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How Australians Can Leave a Charitable Bequest in Their Will

Many Australians are looking for meaningful ways to create a lasting impact beyond their lifetime. One powerful way to do this is to leave a charitable bequest in your will. Whether you want to support causes close to your heart or contribute to future generations, including a charitable gift in your estate plans can transform lives and create positive change.

What Is a Charitable Bequest?

A charitable bequest is a gift made in your valid will to a charity or not for profits organisation. It is a legally binding way to ensure your charitable intentions are honoured after your lifetime. This type of gift can take many forms, including money, property, or other assets, and is distributed as part of your estate.

In Australia, it’s important that the intended organisation is among registered charities with an Australian Business Number and, ideally, Deductible Gift Recipient (DGR) status. This ensures the charity can receive your gift properly and provide sufficient discharge to your estate.

Leaving a gift through a bequest allows your wishes to be carried out accurately, even as circumstances change over time. When drafted correctly with the help of a legal professional or solicitor, your will remains valid and reflects your specific intentions.

Types of Charitable Bequests

There are several types of charitable bequests Australians can include in their wills, depending on their financial situation and goals:

Specific bequest: This involves leaving a specific sum of money, property, or a particular asset to a charity. For example, you might leave a fixed amount of funds or a piece of real estate for a specific purpose.
Residuary bequest: A residuary gift is a percentage or the entirety of your estate after other expenses and gifts to loved ones have been distributed. This type of bequest can grow as your estate grows, making it a flexible and popular choice.
Percentage bequest: You may choose to leave a small percentage of your estate to one or more Australian charities. This allows you to balance your generosity between family and charitable causes.
Specific purpose bequest: This is where you direct your gift toward a particular program or intended purpose within a charity. It’s important to include wording that ensures the gift can still be used for general purposes if circumstances change or the original purpose is no longer viable.

Each option offers a powerful way to support causes that matter to you, while ensuring your wishes are carried out in a legally valid manner.

Why Leave a Bequest to Charity?

There are many reasons why leaving a charitable bequest is a personal decision for many Australians. One key motivation is the opportunity to create a lasting difference. Charitable bequests help fund vital work carried out by not for profits, enabling them to continue operating longer and supporting communities well into the future.

Another benefit is the potential tax benefits. While Australia does not have inheritance tax, gifting assets to charities with DGR status may reduce capital gains tax obligations within your estate. This means more of your estate can go toward causes you care about, rather than tax liabilities.

Bequests also allow individuals to reflect their values and legacy. Whether you want to support medical research, education, or environmental conservation, your generosity can have a profound impact on lives and future generations.

Additionally, leaving a gift in your will does not affect your finances during your lifetime. You retain full control over your money and assets, and your bequest only takes effect after your passing.

How to Include a Charity in Your Will?

Including a charity in your will is a straightforward process, but it’s important to get professional advice to ensure everything is done correctly:

Choose your charity: Identify registered charities or organisations aligned with your values. Confirm their DGR status and details such as their Australian Business Number.
Decide on the type of bequest: Consider whether a specific bequest, residuary bequest, or percentage gift best suits your estate plans and financial situation.
Consult a legal professional: A solicitor or wills team can help ensure your will is legally valid and includes the correct wording. This step is essential to ensure your wishes are accurately documented.
Use clear wording: Include the charity’s full legal name and specify your intentions clearly. This avoids confusion and ensures your gift reaches the intended organisation.
Review your will regularly: As circumstances change, it’s important to update your will so it remains valid and reflects your current wishes.

By following this process, you can confidently leave a charitable bequest that aligns with your goals and values.

Learning how Australians can leave a charitable bequest in their will, highlights just how impactful this act of generosity can be. Whether you choose to leave a specific asset, a percentage, or your entire estate, your contribution can support vital causes and create meaningful change.

Gifts in wills are a powerful way to ensure your legacy lives on. With careful planning, professional advice, and clear intentions, you can make a lasting impact that benefits both your loved ones and the wider community for years to come.

How The Giving Advisory Can Help

At The Giving Advisory, we understand that initiating and maintaining conversations about giving in the family can sometimes be challenging. Our services team is here to help guide your family through the process of family philanthropy, whether you’re starting a donor advised fund, planning your first charitable contribution, or seeking advice on how to align your giving with your family’s values.

If you want to learn more about how to engage your family in giving and create a lasting philanthropic legacy, contact us today. We’re here to help you reach your philanthropic goals and make a positive impact together.

Brad Seeto

Charitable Trust vs Private Foundation in Australia

When it comes to structured giving in Australia, one of the most common questions is the difference between a charitable trust vs foundation Australia. Both options are widely used by private individuals, families, and organisations looking to create a lasting legacy through charitable activities. However, they differ in legal structures, tax treatment, and how they manage assets.

Understanding these differences is essential before deciding which structure is right for your charitable purposes. While this guide provides a clear overview, it does not constitute legal advice, and you should always seek professional advice to ensure compliance with relevant laws and regulations.

What Is a Charitable Trust?

A charitable trust is a type of trust fund established under trust law, where trustees manage assets for a specific charitable purpose such as advancing education, social welfare, or human rights.

A charitable trust structure is created through a governing document known as a trust deed. This document outlines the responsibilities of the initial trustees, how trust assets are managed, and how income is distributed. The trust itself does not have a separate legal identity; instead, the trustees act on behalf of the charitable entity.

Charitable trusts can take different forms, including a standalone charitable trust or a testamentary charitable trust established through a will. In some cases, families use testamentary trust arrangements to leave money or assets for charitable organisations after their passing, creating a long-term positive impact.

From a tax perspective, charitable trusts may be eligible for tax concessions if registered with the not for profits commission (ACNC) and endorsed by the Australian taxation office. If the trust qualifies as a deductible gift recipient, it can receive tax deductible donations, which is a major benefit for fundraising activities.

Charitable trusts are commonly used by family trusts or individuals who want a structured way to manage assets and distribute funds over time. They offer strong asset protection and flexibility, but they must operate strictly within their stated charitable purposes and legal requirements.

What Is a Private Foundation?

The Australian equivalent is typically a private ancillary fund (PAF). A private ancillary fund is a type of charitable fund that allows private individuals, families, or corporate groups to make tax deductible donations and then distribute those funds to other registered charities over time.

Unlike a traditional charitable trust, a private ancillary fund is designed specifically for structured giving and grant-making. It is regulated by both the not for profits commission ACNC and the Australian taxation office, ensuring transparency and accountability.

A private foundation usually has a corporate trustee, giving it a more formal organisation’s legal structure. This setup provides a clearer legal identity and can simplify governance, especially for larger funds. These foundations cannot directly conduct charitable activities; instead, they provide grants to other charitable organisations that carry out the work.

Private ancillary funds must follow strict rules, including minimum annual distribution requirements and limitations on fundraising activities. For example, they typically cannot solicit funds from the public, which distinguishes them from public ancillary fund structures or community foundations that are designed to receive income from a broader donor base.

One of the key attractions of private foundations is the tax advantages they offer. Donations made to a private ancillary fund are tax deductible, and the fund itself may benefit from income tax exemptions. This makes them an appealing option for high-net-worth individuals looking to manage money in a tax-effective way while supporting charities.

