Why structured philanthropy — and Private Ancillary Funds — are reshaping how Australian families give.
Philanthropy in Australia is having a moment. After decades of being treated as a quiet, often reactive part of family life — a cheque to the school appeal, a tap of the card at a charity dinner — giving is moving into the foreground of how wealthy Australians think about their wealth, their legacy and their families.
Several forces are driving the shift. The largest intergenerational wealth transfer in our history is underway, with an estimated $3.5 trillion expected to change hands over the next two decades. The Federal Government, on the back of the Productivity Commission’s 2024 “Future Foundations for Giving” inquiry, has set a national goal of doubling philanthropic giving by 2030 and is rewriting parts of the DGR framework to make giving easier and more transparent. And a new generation of donors — often founders, executives and inheritors in their 40s and 50s — is asking sharper questions about impact, governance and how their giving fits alongside their investing.
At the same time, the post-COVID years have permanently lifted the profile of community need. Families that once gave reactively are now asking how to give strategically: with a thesis, a structure, and a plan that involves the next generation rather than surprises them after a funeral.
Against that backdrop, structured giving vehicles — led by the Private Ancillary Fund — have moved from niche to mainstream. But they are not the only path, and they are not always the right one. This piece walks through how PAFs work, the alternatives worth weighing, and how to think about which structure fits your family.
What is a Private Ancillary Fund?
A PAF is a private charitable trust, endorsed by the ATO as a Deductible Gift Recipient (DGR). Think of it as your family’s own foundation — without the cost and complexity of running a standalone charity.
You contribute capital (as a lump sum or progressively), the fund is invested for long-term growth, and each year a portion is distributed to eligible charities of your choosing. The fund continues across generations, making it as much a structure for family stewardship as it is for giving.
How they work in practice
• Establishment. The PAF is set up as a trust with a corporate trustee. At least one director must meet the ATO’s “responsible person” test.
• Contributions. Donations into the PAF are fully tax-deductible, with the option to spread the deduction over five years.
• Investment. Assets are invested according to a documented investment strategy. Earnings inside the fund are tax-free.
• Distributions. A minimum of 5% of the fund’s net assets must be distributed each year to DGR Item 1 charities.
• Governance. The fund must comply with the PAF Guidelines, lodge annual returns and be independently audited each year.
Why families choose a PAF
1. Bringing forward the tax deduction. A substantial contribution in a high-income year — a business sale, a liquidity event, a strong bonus — generates a deduction now, even though the giving plays out over decades.
2. Family engagement. Children and grandchildren can sit on the board, help select causes, and learn the disciplines of stewardship, investment oversight and not-for-profit due diligence.
3. Strategic giving. Rather than reacting to appeals, families build a giving thesis — perhaps focused on mental health, regional education or environmental conservation — and back it consistently.
4. Legacy that outlives the founder. The corpus continues to grow and give long after the founding generation, creating a multi-decade philanthropic footprint.
Other ways to give — the alternatives to a PAF
A PAF is powerful, but it isn’t the only option. For many families, one of the structures below — or a combination of them — is a better fit. The right answer usually depends on the size of the gift, the time horizon, and how much governance the family wants to take on.
Public Ancillary Fund (PuAF) sub-funds
A sub-fund inside a Public Ancillary Fund — such as those operated by community foundations, Perpetual, Australian Communities Foundation or APS Foundation — gives you most of the benefits of a PAF without the governance overhead.
• How it works: you contribute capital, receive a full tax deduction, and recommend grants from your named sub-fund. The trustee handles compliance, investment and reporting.
• Minimums: typically $20,000–$50,000 to open, versus the practical $500,000+ threshold for a PAF.
• Best for: families wanting structured, named giving without the cost of running their own trust — and those who may step up to a PAF later.
Direct giving to DGR charities
The simplest option, and still the most common. A direct gift to a Deductible Gift Recipient charity is tax-deductible in the year it is made and goes straight to work.
• Best for: donors who already know the causes they want to support, value simplicity, and don’t need a deduction smoothed across years.
• Trade-off: no long-term corpus, no compounding, no structured family involvement.
Charitable bequests in your will
A bequest is a gift to charity made through your estate. It costs nothing during your lifetime and can be a powerful lever for families whose wealth is concentrated in illiquid assets.
• Forms it can take: a fixed dollar amount, a specific asset, a percentage of the estate, or the residue after other beneficiaries are looked after.
• Tax benefit: estates generally don’t pay tax on assets gifted to DGRs, and CGT on gifted assets can be eliminated with the right structuring.
• Best for: donors who want maximum flexibility now while ensuring meaningful giving at the end of life.
Testamentary charitable trust
A testamentary charitable trust is created by your will and only comes into existence after your death. It can sit alongside a PAF or replace the need for one.
• Best for: families who want to delay establishing a giving vehicle until after the estate is settled, or who plan to fund philanthropy primarily from estate assets rather than during lifetime.
• Trade-off: no lifetime tax deduction, and the family doesn’t experience running the structure together before the founder is gone.
In-specie gifts of shares, property or business interests
Donations don’t have to be cash. Gifting appreciated shares, real estate or other assets to a DGR (or into a PAF or sub-fund) can produce a tax deduction at market value while extinguishing the embedded capital gain in some cases.
• Best for: donors holding concentrated positions with large unrealised gains — founders post-IPO, long-term shareholders, property owners.
• Watch for: specific ATO rules around eligible asset types, valuation and the cultural gifts program.
Workplace giving and matched giving
Often overlooked at the higher end of the market, workplace giving allows pre-tax salary contributions to DGRs and is frequently matched by employers. For business owners, setting up a workplace giving program can be a culture-builder as well as a tax-effective channel.
Impact investing alongside giving
Strictly speaking, this isn’t philanthropy — capital is expected back, with a return — but it sits in the same conversation for many families. Impact investments target measurable social or environmental outcomes alongside financial returns and increasingly complement (rather than replace) a giving program.
Choosing the right vehicle
There is no single “right” philanthropic structure. The decision usually comes down to four questions:
1.How much capital are you committing, and over what timeframe?
2.When do you need the tax deduction — this year, smoothed, or at estate?
3.How involved do you want the family to be in running the giving program?
4.How much governance and compliance overhead are you willing to take on?
Many families end up with a combination: a PAF or sub-fund for structured, multi-generational giving; direct gifts for causes that need money immediately; and a bequest in the will to top up the corpus at the end of life.
If you’d like help thinking through which mix is right for your family, that’s exactly the kind of conversation we welcome.
General Advice Warning
The information in this article is general in nature and has been prepared without taking into account your personal objectives, financial situation or needs. It does not constitute personal financial, tax or legal advice. Before acting on any of the information, you should consider its appropriateness having regard to your own objectives, financial situation and needs, and seek professional advice from a qualified financial adviser, accountant or lawyer. Taxation outcomes depend on individual circumstances and current legislation, both of which may change. Ora Private Wealth and its representatives do not accept liability for any loss or damage arising from reliance on the information contained in this article.
