Private Ancillary Fund (PAF)
Private Ancillary Fund (Giving Fund) Setup, Compliance, Management & More
A Private Ancillary Fund (PAF) is a private charitable trust that allows individuals, families, and businesses to make tax-deductible contributions, invest those assets, and distribute grants to eligible charities over time. Note – PAFs are being renamed “Giving Funds” as part of recent Australian Government reforms.
A Private Ancillary Fund (PAF) is a private charitable trust established under Australian tax law that allows individuals, families, or businesses to make tax-deductible contributions, invest those assets, and distribute grants to eligible charities over time. Unlike Public Ancillary Funds, which pool donations from the general public, a PAF is privately controlled and funded by its founder or a small group, giving donors complete flexibility over which causes they support and when grants are distributed.
PAFs are regulated by both the Australian Taxation Office (ATO) and the Australian Charities and Not-for-profits Commission (ACNC), and must operate under strict guidelines to ensure compliance with Australian law. They can only make grants to organisations with Deductible Gift Recipient (DGR) status, ensuring all funds are directed toward legitimate charitable purposes.
PAFs are best suited to high-net-worth individuals, families, and businesses who want a structured, long-term approach to charitable giving. They are particularly well-suited to those who have experienced a liquidity event – such as the sale of a business or property – and wish to direct a meaningful portion of that wealth toward causes they care about. Corporate entities and professional advisors such as accountants and financial planners also engage with PAFs, either on behalf of clients or as a white-labelled service offering.
A PAF may be right for you if you want to make large, tax-effective charitable contributions; involve family members in a shared philanthropic vision; incorporate charitable giving into your estate or succession plan; or prefer a structured, compliant approach to long-term giving. Many families also use their PAF as a platform for intergenerational conversations about values, community, and responsibility – creating a philanthropic legacy that can be passed down through generations.
Setting up a PAF involves five key steps – defining your philanthropic goals, establishing a trust deed, registering with the ACNC, applying for tax concessions, and developing an investment strategy. The trust deed is a legal document that sets out the purpose, structure, and rules of the fund; it must comply with the Charities Act and include clauses about granting only to DGR organisations, meeting annual minimum distribution requirements, and following ACNC governance standards.
Once the trust deed is in place, the PAF must be registered with the ACNC by providing details about its objectives and compliance with Governance Standards and External Conduct Standards. PAFs can then apply for Income Tax Exempt Fund (ITEF) status through the ATO, ensuring that income generated by the fund’s investments is tax-free – maximising the capital available for charitable distribution over time.
Contributions to a PAF are fully tax-deductible, reducing 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 flow to charities over time. This combination of an upfront deduction and ongoing tax-exempt growth makes a PAF one of the most tax-effective charitable structures available in Australia.
In practice, many PAFs also benefit from franking credit optimisation – a strategy that maximises the fund’s giving capacity by reclaiming tax credits attached to dividends from Australian shares. Together, these tax advantages mean that a well-structured PAF can deliver significantly more to charitable causes than direct giving alone.
PAFs must invest in accordance with an ATO-compliant investment strategy approved by the board of trustees. The strategy must reflect both the fund’s charitable objectives and its obligations under the Private Ancillary Fund Guidelines – requiring that investments be made on a prudent, arms-length basis. The fund cannot engage in speculative or high-risk investments that could jeopardise its charitable purpose.
In practice, PAFs typically invest in diversified portfolios of listed equities – both Australian and international – fixed income, and cash holdings for liquidity. Many founders also incorporate ESG or responsible investment strategies aligned with their values; unlisted assets may also be held in certain circumstances, subject to the relevant guidelines.
From 26 February 2026, the minimum annual distribution rate for Private Ancillary Funds increased from 5% to 6% of net assets – up from the previous 5% requirement. Existing funds have a two-year transition period before the new rate applies. A three-year distribution smoothing rule also applies, meaning funds can average their distributions over three years rather than being required to hit exactly 6% every year – providing flexibility in years following a market downturn.
It is worth noting that the Treasury’s own analysis found that long-term total giving to charities is actually maximised at the previous 5% rate; the higher rate increases giving now but gradually reduces the pool from which future grants are drawn. A well-structured investment strategy – with a meaningful allocation to growth assets – is essential for funds to meet the 6% requirement, cover administration costs, and preserve capital over the long term.
The three main challenges in managing a PAF are compliance risk, investment management, and administrative burden. Missing distribution or reporting deadlines can trigger penalties or deregistration; balancing investment growth against mandatory distributions requires a clear and regularly reviewed strategy; and the ongoing record-keeping, audit coordination, and regulatory reporting can be demanding – particularly for individuals or families unfamiliar with trust regulation.