Key Differences in Structure

Understanding the key differences in structure is crucial when comparing a charitable trust vs private foundation in Australia.

First, legal identity is a major distinction. A charitable trust does not have a separate legal identity, whereas a private foundation operates as a distinct legal entity. This affects governance, liability, and how the organisation can borrow money or enter into contracts.

Second, purpose and function differ. Charitable trusts can directly carry out charitable activities, such as delivering social services or advancing education. In contrast, private foundations (private ancillary funds) primarily act as grant makers, distributing funds to other registered charities rather than operating programs themselves.

Third, funding and fundraising models vary. Charitable trusts may receive income through donations, government grants, or other sources, and they can sometimes solicit funds depending on their structure. Private foundations, however, are typically funded by a single donor or family members and have restrictions on public fundraising.

Fourth, regulatory requirements are stricter for private foundations. They must comply with detailed guidelines set by the profits commission ACNC and the Australian taxation office, including minimum distribution rates and reporting obligations. Charitable trusts also need to ensure compliance, but their obligations can be less prescriptive depending on their setup.

Finally, flexibility is an important consideration. Charitable trusts offer more flexibility in how funds are used and managed, including options like fixed trust arrangements or sub fund structures. Private foundations are more rigid but provide clearer frameworks for structured giving and tax benefits.

Should I Set Up a Charitable Trust or a Private Foundation?

So, should I set up a charitable trust or a private foundation? The answer depends on your goals, resources, and desired level of involvement.

If you want to directly manage charitable activities, maintain flexibility, and potentially involve family trusts or a testamentary trust, a charitable trust may be the better option. It allows trustees to act in the best interests of the charitable purpose while adapting to changing needs.

On the other hand, if your goal is to create a structured, tax-effective fund that supports other charities through grants, a private foundation (private ancillary fund) may be more suitable. It offers strong tax benefits, clear governance, and a streamlined way to create a lasting legacy.

Ultimately, both options play a vital role in Australia’s not for profit sector. Whether you choose a charitable trust or a private foundation, the key is to align your structure with your charitable goals, ensure compliance with legal requirements, and focus on creating meaningful social impact.

How The Giving Advisory Can Help

Brad Seeto

Largest Charities in Australia by Revenue

Australia’s charity sector plays a critical role in supporting communities, delivering essential services, and strengthening the nation’s social fabric. When discussing the largest charities in Australia by revenue, it’s important to understand how these organisations operate, where their money comes from, and whether higher income actually translates into greater impact. From human services and education to faith based spirituality and international relations, Australia’s charities represent a diverse and complex not for profit sector that contributes significantly to the Australian economy.

How Revenue Is Reported

To understand the largest charities in Australia, you first need to look at How Revenue Is Reported. All registered charities submit annual information statements to the not for profits commission, which include detailed financial information such as total revenue, total expenses, total assets, and total liabilities. These reports form the basis of the Australian charities report, which provides a comprehensive overview of the sector’s total revenue and performance during each reporting period.

Charity revenue is typically broken down into common categories such as government grants, donations and bequests, service fees, and investment income. Some organisations rely heavily on voluntarily reported finances, while others receive structured funding through government programs. This distinction is key when analysing how charities operate and how financial stability is maintained.

The data confirms that total revenue increased across the sector in recent years, with many charities reporting record high income. However, expenses increased as well, driven by rising operational costs, employee expenses, and expanded social sector initiatives. Comparing figures from the previous reporting period or previous year helps identify trends such as whether donations rose or whether increased costs impacted overall profits.

Charity size also plays a role in reporting. Extra small charities, large charities, and extra large charities reported vastly different financial profiles. Extra large charities, in particular, often have more assets, higher total income, and significant paid staff, making them a major employer within Australia’s workforce.

Examples of High Revenue Charities in Australia

Looking at Examples of High Revenue Charities in Australia, we see a mix of organisations across healthcare, social services, and faith-based sectors. Hospitals and health networks (sometimes referred to informally as “God health care” providers) often rank among the largest due to substantial government funding and high service demand.

Faith-based organisations such as those connected to the Roman Catholic Archdiocese also appear prominently, particularly among basic religious charities. These groups often manage large asset portfolios and deliver a wide range of services, from education to community support.

Other high-revenue organisations include those focused on human services, disability support, and Indigenous communities, including Torres Strait Islander organisations and Indigenous corporations. Many of these charities receive a combination of government funding and donations, enabling them to scale their operations and reach more people.

Organisations like St John are also notable, blending volunteer-driven models with professional services. Volunteer numbers and total volunteers are significant indicators of capacity, especially in charities that rely on community engagement rather than purely financial resources.

The largest donation figures often go to well-known national charities, but grant makers and institutional funding bodies also contribute significantly to total income across the sector. In some cases, nearly one fifth of a charity’s revenue may come from a single funding source, highlighting the importance of diversified income streams for long-term financial stability.

Government Funded vs Donation Funded Charities

A key distinction in the charity sector is explored in Government Funded vs Donation Funded Charities. Government funded charities typically receive the majority of their revenue through contracts and grants to deliver public services. These organisations often have higher annual revenue, more paid staff, and structured operations aligned with policy objectives.

In contrast, donation funded charities rely heavily on public generosity, including donations and bequests. While these organisations may have lower total revenue, they often maintain strong community connections and flexibility in pursuing their charitable purpose. Their financial health can fluctuate depending on economic conditions, public awareness, and fundraising success.

The balance between these funding models shapes how charities operate. Government funded organisations may focus on large-scale service delivery, while donation funded groups often prioritise niche or grassroots initiatives. Both models contribute to the broader not for profit sector and support a wide range of social services.

Interestingly, the sector increased its reliance on mixed funding models in recent years. Many charities continued to diversify their income sources to improve resilience, especially during periods of economic uncertainty. Asset ratio, charity assets, and total liabilities are increasingly scrutinised to ensure organisations remain sustainable over time.

Does Higher Revenue Mean Greater Impact?

A common question is: Does Higher Revenue Mean Greater Impact? The answer is not always straightforward. While higher revenue allows charities to expand their programs, hire more staff, and invest in infrastructure, it does not automatically guarantee better outcomes.

Impact depends on how effectively resources are used. Some smaller organisations deliver highly targeted and efficient services, achieving meaningful results with limited funding. Meanwhile, larger charities may face challenges related to scale, including administrative complexity and increased costs.

Financial metrics like total expenses, total income, and profits provide useful insights, but they do not capture the full picture. Measures such as volunteer breakdown, community engagement, and program outcomes are equally important in assessing success.

Ultimately, Australia’s charities play a vital role in supporting the nation. Whether they are extra large charities with extensive operations or smaller not for profit organisations focused on specific communities, each contributes to a stronger, more inclusive society.

How The Giving Advisory Can Help

Brad Seeto

Why the Recent Government Changes Make an Investment Review Essential?

This article follows our recent update, “Government Announces Major Changes to Ancillary Funds (Giving Funds)“, which outlined the Government’s decision to rename Private and Public Ancillary Funds as Giving Funds, align minimum distributions to 6%, and allow distributions to be smoothed over a three-year period.

