make distributions.
- Tax Advantages – Eligible donations receive tax deductions, creating financial efficiencies.
Compliance and Regulatory Oversight
PAFs operate under strict rules set out in the Private Ancillary Fund Guidelines 2019. They must submit annual reports to the Australian Charities and Not-for-profits Commission (ACNC) and maintain accurate financial statements. Transparent record-keeping is critical to meeting these obligations.
Is a PAF Right for You?
A PAF is best suited to donors who want to make a substantial, long-term commitment to charitable giving. It may not be the right choice for those seeking a short-term or one-off approach, in which case a public ancillary fund or direct giving might be more suitable.
Closing Thoughts
A PAF offers a structured, tax-effective, and impactful way to support the causes you care about. By combining a clear investment strategy with thoughtful philanthropy, you can create a fund that delivers benefits to the community for generations to come.
If you’re ready to explore how a PAF could work for your goals, The Giving Advisory can guide you from establishment through to ongoing management, ensuring your giving makes the biggest possible difference.