Investment management presents its own complexity – PAFs must generate sufficient returns to fund distributions and preserve capital over time, while remaining within the bounds of a prudent, ATO-compliant investment strategy. Without professional support, these responsibilities can quickly become overwhelming and distract from the philanthropic goals the fund was created to achieve.
PAF trustees must meet the annual distribution requirement, lodge an Annual Information Statement with the ACNC each year, and complete an independent annual audit. The Annual Information Statement provides details on the fund’s activities, governance, and financial performance; it is publicly available, allowing donors and the public to assess the PAF’s effectiveness. Trustees must also adhere to ACNC Governance Standards – including acting with integrity, managing financial affairs responsibly, and ensuring the fund is never used for personal benefit.
PAFs operating overseas must additionally comply with External Conduct Standards, which focus on transparency and accountability in international activities. Failure to meet distribution requirements or lodge the necessary reports can result in penalties or deregistration – making professional compliance support an important consideration for most trustees.
The Giving Advisory is a full-service partner for private giving funds, handling the operational complexity from day one so you can focus on the giving itself. Our services cover every aspect of your PAF – fund setup and trust structure; investment strategy and ongoing management; ACNC and ATO compliance and lodgements; annual audit coordination; online reporting and performance tracking; and charity research, grant coordination, and board meeting attendance.
We work with individual donors, families, financial advisors, and accountants across Australia. For advisors and accountants, we also offer a white-label partnership model – allowing you to provide PAF setup, compliance, and investment management under your own brand, supported by our infrastructure and expertise behind the scenes. Every engagement starts with a conversation about your philanthropic goals, and we build everything around those.
Ready to start your PAF journey? Get in touch with our team by calling (02) 7252 4900 or emailing hello@givingadvisory.com.au – we would love to hear from you.
We Are Your Full-Service Partner for Private Ancillary Funds
We offer comprehensive services to manage every aspect of your Private Giving Fund (formerly known as Private Ancillary Fund or PAF) :
- Setup and Strategy: We establish your Private Giving Fund’s structure and assist you in designing an investment strategy which is aligned to your philanthropic goals.
- Administration and Compliance: We will complete lodgements with the Australian Charities and Not-for-profits Commission (ACNC) and ATO annual returns, we manage all administrative and compliance requirements.
- Investment Management: We oversee the investments of your Private Ancillary Fund (Giving Funds), ensuring they align with your philanthropic objectives and governance standards.
- Online reporting: You will be able to track how your investments are performing via our online reporting.
- Audit and Reporting: We coordinate the annual audit to ensure your Private Ancillary Fund (Giving Funds) remains compliant.
We handle the operational complexities, allowing you to focus on what matters most to you.
Your Accounting Partner
We offer accounting services tailored for Financial Advisors and Accountants looking to expand their offerings or for accountants who would like to outsource their Private Ancillary Fund (Giving Funds) compliance and administration. This partnership allows you to provide seamless Giving Fund management and compliance services under your brand, supported by our expertise and infrastructure.
The accounting and administration services include:
- Private Giving Fund setup
- Private Private Ancillary Fund (Giving Funds) administration
- Online reporting showing performance of your investments
- Giving policy
- The Australian Charities and Not-for-profits Commission (ACNC) Lodgements
- Private Ancillary Fund (Giving Funds) compliance, including ATO Annual Information Return and Application for Refund of Franking Credits
- Attending required board meetings
- Coordination and management of the annual Private Ancillary Fund (Giving Funds) audit
- Coordinating donations with charities
- Coordinating the annual audit with the auditors
- Charity research and inquiries
- Implementing a Private Ancillary Fund (Giving Fund) as part of your estate planning strategy
- Communicating with your financial advisor on how to best administer your PAF
Your Investment Management Partner
Our investment management service for accountants enables you to incorporate sophisticated investment management solutions into your services. We work behind the scenes, ensuring you can offer a full spectrum of Private Ancillary Funds-related services to your clients, enhancing your firm’s capabilities and value proposition.
The Investment Management services include:
- Investment strategy
- Investment management of your Private Ancillary Fund (Giving Funds)
- Attending required board meetings
- Communicating with your accountant on how to best administer your Private Ancillary Fund (Giving Funds)
Our Process
How we work with you
Initial Meeting
We will discuss your giving vision and requirements and get an overview of our services and fee structure.
Setup
Following your approval, we’ll implement your Giving Fund’s structure, investment strategy, and giving policy, quickly getting your fund operational.
Implementation
We create the required documentation, establish necessary accounts, and set governance policies and assist you with making your first contribution to the Private Ancillary Fund (Giving Funds).
Ongoing Management
We handle all compliance and management aspects of your Private Ancillary Fund (Giving Funds), keeping you informed and engaged.
GIVING
Enjoy the rewards of your generosity with the peace of mind that your investments and compliance are expertly managed.