These reforms are not simply administrative. They materially change how Giving Funds must think about investment strategy, portfolio construction, and risk management.

The critical question for trustees and founders now becomes:

Is our investment strategy genuinely designed to support a 6% distribution – consistently, sustainably, and through market cycles – while preserving the Fund’s long-term giving capacity?

For many Giving Funds, the recent announcements should act as a clear trigger to review and, where necessary, reset their approach.

The Shift to 6%: A Higher Bar for Investment Outcomes

Under the new framework, all Giving Funds will be required to distribute at least 6% of net assets per year. While many funds have historically met or exceeded this level, doing so reliably going forward is not guaranteed, particularly in a more volatile investment environment.

Trustees should be asking:

Is the portfolio targeting returns meaningfully above 6% after fees and inflation?
What happens to distributions if markets deliver a poor year, or several in a row?
Will meeting the 6% requirement force the sale of growth assets at unfavourable times?

A portfolio that was ‘good enough’ under a lower distribution regime may now fall short when tested against higher and more consistent cashflow demands.

Distribution Smoothing: Flexibility That Must Be Earned

One of the most important, and most misunderstood, elements of the reforms is the ability to smooth distributions over a three-year period.

This flexibility allows Giving Funds to distribute more in strong years and less in weaker years, supporting more stable and strategic grantmaking. However, smoothing is not automatic.

It only works when the investment strategy is intentionally structured to:

Build reserves in strong market conditions
Maintain sufficient liquidity for grant commitments
Avoid excessive volatility that undermines long-term capital

Funds that rely heavily on a traditional balanced or growth portfolio, often adopted at establishment and left untouched, may struggle to use smoothing effectively when it is most needed.

Giving Fund Portfolios Are Not Personal Portfolios

A Giving Fund has a fundamentally different purpose from a personal or SMSF portfolio.

The objective is not maximising returns in any single year. It is to support ongoing, reliable giving, year after year, generation after generation.

That raises important strategic questions:

Is the Fund overly dependent on equity market growth to fund annual grants?
Is there appropriate diversification across asset classes, sectors, and return drivers?
Would a greater focus on income, capital preservation, or alternative assets improve stability?

Investment risk in a Giving Fund should be aligned to charitable intent, not personal risk tolerance.

Governance Expectations Are Rising Alongside the Reforms

The Government’s changes also raise expectations around trustee oversight and governance.

Trustees should be able to demonstrate that:

The investment strategy has been reviewed in light of the new rules
Portfolio construction supports both distribution obligations and capital longevity
Performance, liquidity, and risk are actively monitored

An outdated investment strategy, particularly one that has not been reviewed since the Fund was established, creates not only financial risk, but also governance risk.

A Clear Call to Action for Giving Fund Trustees

If your Giving Fund:

Has not reviewed its investment strategy since the reforms were announced
Is narrowly meeting the 6% distribution requirement
Experiences significant year-to-year volatility
Or was established quickly without a purpose-built portfolio

then now is the right time to act.

A structured portfolio review can help determine whether your Fund is positioned to:

Sustain 6% distributions through market cycles
Make effective use of distribution smoothing
Support its charitable mission with confidence and resilience

How Giving Advisory Can Help

At Giving Advisory, we work exclusively with Giving Funds and philanthropic structures. We help trustees ensure their investment strategies are aligned with:

The new regulatory framework
Long-term sustainability of the Fund
The giving objectives of founders and families

Our approach goes beyond performance reporting. We focus on structure, resilience, and outcomes, so your Fund can give with confidence, regardless of market conditions.

Next Steps

If you would like to review your Giving Fund’s investment strategy in light of the recent Government changes, we invite you to contact Giving Advisory for a confidential discussion.

A proactive review today can protect and enhance the impact your Giving Fund delivers for years to come.

AIAD

Government Announces Major Changes to Ancillary Funds

The Australian Government has announced that Private Ancillary Funds (PAFs) and Public Ancillary Funds (PuAFs) will be renamed Giving Funds. This change is more than cosmetic; it signals a clear shift in the Government’s expectations about the purpose and culture of philanthropic structures in Australia.

Alongside the rename, the Government has also announced significant changes to minimum distribution rates, moving both fund types to a uniform 6% of net assets per year. This article covers both changes in detail, starting with the rename and what it means for trustees and families.

Why the Rename?

The Government’s view is straightforward: the existing names, ‘Private Ancillary Fund’ and ‘Public Ancillary Fund’, are technical, opaque, and fail to convey what these structures are actually for. The new name, Giving Fund, is designed to make that purpose explicit.

Ancillary funds have always been vehicles for charitable giving, but in practice, some have operated more as long-term investment vehicles with limited distributions. By renaming them Giving Funds, the Government is reinforcing that these structures exist to distribute money to eligible charities- not to accumulate capital indefinitely.

What Are Giving Funds?

A Private Giving Fund (formerly PAF) is a popular vehicle for family philanthropy in Australia. It allows donors to make tax-deductible contributions to a charitable trust that is controlled and managed by the family or a nominated board. The fund then distributes grants to endorsed deductible gift recipients, excluding other ancillary funds, in line with the family’s charitable objectives.

A Public Giving Fund (formerly PuAF) operates similarly, but raises donations from the broader community rather than a single family group.

Both structures are regulated by the Australian Charities and Not-for-Profits Commission (ACNC) and the Australian Taxation Office (ATO) and must comply with strict governance, reporting and distribution requirements.

The Broader Policy Context

These reforms respond directly to recommendations in the Productivity Commission’s Future Foundations for Giving report and the Not-for-Profit Sector Development Blueprint, both of which identified that ancillary funds were not always functioning as active giving vehicles. The rename is part of a broader strategy to increase the flow of philanthropic capital to charities across Australia and strengthen long-term charitable support.

Distribution Rate Changes: Moving to a Uniform 6% Minimum

The most significant reform is the introduction of a single minimum annual distribution rate of 6% of net assets, applying to both Private and Public Giving Funds.

The Current Rates

Currently, the minimum annual distribution requirements are:

Private Ancillary Funds: 5% of net assets per year
Public Ancillary Funds: 4% of net assets per year

The new 6 %uniform rate represents an increase for both fund types: a 20% rise for PAFs and a 50% rise for PuAFs. This is the most material change for existing fund trustees and advisers.

Why 6%?

The rationale is to increase the total quantum of funding flowing into the charity sector each year. By lifting and aligning the minimum distribution rate, the Government intends to encourage more active, regular grant-making rather than the slow accumulation of capital over decades.

For many philanthropic families, this change will require a review of investment strategies and cash flow planning. Private Giving Funds are often structured to preserve and grow capital so that giving can continue across generations. A higher mandatory distribution rate may influence portfolio allocation, expected returns and the size of annual grants.

Three-Year Distribution Smoothing: Flexibility to Balance Compliance and Strategy

To offset the impact of the higher distribution requirement, the Government will allow Giving Funds to smooth distributions over three years. Rather than meeting the full 6% minimum strictly in every financial year, funds can average their required distributions across three years.

What Does Smoothing Mean in Practice?

