A public ancillary fund is a philanthropic structure that allows a planned approach to charitable giving. When correctly structured, a public ancillary fund carries Deductible Gift Recipient (DGR) status, meaning the fund is entitled to receive income tax deductible gifts. A tax deduction is available in the year of the donation, while the giving to charities can be spread over subsequent years as an ongoing philanthropic process.
The ATO has a fact sheet for public ancillary funds here.
The benefits of public ancillary funds include:
- Simple – A public ancillary fund has the administration, investment and governance activities as the responsibility of the trustee, leaving donors solely to think about the charities they would like to support.
- Quick – A sub-fund can be established immediately, as there is no requirement to establish a new trust or trustee company. A donor simply opens a new ‘sub-fund’.
- Taxation benefits – the money donated into your sub-fund is usually tax deductible in the year of the donation. A public ancillary fund is a tax exempt structure, so the philanthropic dollar goes further.
- Portability – In certain circumstances, it’s possible to transfer assets from a public ancillary fund into a private ancillary fund, or PAF .
- Naming – The sub-fund can have a specific name, such as a family name, and grants to charities from the sub-fund will refer to this name. Anonymous grants are also possible.
Australian Philanthropic Services (APS) is a leading provider of public ancillary funds, and a comprehensive brochure can be found here. APS can also assist organisations to set up and administer their own public ancillary fund in a cost effective manner. Organisations that may be interested include:
- Financial advisory firms (to provide a philanthropic option for their clients)
- Specific geographic-based communities (to benefit their own community organisations)
- Companies (to engage with staff and clients)
- Groups with a common interest (such as sporting groups or giving circles).