Private Ancillary Funds, commonly known as PAFs, are an increasingly popular way for Australians to structure their charitable giving. They provide a formal framework for long-term philanthropy, allowing donors to plan, invest, and distribute funds to eligible charities over time. A common question for people considering this option is who is actually allowed to establish a PAF.
What Is a Private Ancillary Fund?
A PAF is a charitable trust created specifically to support deductible gift recipient charities. It allows donors to make tax-deductible contributions, invest those funds, and distribute a minimum amount each year to eligible causes. PAFs are governed by strict regulatory requirements to ensure transparency, accountability, and genuine charitable outcomes.
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Who Is Eligible to Establish a PAF?
A PAF can be established by a range of donors who want a structured approach to giving. Individuals are among the most common founders, particularly those seeking to formalise their philanthropy or create a long-term legacy. Families also frequently establish PAFs, using them as a way to involve multiple generations in charitable decision-making and shared values. Businesses and companies may set up PAFs to align their charitable giving with broader corporate or community objectives. For an overview of how pafs are established and managed, it helps to understand that eligibility is broad, but the commitment to governance and compliance is essential.
Do You Need a Minimum Amount to Establish a PAF?
There is no legal minimum amount required to establish a PAF. However, most advisers suggest that a starting balance of around $500,000 makes the structure more cost-effective. This helps cover administrative, investment, and compliance costs while still allowing meaningful distributions to charities each year.
Key Requirements to Establish a PAF
Establishing a PAF involves setting up a compliant trust deed that outlines the purpose and rules of the fund. Trustees must be appointed to manage the fund’s operations, investments, and distributions. At least one responsible person with recognised community standing is also required to support governance and oversight. The fund must then apply for deductible gift recipient endorsement so donations can be treated as tax deductible.
Who a PAF May Not Be Suitable For
PAFs may not suit everyone. They are generally not ideal for people who only want to make one-off donations or who prefer minimal administration. PAFs also cannot engage in public fundraising, so donors seeking broad public participation may be better suited to other charitable structures.
Benefits of Establishing a PAF
A PAF offers tax-effective giving, structured governance, and the ability to support multiple charities over time. It encourages thoughtful, planned philanthropy and can help donors build a lasting charitable legacy. For families and organisations, it also creates opportunities for shared involvement and long-term impact.
Bottom Line
Individuals, families, and businesses can all establish a PAF, provided they are willing to meet the governance and compliance requirements that come with it. For those seeking a structured, long-term approach to philanthropy, a PAF can be a powerful and rewarding way to support the causes that matter most.