This measure is designed to:

Support more strategic, multi-year grant-making
Reduce the risk of forced asset sales in years of weaker investment performance
Allow funds to support larger or longer-term charitable projects more flexibly

For example, a Giving Fund supporting a long-term medical research program or a major community infrastructure project can structure grants more flexibly without needing to draw down capital heavily in a single year.

Timing and Transition Period

The new 6% minimum distribution rate will apply from the first financial year after the Ancillary Fund Guidelines are formally amended.

Existing Giving Funds will benefit from a two-year transition period before the new rate becomes mandatory. This gives trustees time to:

Assess compliance obligations under the new framework

Review and update trust deeds and governing documents where necessary

Refine grant-making strategies and investment portfolios

Model the cash flow impact of higher distributions across different market return scenarios

What This Means for Trustees and Advisers

For families, trustees and advisers involved in Private or Public Giving Funds, these reforms signal a meaningful shift in how philanthropic capital will be managed and distributed in the years ahead. The changes create both compliance obligations and strategic opportunities.

Key areas to address include:

Investment strategy review: Modelling the cash flow and investment impact of a 6% distribution rate across different market return scenarios
Governing documents: Reviewing trust deeds to ensure they permit higher distributions and three-year averaging
Grant strategy design: Designing grant strategies that use averaging effectively while still meeting annual compliance requirements
Liquidity planning: Aligning distribution timing with investment performance and liquidity needs
ACNC and ATO compliance: Documenting trustee decisions to meet regulator expectations

Strategic Advice Under the New Giving Fund Rules

The Giving Advisory supports families, boards and advisers in establishing and managing private giving funds. Our team guides governance, investment considerations, distribution strategy and regulatory compliance under the new 6% framework.

If you are reviewing your ancillary fund or considering setting up a giving fund, The Giving Advisory can help you align your structure with the new rules while preserving your long-term philanthropic vision.

Frequently Asked Questions

What is the difference between the old Ancillary Funds and the new Giving Funds?

There is no structural difference, the rename from Private Ancillary Fund (PAF) and Public Ancillary Fund (PuAF) to Private Giving Fund and Public Giving Fund is primarily about clarifying purpose. The Government wants the name to reflect that these structures exist to actively distribute money to eligible charities, not to accumulate capital indefinitely.

What is the new minimum distribution rate and when does it take effect?

Both Private and Public Giving Funds will be required to distribute a minimum of 6% of net assets per year, up from 5% for PAFs and 4% for PuAFs. The new rate will apply from the first financial year after the Ancillary Fund Guidelines are formally amended, with a two-year transition period for existing funds.

What is the three-year distribution smoothing rule and how does it work?

Rather than requiring funds to meet the full 6% minimum in every single financial year, the Government will allow Giving Funds to average their distributions across three years. This provides flexibility for strategic multi-year grant-making, reduces the risk of forced asset sales in weaker investment years, and allows funds to support larger or longer-term charitable projects more effectively.

What do trustees need to do to prepare for these changes?

Trustees should review their investment strategy and model the cash flow impact of the new 6% distribution rate, update trust deeds and governing documents where necessary, design grant strategies that make use of the three-year averaging provision, and ensure compliance with ACNC and ATO reporting requirements throughout the transition period.

Who do these changes apply to?

These changes apply to all existing and new Private and Public Giving Funds regulated by the Australian Charities and Not-for-Profits Commission (ACNC) and the Australian Taxation Office (ATO). Both families managing private giving funds and organisations operating public giving funds will need to review their structures and strategies in light of the new requirements.

AIAD

Most Trusted Charities in Australia: How to Evaluate Them

Australians are well known for their generosity. Each year, individuals, families, and businesses donate billions of dollars to causes ranging from disaster relief and medical research to education and community development. However, with thousands of registered charities operating across the country, many donors want to ensure their contributions are going to reputable organisations.

Understanding how to identify the most trusted charities Australia has to offer is an important step in giving effectively. By evaluating transparency, impact, and governance, donors can make informed decisions and maximise the difference their donations make.

So, how do I evaluate a charity before donating? The answer lies in looking beyond marketing messages and examining how organisations operate, manage funds, and deliver outcomes.

What Makes a Charity Trusted?

When people search for the most trusted charities Australia, they are usually looking for organisations that are transparent, accountable, and effective in delivering real results.

What Makes a Charity Trusted? Several key factors tend to separate reputable organisations from those that are less effective.

Transparency and reporting
Trusted charities openly share information about their mission, programs, finances, and impact. This typically includes publishing annual reports, financial statements, and details about how donations are used.

Clear mission and measurable impact
A strong charity clearly communicates what problem it is trying to solve and how it measures success. Whether the goal is supporting vulnerable communities or funding medical research, donors should be able to see tangible outcomes from the organisation’s work.

Responsible financial management
Donors often look at how much of a charity’s funds go toward programs versus administration and fundraising. While administrative costs are necessary, a trusted charity should demonstrate that a meaningful portion of funds supports its core mission.

Good governance and leadership
Effective charities usually have a qualified board of directors, experienced leadership, and clear governance policies. This helps ensure donations are managed responsibly and in line with the organisation’s goals.

Regulatory compliance
In Australia, registered charities must meet certain reporting and governance requirements. Checking whether a charity is properly registered and compliant can provide an additional level of confidence.

By reviewing these elements, donors can better determine whether an organisation deserves their trust and support.

Large National Charities vs Local Community Organisations

When considering where to donate, many people debate whether to support large national charities or smaller local organisations. Both can play an important role in addressing social challenges.

Large National Charities vs Local Community Organisations each offer unique strengths.

Large national charities often have well-established infrastructure, broad reach, and significant resources. This allows them to respond quickly to major issues such as natural disasters, public health crises, or large-scale social programs. Their size can also mean they have extensive expertise and established partnerships with governments and international organisations.

However, larger charities sometimes face criticism for higher administrative costs or a perceived lack of personal connection with donors.

Local community organisations, on the other hand, often operate on a smaller scale and work directly within specific communities. Because of their close proximity to the people they serve, they may have deeper insights into local challenges and needs.

Supporting local charities can provide a sense of connection and visibility, as donors may see the direct results of their contributions within their own communities.

Rather than viewing these options as competing choices, many donors choose to support a combination of both. Large organisations may address systemic issues at scale, while smaller groups deliver targeted community support.

Strengthening Your Giving Through Structured Philanthropy

For individuals and business owners who donate regularly, developing a more intentional giving strategy can significantly increase the impact of their contributions.

Strengthening Your Giving Through Structured Philanthropy means approaching charitable donations with a clear plan rather than making purely spontaneous decisions.

Structured philanthropy might involve:

Defining your priorities
Identify the causes that matter most to you, such as education, healthcare, environmental protection, or poverty reduction. Focusing on a few key areas often leads to greater long-term impact.

Researching charities carefully
Before donating, take time to review an organisation’s mission, financial reports, and track record. This helps ensure your donations are aligned with organisations that use funds responsibly.

Supporting organisations over the long term
Consistent support allows charities to plan ahead and expand their programs. Long-term partnerships often produce stronger outcomes than one-off donations.

Tracking the results of your giving
Following up on how charities report their outcomes can help donors understand the difference their contributions are making and refine their future giving decisions.

