Public Ancillary Funds
A Public Affair: establishing a Public Ancillary Fund under your Will
Public Ancillary Funds (‘PAFs’) are communal philanthropic structures created under a Will or trust deed in order to provide money, property or other benefits to Deductible Gift Recipients that are not other ancillary funds.
It is possible for PAFs to be registered as charities with the Australian Charitable and Not-for-Profit Commission provided that they meet the definition of a charity.
Typically, PAFs are set up as trusts under a Will, which sets out its purpose, governing rules and confirms that the PAF is a not-for-profit entity that is established and operated solely within Australia.
As the name implies, PAFs are required to be ‘public’ — that is, they must invite and allow members of the public to make donations to the fund. Due to their public and charitable nature, there are stringent requirements on PAFs, such as strict gifting requirements and similarly firm standards for who may act as trustee. Further, setting up a PAF is a costly exercise – with the minimum recommended investment amount being $500,000.
However, PAFs are effective vehicles for public philanthropy and provide useful opportunities for donors to obtain tax deductions. PAFs are also able to obtain income tax exemptions on income earned by the fund, which can include capital gains. Some PAFs are able to acquire charity status, which can further open up tax minimisation opportunities.
A gift to a PAF permits a donation to be distributed over a number of charitable projects, and allows the donor’s money to have an inter-generational impact by investing in a fund that can support charities over a number of decades.
Professional Estate Planning for You
A PAF is just one of the various options open to people who wish to give charitably through their Will. If you are interested in charitable giving under your Will, or if you simply wish to discuss your estate planning further, please contact a member of our experienced Wills, Trusts and Estate Planning Team at Bell Legal Group on 07 5597 3366 or complete the ‘Contact Us‘ form below.
This publication was written by Josephine Vernon a solicitor with Bell Legal group. It is for information only is not legal advice nor should it be treated as such.