For those looking to engage in long-term, structured philanthropy, establishing a Private Ancillary Fund (PAF) is a strategic and tax-effective way to support Australian charities. While setting up a PAF involves careful planning and regulatory steps, the process is straightforward with the right guidance. From initial discussions to formal registration and compliance, the typical timeframe to establish a PAF is approximately 4 to 8 weeks.
Understanding what’s involved at each stage helps manage expectations and ensures the fund is set up correctly from the outset.
Step 1: Preparing to Establish a Private Ancillary Fund (Weeks 1–2)
The first stage involves confirming your philanthropic goals, determining how involved you and your family or business will be in decision-making, and identifying the right structure. Unlike a Public Ancillary Fund, which accepts donations from the public, a PAF is a charitable trust funded and controlled privately—typically by individuals, families, or businesses.
Step 2: Drafting the Trust Deed and Legal Documentation (Weeks 2–3)
The trust deed is a foundational legal document that sets out how the PAF will be governed. It must comply with Australian trust law and the Private Ancillary Fund Guidelines 2019, as issued by the Australian Government.
This document will include:
- The objectives of the PAF.
- Governance and reporting obligations.
- Provisions to ensure grants can only be made to Deductible Gift Recipients (DGRs).
The deed must clearly reflect that the fund is being established and maintained solely for charitable purposes.
Step 3: Registration and ATO Endorsement (Weeks 3–6)
Once the trust deed is executed, the next step is to register the PAF with the Australian Charities and Not-for-profits Commission (ACNC)—often referred to as the profits commission ACNC. This process ensures the PAF is recognised as a registered charity, enabling access to various income tax exemptions.
Following registration, the fund must be endorsed by the Australian Taxation Office (ATO) as:
- A deductible gift recipient (DGR) under Item 2 of the DGR register.
- An entity eligible for income tax exemption and other tax concessions.
ATO endorsement usually takes 1–2 weeks if all documentation is in order.
Step 4: Operational Readiness and Launch (Weeks 6–8)
After receiving ACNC registration and ATO endorsement, the fund can begin operating. This includes:
- Opening a bank account in the name of the PAF.
- Accepting the initial donation from the donor to the fund.
- Establishing an investment strategy aligned with the fund’s purpose and sustainability.
- Setting internal procedures for grant-making, record-keeping, and annual reporting.
Trustees must ensure that the PAF distributes at least 5% of its net assets each year to eligible DGRs and complies with governance and audit obligations.
How Long Should You Expect?
In total, the process to establish a PAF typically takes between 4 and 8 weeks. Factors that can influence the timeframe include:
- The availability of nominated trustees and the Responsible Person.
- The readiness of your trust deed and supporting documentation.
- The processing time of both the ACNC and ATO.
Choose Us As Your Support System
While setting up a PAF involves several technical and regulatory steps, the timeline is manageable—especially with expert assistance. Choosing the right structure, preparing accurate documentation, and aligning with legal requirements ensures the fund can be launched efficiently and with confidence.
At The Giving Advisory, we support individuals, families, and businesses through every stage of establishing a PAF. From drafting your trust deed to navigating ACNC registration and developing a compliant investment and governance plan, we ensure your fund is set up correctly—and ready to make a meaningful impact over the long term.To get started, explore our guide to Private Ancillary Funds or contact us for tailored support.