Structured philanthropy is particularly valuable for families and business owners who want their charitable giving to reflect their values and create a lasting impact.

How Do I Evaluate a Charity Before Donating?

Evaluating a charity does not have to be complicated, but it does require some research. Before making a donation, consider asking the following questions:

Is the charity transparent about its finances and impact?
Does it have a clear mission and measurable outcomes?
Are its leadership and governance structures credible?
How effectively does it use donated funds?
Does the organisation align with the causes you care about?

By taking the time to answer these questions, donors can feel confident they are supporting organisations that genuinely make a difference.

Ultimately, finding the most trusted charities Australia offers is about more than just reputation. It involves understanding how organisations operate, evaluating their impact, and aligning your donations with causes that matter to you.

With thoughtful research and a structured approach, charitable giving can become a powerful way to create positive change while ensuring your generosity has the greatest possible effect.

How The Giving Advisory Can Help

Frequently Asked Questions

What makes a charity trusted and reputable?

A trusted charity typically demonstrates transparency by openly sharing financial statements, annual reports, and details about how donations are used. Beyond that, reputable organisations have a clear mission with measurable outcomes, responsible financial management, qualified governance and leadership, and are properly registered and compliant with Australian regulatory requirements. Reviewing these factors together gives donors a well-rounded picture of whether an organisation is worthy of their support.

How do I evaluate a charity before donating?

Start by asking a few key questions: Is the charity transparent about its finances and impact? Does it have a clear mission with measurable outcomes? Are its leadership and governance structures credible? How effectively does it use donated funds? And does it align with the causes you personally care about? Taking the time to research an organisation’s track record and financial reports before donating can give you much greater confidence in your decision.

Should I donate to large national charities or smaller local organisations?

Both have their merits and many donors choose to support a combination of the two. Large national charities often have the infrastructure and reach to respond quickly to major issues such as natural disasters or public health crises, while smaller local organisations tend to have deeper community connections and can deliver more targeted, visible results. Rather than viewing them as competing choices, consider how each might complement your overall giving strategy.

What is structured philanthropy and how can it improve my giving?

Structured philanthropy means approaching charitable giving with a clear and intentional plan rather than making purely spontaneous donations. It involves defining the causes that matter most to you, researching charities carefully before committing funds, supporting organisations consistently over the long term, and tracking the outcomes of your giving. This approach is particularly valuable for families and business owners who want their generosity to reflect their values and create a lasting impact.

How can The Giving Advisory help me with my charitable giving?

The Giving Advisory helps individuals, families, and business owners develop thoughtful and effective giving strategies. Whether you are starting a donor advised fund, making your first charitable contribution, or looking to align your giving with your family’s values and long-term philanthropic goals, their services team can guide you through the process and help ensure your generosity makes the greatest possible difference.

Brad Seeto

Can a Trust Donate to Charity in Australia?

Many individuals and families in Australia use trusts to manage assets, distribute income, and support long-term financial planning. Alongside these purposes, trusts can also play a role in philanthropy. However, questions often arise around whether charitable giving is allowed within a trust structure and what rules apply.

So, can a trust donate to charity Australia? In most cases, the answer is yes, but it depends on several factors, including the type of trust, the wording of the trust deed, and how the trustee exercises their powers.

Understanding how trusts interact with charitable giving can help trustees and beneficiaries ensure donations are made legally, strategically, and in alignment with the trust’s purpose.

Understanding the Different Types of Trusts

Before making charitable donations through a trust, it is important to understand the structure of the trust itself. Different types of trusts operate under different rules and objectives.

Understanding the Different Types of Trusts helps determine how and when charitable donations may be made.

Discretionary (family) trusts
These are one of the most common trust structures in Australia. In a discretionary trust, the trustee has the power to decide how income or capital is distributed among beneficiaries. If the trust deed permits it, the trustee may also make donations to registered charities.

Unit trusts
Unit trusts operate similarly to companies in that beneficiaries hold units representing their share of the trust. Because distributions are typically tied to those units, charitable donations may be less flexible unless specifically allowed under the trust deed.

Charitable trusts
Charitable trusts are established specifically for charitable purposes. Their primary function is to support charitable activities and organisations, often over a long period of time.

Testamentary trusts
Created through a will, testamentary trusts take effect after a person passes away. Depending on the instructions in the will, trustees may have the authority to donate to charities or continue a legacy of philanthropy.

In all cases, trustees must act within their legal duties and the terms set out in the trust deed.

Strategic Use of Trusts in Philanthropy

Trusts can be a powerful tool for structured and long-term charitable giving. When used effectively, they allow individuals and families to integrate philanthropy into their broader financial and legacy planning.

Strategic Use of Trusts in Philanthropy often involves planning how and when donations will be made while maintaining the trust’s primary objectives.

For example, a family trust may allocate a portion of its annual income to charitable donations. This allows the family to support causes they care about while maintaining flexibility in distributing remaining income to beneficiaries.

Trusts may also support philanthropy through:

Regular donations to registered charities
Funding community projects or foundations
Supporting charitable initiatives aligned with family values

In some cases, trusts are used to support structured giving vehicles such as philanthropic funds or charitable foundations. This approach can help families build a long-term giving strategy that spans generations.

However, trustees must ensure that charitable donations are made in a way that complies with tax rules and the governing terms of the trust.

The Importance of the Trust Deed

One of the most important factors in determining whether a trust can donate to charity is the trust deed itself.

The Importance of the Trust Deed cannot be overstated. The trust deed outlines the powers, responsibilities, and limitations of the trustee. It also defines how the trust’s income and capital may be used.

If the trust deed specifically allows charitable donations, the trustee generally has the authority to make them. However, if the deed is silent or restrictive on this issue, the trustee may not have the power to donate trust funds to charity.

In some situations, it may be possible to amend the trust deed to allow for charitable giving, but this depends on the structure of the trust and the amendment powers included in the deed. Professional legal or financial advice is often required before making any changes.

Trustees must also ensure that donations align with their fiduciary duties. Their primary responsibility is to act in the best interests of beneficiaries and to manage trust assets prudently.

Is a Trust Allowed to Donate to Charity?

So, is a trust allowed to donate to charity? In many cases, yes, but only if the trust deed permits it and the trustee acts within their legal responsibilities.

The key considerations include:

Whether the trust deed allows charitable donations
The type of trust involved
The trustee’s fiduciary duties to beneficiaries
Any relevant tax implications

When structured correctly, trusts can play an important role in long-term philanthropy, allowing families and business owners to support charitable causes while maintaining a thoughtful approach to wealth management.

Before making charitable donations through a trust, trustees should review the trust deed carefully and consider seeking professional advice. This ensures that giving is both compliant and aligned with the trust’s overall purpose.

How The Giving Advisory Can Help

Frequently Asked Questions

Can a trust donate to charity in Australia?

In most cases, yes. However, whether a trust can make charitable donations depends on several key factors, including the type of trust, the specific wording of the trust deed, and how the trustee exercises their powers. Trustees must always act within their legal duties and the terms set out in the trust deed before making any charitable contributions.

What types of trusts can be used for charitable giving?

Several trust structures can be used to support charitable giving in Australia. Discretionary family trusts can make donations if the trust deed permits it. Charitable trusts are established specifically to support charitable activities and organisations over the long term. Testamentary trusts, created through a will, may also allow trustees to donate to charities depending on the instructions left by the deceased. Unit trusts tend to be less flexible for charitable donations unless the trust deed specifically allows for them.

Why is the trust deed so important when it comes to charitable donations?

The trust deed is the governing document that outlines the powers, responsibilities, and limitations of the trustee, including how the trust’s income and capital may be used. If the deed specifically allows charitable donations, the trustee generally has the authority to make them. If the deed is silent or restrictive on the matter, the trustee may not have the power to donate trust funds to charity at all. In some cases the deed can be amended, but this requires professional legal or financial advice.

What are a trustee’s responsibilities when making charitable donations?

Trustees must ensure that any charitable donations comply with the terms of the trust deed, relevant tax rules, and their fiduciary duties to beneficiaries. Their primary legal responsibility is to act in the best interests of beneficiaries and to manage trust assets prudently. Charitable giving must therefore be balanced against these obligations and should never be made in a way that conflicts with the trust’s overall purpose.

How can trusts be used as part of a long-term philanthropic strategy?

Trusts can be a powerful vehicle for structured, multigenerational charitable giving. A family trust, for example, may allocate a portion of its annual income to registered charities, fund community projects, or support charitable initiatives that reflect the family’s values. Trusts can also work alongside other structured giving vehicles such as philanthropic funds or charitable foundations to build a long-term giving strategy. To ensure donations are made correctly and tax-effectively, trustees should review the trust deed carefully and seek professional advice before proceeding.

Brad Seeto

How to Structure Charitable Giving for Business Owners

Charitable giving has long been part of the legacy many entrepreneurs want to build. Beyond simply donating money, thoughtful philanthropy allows business owners to support causes they care about while also strengthening their brand, engaging employees, and planning for the future. However, without a clear framework, charitable efforts can become inconsistent, inefficient, or disconnected from broader financial goals.

A structured plan for charitable giving for business owners helps ensure that donations are meaningful, strategic, and sustainable. When philanthropy is approached with intention, it can amplify both community impact and long-term business success.

Why a Structured Approach Matters

Many business owners give to charity informally: supporting community events, sponsoring local initiatives, or responding to fundraising requests. While these efforts are valuable, they can sometimes lead to scattered giving without measurable impact.

A structured approach helps create clarity and purpose. Instead of making one-off donations, business owners can define clear priorities, set budgets, and establish guidelines for how and where funds are distributed.

There are several advantages to structured giving:

1. Consistency and long-term impact
Strategic giving allows businesses to support causes over time rather than through isolated donations. Long-term partnerships with charities often lead to deeper community outcomes.

2. Financial planning and tax efficiency
When donations are planned in advance, business owners can better integrate them into financial planning. This may involve scheduled annual contributions, percentage-of-profit donations, or structured philanthropic vehicles.

3. Clear philanthropic goals
A structured plan encourages business owners to articulate what they want their philanthropy to accomplish. This could include supporting education, healthcare, environmental sustainability, or local community development.

Ultimately, Why a Structured Approach Matters is simple: it transforms charitable giving from reactive generosity into purposeful, strategic impact.

Aligning Philanthropy With Business Strategy

Philanthropy can also play a meaningful role in strengthening a company’s mission and values. When charitable efforts align with a business’s broader strategy, they often create benefits for both the community and the organisation.

Aligning Philanthropy With Business Strategy begins by identifying causes that resonate with the company’s purpose. For example:

A technology company might support digital literacy programs.
A construction firm might contribute to housing initiatives.
A food business might partner with hunger relief organisations.

When giving reflects a company’s expertise or industry, it often becomes more authentic and impactful.

There are several ways business owners can integrate charitable initiatives into their operations:

Employee engagement
Many organisations involve employees in philanthropic decisions or volunteer programs. This can increase staff morale and foster a stronger workplace culture.

Brand and reputation
Customers increasingly value businesses that contribute positively to society. Strategic philanthropy can reinforce brand values and build trust with clients and stakeholders.

Partnership opportunities
Working closely with nonprofit organisations can create long-term partnerships that extend beyond financial contributions. Businesses may offer mentorship, professional services, or resources that amplify their impact.

By aligning philanthropy with business goals, charitable efforts become more than just donations. They become part of a company’s identity.

Integrating Giving With Estate Planning

For many entrepreneurs, philanthropy is not only about present-day impact but also about the legacy they leave behind. This is where Integrating Giving With Estate Planning becomes especially important.

Estate planning provides opportunities to incorporate charitable goals while also managing wealth transfer and family interests. Business owners may consider a variety of structures depending on their financial situation and long-term objectives.

Some common strategies include:

Donor-advised funds
These accounts allow individuals to contribute assets, receive potential tax benefits, and recommend grants to charities over time.

Private foundations
A private foundation allows families or businesses to create a long-term philanthropic institution that distributes funds to chosen causes.

Charitable trusts
Certain trust structures can provide income to beneficiaries while also supporting charitable organisations in the future.

Legacy gifts through wills or business succession
Business owners may allocate a portion of their estate or business sale proceeds to charitable causes, ensuring their philanthropic vision continues beyond their lifetime.

Integrating philanthropy into estate planning can also help business owners involve family members in charitable decision-making. This often becomes a powerful way to pass down values alongside financial wealth.

What Is the Best Way for Business Owners to Give to Charity?

The best approach depends on the owner’s goals, financial position, and desired level of involvement. However, the most effective strategies usually share several common elements:

Define clear philanthropic goals – Identify the causes and outcomes that matter most.
Create a giving structure – Establish a framework such as annual donation targets, philanthropic funds, or charitable foundations.
Align giving with business values – Support causes that connect with the company’s mission or expertise.
Plan for long-term impact – Consider how charitable efforts will evolve over time.
Integrate giving into financial and estate planning – Work with professional advisors to ensure philanthropy supports broader wealth and legacy goals.

By following these principles, business owners can transform charitable giving into a powerful extension of their leadership and values.

How The Giving Advisory Can Help

Frequently Asked Questions

Why should business owners take a structured approach to charitable giving?

Unstructured giving tends to be scattered and hard to measure. A clear framework lets business owners set priorities, plan donations around financial goals, and build long-term partnerships with charities that create deeper, more meaningful community outcomes rather than one-off contributions.

How can business owners align their philanthropy with their business strategy?

Start by identifying causes that connect naturally with your industry and company values. A construction firm supporting housing initiatives, or a tech company backing digital literacy programs, creates giving that feels authentic rather than transactional. Employee volunteer programs and nonprofit partnerships can further embed philanthropy into your company’s culture and identity.

What structured giving vehicles are available to business owners?

The most common options are donor-advised funds (flexible, tax-effective, and simple to set up), private foundations (ideal for long-term family or business philanthropy), charitable trusts (which can benefit both beneficiaries and charities simultaneously), and legacy gifts through wills or business succession to carry your philanthropic vision forward.

How does charitable giving fit into estate planning?

Philanthropy built into estate planning ensures your generosity outlasts you. It allows wealth and values to be transferred together, gives family members a shared purpose, and can be structured through trusts, foundations, or direct bequests to maximise both charitable impact and tax efficiency across generations.

What is the best first step for a business owner wanting to give more strategically?

Define what you want your giving to achieve. Clarity on causes, outcomes, and budget is the foundation everything else is built on. From there, a professional advisor can help you choose the right giving structure, integrate donations into your financial plan, and ensure your philanthropy grows alongside your business.

Brad Seeto

What is a Private Ancillary Fund (PAF)?

A Private Ancillary Fund (PAF) is a type of private charitable trust that allows individuals, families, or businesses to engage in structured giving. It is established to provide grants or donations to organisations that have a Deductible Gift Recipient (DGR) status, ensuring that the funds are used for charitable purposes.

We simplify the complexities of giving, enabling you to maximise the impact of your charitable efforts. With The Giving Advisory, you’re not just investing resources; you’re investing in a future of meaningful change. Get in touch to find out more.

Learn more about Private Ancillary Funds below. Click here to find out more about PAF accounting and management services.

Public Vs Private Ancillary Funds

Unlike Public Ancillary Funds (PuAFs), which collect donations from the general public, PAFs are privately controlled and typically funded by a single source or a small group. This structure ensures that PAFs focus solely on distributing funds rather than raising them, allowing donors to concentrate on their philanthropic goals without the need for public fundraising. PAFs are regulated by the Australian Taxation Office (ATO) and the Australian Charities and Not-for-profits Commission (ACNC), operating under strict operational guidelines established by the ATO to ensure full compliance with Australian laws and regulations.ws and regulations.

Aspect	Public Ancillary Funds (PuAFs)	Private Ancillary Funds (PAFs)
Purpose	Established to pool public donations for distribution to eligible charities.	Established by individuals, families, or businesses for private charitable giving.
Funding Source	Open to contributions from the general public.	Funded exclusively by the founder(s) or a specific group (e.g., family or business).
Control and Oversight	Managed by a corporate trustee with a public governance model.	Managed by a corporate trustee but under the control of the founder(s).
Beneficiaries	Typically supports a wide range of eligible charities.	Supports charities chosen by the founder(s), allowing for personalised giving.
Compliance	Subject to specific Australian Taxation Office (ATO) rules and must maintain public accountability.	Subject to ATO compliance rules but operates privately without public accountability.
Reporting	May require public transparency and reporting.	Reporting is private, with details only provided to regulatory authorities.
Flexibility	Less flexible in terms of grant-making decisions due to broader public accountability.	Offers greater flexibility for targeted and strategic philanthropy.
Examples	Community foundations, workplace giving programs.	Family foundations or corporate charitable trusts.

PuAFs must ask for donations from the public. PAFs are restricted in their ability to receive donations from people other than their founders or relatives, associates and employees of the founders—source: Distribution guidelines for ancillary funds available on treasury.gov.au

Key Features of PAFs

DGR Status: PAFs can only make donations to organisations with DGR status, providing tax advantages for the donor.
Tax Deductible Donations: Contributions to a PAF are tax-deductible, allowing donors to reduce their taxable income.
Trust Structure: PAFs are structured as trusts, governed by a trust deed outlining the objectives and rules.
Flexibility in Grantmaking: PAFs offer flexibility, allowing donors to decide how and when to distribute funds to chosen charities.

How to Set Up a Private Ancillary Fund

Setting up a PAF requires careful planning and an understanding of the regulatory framework. Here’s a step-by-step guide to help you navigate the process:

1. Define Your Philanthropic Goals

Before establishing a PAF, consider your philanthropic objectives. What causes do you want to support? Do you want to make a long-term impact in a particular sector? Having a clear vision will help guide your decisions throughout the setup process.

2. Establish a Trust Deed

A trust deed is a legal document that sets out the purpose, structure, and rules of the PAF. It must comply with the Charities Act and include clauses about:

Granting only to DGR organisations.
Meeting annual minimum distribution requirements (usually 5% of the fund’s net assets).
Following governance standards set by the ACNC.

3. Register with the ACNC

Once the trust deed is in place, the PAF must be registered with the Australian Charities and Not-for-profits Commission (ACNC). The registration process involves providing details about the PAF, its objectives, and compliance with the Governance Standards and External Conduct Standards.

4. Apply for Tax Concessions

PAFs can apply for tax exemptions, such as Income Tax Exempt Funds (ITEFs) status, through the ATO. These concessions ensure that the income generated by the PAF’s investments is tax-free, maximising the funds available for charitable activities.

5. Develop an Investment Strategy

A key element of a successful PAF is a well-defined investment strategy. The strategy should align with the PAF’s philanthropic goals and be designed to preserve and grow the fund’s assets over time. Considerations include:

Risk tolerance and asset allocation.
Ethical investment choices that align with the donor’s values.
Regular reviews and adjustments to the strategy.

Compliance and Governance

PAFs are subject to stringent compliance requirements to ensure transparency and accountability. Here are some of the key obligations:

Annual Distribution Requirement

PAFs are required to distribute at least 5% of their net assets annually to eligible DGRs. This minimum distribution rule ensures that the funds are actively contributing to charitable causes.

Lodging the Annual Information Statement

PAFs must submit an Annual Information Statement to the ACNC, providing details on their activities, governance, and financial performance. The statement is publicly available, allowing donors and the public to assess the PAF’s effectiveness.

Audit and Reporting

An annual audit is required to ensure the PAF’s financial records are accurate and compliant with regulations. The auditor will review the trust’s financial statements, investment performance, and adherence to the trust deed’s requirements.

Governance and Compliance Standards

PAFs must adhere to Governance Standards set by the ACNC, which include:

Acting with integrity and accountability.
Managing financial affairs responsibly.
Ensuring that the PAF is not used for personal benefit.

Additionally, PAFs operating overseas must comply with External Conduct Standards, which focus on transparency and accountability in international activities.

Benefits of Setting Up a Private Ancillary Fund

Establishing a PAF can offer numerous advantages for donors who want to engage in structured giving:

1. Control and Flexibility

PAFs allow donors to have complete control over how the funds are managed and distributed. This flexibility makes it easier to align the PAF’s activities with personal or family philanthropic goals.

2. Tax Efficiency

Contributions to a PAF are tax-deductible, reducing the donor’s taxable income. Additionally, the income earned by the PAF is generally tax-exempt, allowing the fund to grow more effectively.

3. Long-Term Impact

A PAF can be structured to provide grants over many years, ensuring a lasting impact on chosen causes. It also enables families to create a philanthropic legacy that can be passed down through generations.

4. Professional Management

With professional management and oversight, PAFs can make informed investment decisions and maintain compliance with complex regulatory requirements.

Common Challenges in Managing a PAF

While PAFs offer significant benefits, they also come with certain challenges:

1. Compliance Risks

Failure to meet the annual distribution requirements or lodge the necessary reports can result in penalties or deregistration. Engaging a professional service like The Giving Advisory can help manage these risks effectively.

2. Investment Management

PAFs must balance the need to generate income with the risk of investment losses. Developing a clear investment strategy and reviewing it regularly is essential for the fund’s sustainability.

3. Administrative Burden

Managing a PAF involves significant administrative tasks, including record-keeping, compliance reporting, and audits. This can be time-consuming, especially for individuals or families unfamiliar with trust regulation.

Why Choose The Giving Advisory for Your Private Ancillary Fund?

At The Giving Advisory, we understand the complexities involved in setting up and managing a PAF. We offer a full suite of services designed to simplify the process, including:

Setup and Strategy Design: We establish your PAF’s structure and align it with your philanthropic vision.
Administration and Compliance: Our team handles all regulatory requirements, ensuring your PAF remains compliant with ATO and ACNC standards.
Investment Management: We oversee the fund’s investments, focusing on sustainable growth aligned with your values.
Online Reporting and Transparency: Access real-time updates on your fund’s performance with our online reporting tools.
Annual Audit and Reporting: We coordinate annual audits, providing peace of mind that your PAF is managed with integrity.

By partnering with The Giving Advisory, you can focus on making a meaningful impact without worrying about the complexities of compliance and administration.

Final Thoughts

Setting up a Private Ancillary Fund is an excellent way to engage in structured giving, offering tax benefits, control, and the potential for long-term impact. However, managing a PAF requires expertise and a deep understanding of regulatory requirements. With the right guidance and support, you can maximise the benefits of your PAF and contribute to the causes you care about most.

Ready to Start Your Philanthropic Journey?

Let The Giving Advisory be your trusted partner in establishing and managing your Private Ancillary Fund. Contact us today to learn how we can help you turn your philanthropic vision into reality.

Frequently Asked Questions

What is a Private Ancillary Fund and who is it for?

A PAF is a private charitable trust that allows individuals, families, or businesses to engage in structured, tax-effective giving. Unlike Public Ancillary Funds, which raise money from the general public, a PAF is privately controlled and funded by its founder, giving donors complete flexibility over which causes they support and when grants are distributed.

What are the key tax benefits of setting up a PAF?

Contributions made to a PAF are fully tax-deductible, reducing the donor’s taxable income in the year the contribution is made. Income generated by the fund’s investments is also generally tax-exempt, meaning more capital stays in the fund to grow and ultimately flow to charitable causes over time.

What are the main compliance obligations for PAF trustees?

PAF trustees must distribute at least 5% of the fund’s net assets annually to eligible Deductible Gift Recipient organisations, lodge an Annual Information Statement with the ACNC, and complete an annual independent audit. Trustees must also adhere to ACNC Governance Standards, ensuring the fund is managed with integrity and never used for personal benefit.

What are the most common challenges in managing a PAF?

The three main challenges are compliance risk, investment management, and administrative burden. Missing distribution requirements or reporting deadlines can trigger penalties or deregistration. Balancing investment growth against mandatory distributions requires a clear strategy, and the ongoing record-keeping and regulatory reporting can be demanding without professional support.

How does a PAF create a lasting philanthropic legacy?

A PAF can be structured to distribute grants across many years and even generations, making it a powerful vehicle for building a family philanthropic legacy. With a well-designed investment strategy, the fund can preserve and grow its capital over time while consistently supporting the causes that matter most to the founding family, long after the initial contribution is made.

AIAD

Investment Strategies for PAFs: Balancing Growth and Giving

For Private Ancillary Funds (PAFs), investment decisions play a critical role in sustaining long-term philanthropy. Trustees must balance capital growth with reliable distributions, ensuring the fund can meet its charitable purpose today while preserving its ability to give in the future. Well-designed investment approaches (diversified portfolios and ethical investing) help PAFs align financial performance with values, compliance obligations, and annual distribution goals.

What are some investment strategies for PAFs?

PAF investment strategies are shaped by regulatory requirements, risk tolerance, time horizon, and charitable objectives. Common approaches include:

1. Diversified portfolios

A diversified portfolio spreads investments across asset classes such as:

Australian and international equities

Fixed income and cash

Property and infrastructure

Alternative or defensive assets

Diversification helps reduce volatility and smooth returns, supporting consistent grant-making even during market fluctuations. This is one of the most widely used investment approaches (diversified portfolios and ethical investing) for PAFs.

2. Ethical and responsible investing

Many PAFs adopt ethical or responsible investment frameworks to ensure investments align with their charitable mission. This may include:

Excluding industries that conflict with values

Selecting ESG-focused funds

Prioritising sustainability or social responsibility

Ethical investing allows trustees to reinforce the fund’s purpose while still targeting long-term returns.

3. Total return approach

Rather than relying solely on income (such as dividends), many PAFs adopt a total return strategy that considers both income and capital growth. This approach supports stable annual distribution goals while maintaining purchasing power over time.

4. Defensive income strategies

Some PAFs allocate a portion of their portfolio to defensive assets like cash or fixed interest. These assets can help ensure liquidity for grant payments and reduce downside risk during market downturns.

5. Long-term growth focus

With no fixed end date, many PAFs can invest with a long-term horizon. This allows for higher growth assets, such as equities, provided short-term volatility is managed carefully.

What are some risk considerations and benchmarks to these strategies?

1. Market risk and volatility

Equity-heavy portfolios may deliver stronger long-term returns but can fluctuate significantly year to year. Trustees must ensure volatility does not compromise the fund’s ability to meet its minimum distribution and ongoing commitments.

2. Liquidity risk

PAFs must maintain sufficient liquidity to meet annual distribution goals (including the minimum 5% requirement). Illiquid investments may restrict access to funds when grants are due.

3. Concentration risk

Overexposure to a single asset class, sector, or investment manager can increase risk. Diversification across assets and strategies helps mitigate this.

4. Alignment risk

Ethical investing strategies must be clearly defined. Poorly articulated screens or values-based criteria can lead to inconsistent decisions or underperformance relative to expectations.

5. Benchmarking performance

Appropriate benchmarks help trustees evaluate whether investment strategies are meeting objectives. Common benchmarks include:

CPI + a target return (e.g. CPI + 3–4%)

Blended benchmarks aligned to asset allocation

Peer-based charitable fund benchmarks

Benchmarks should reflect both growth needs and the requirement to fund grants sustainably.

6. Governance and oversight

Trustees must document investment decisions, regularly review performance, and ensure strategies remain appropriate as market conditions and charitable priorities evolve.

Effective PAF investing requires thoughtful investment approaches (diversified portfolios and ethical investing) that balance growth, risk, and values. By managing risk carefully, setting realistic benchmarks, and aligning portfolios with annual distribution goals, trustees can support sustainable giving while preserving the fund’s long-term impact.

How The Giving Advisory Can Help

Frequently Asked Questions

How are PAFs allowed to invest their funds
PAFs can invest across a wide range of asset classes, provided investments comply with trust deed rules and regulatory requirements. Trustees must ensure investments are prudent, diversified, and aligned with the fund’s charitable purpose.

Why is diversification important for PAF investments
Diversification helps reduce reliance on any single asset or market. By spreading investments across multiple asset classes, PAFs can manage volatility and support more predictable grant-making over time.

How do trustees manage investment risk in a PAF
Trustees manage risk through diversification, liquidity planning, clear investment policies, and regular performance reviews. Risk management ensures the PAF can meet annual distribution obligations even during market downturns.

Brad Seeto