Milestone birthday for transformative giving structure
22 June 2022 at 4:16 pm
Introduced in 2001, private ancillary funds have been a game changer for Australian philanthropy.
When private ancillary funds (PAFs) were introduced to Australia 21 years ago, few could have realised what their impact would be.
PAFs are a form of charitable trust, used for strategic long-term giving. They offer donors tax deductibility, exemptions from income tax and an absence of public fundraising requirements.
PAFs have been transformative in their contribution to Australian philanthropy, opening up new opportunities for donations from high net worth individuals and families.
At the time, according to industry fellow at the Centre for Social Impact at Swinburne University Krystian Seibert, there was a lot of pent-up demand from those who had grown their own and their family’s wealth and were looking to get involved in philanthropy.
Seibert, who is also a policy and regulatory specialist at Philanthropy Australia, said that before 2001, the range of structures for philanthropy weren’t right for many potential givers.
Enter PAFs, which had the right structure and flexibility, and met the evidence-based need and philanthropic culture that existed at the time.
“I don’t think anyone could predict with much certainty how much philanthropy would grow and change because of PAFs,” Seibert said.
“Since then, there’s been steady growth in donations into PAFs and grants out of PAFs. We’ve got over 2,000 PAFs now and just a bit over $7.3 billion in assets under management.
“It’s a great story in terms of the reform and how that process worked, in terms of the evidence base, the collaborative approach between government and stakeholders, and that it really met a need and has had a really positive impact on philanthropy, and could have even more of an impact on philanthropy and the community, which is what matters the most,” Seibert added.
21 years of vital work
Reflecting on the past two decades, Seibert said PAFs had been responsible for supporting many important and innovative projects around Australia.
Asked about some of the biggest, Seibert named the Maranguka Justice Reinvestment project, which was funded by the Dusseldorp Forum (a PAF) and the Vincent Fairfax Family Foundation.
It won the “Best Large Grant Award” at the Australian Philanthropy Awards in 2019.
“It’s an Indigenous-led collective impact initiative in Bourke in New South Wales focused on community building and reducing the number of young people in the criminal justice system, by adopting a ‘justice reinvestment’ approach.
“It’s having such a big impact and making a real difference,” Seibert said.
PAFs can focus on a range of issues, including those that haven’t received as much attention in the past. In that area, Seibert said he admired the Susan McKinnon Foundation’s focus on better government and policy making in Australia.
He also named the Balnaves Foundation which funds public interest journalism, focusing on the arts and Indigenous affairs and the Fay Fuller Foundation, which funds the ‘Our Town’ initiative, which have also been recognised at the Australian Philanthropy Awards 2021.
Seibert hopes to see PAFs grow further in future – and he isn’t alone, with many in the sector acknowledging that with Australia’s wealth, there could, or perhaps should, be more PAFs.
“We need more giving in general,” Seibert mused.
He said Australia’s philanthropic sector is in a good place, but there is still an opportunity to grow giving further, so more wealth is directed towards the public benefit.
His comments come at a time when Australian philanthropy is at a bit of a crossroads, with new charities minister Andrew Leigh pledging to double philanthropy by 2030.
Seibert said there were a number of things that could be done to reach that target, in line with Philanthropy Australia’s pre-election wishlist. He expects that upcoming changes to DGR status for community foundations will help grow giving, and also make it easier for PAFs to support place based giving through community foundations.
“One of the most transformative reforms in terms of supporting the growth of PAFs, and supporting charities and their work in the community more broadly, is reform of the deductible gift recipient framework so that more charities can access DGR status – it would expand the range of organisations and causes that PAFs can fund and is reform that’s much needed and well overdue.
“But [we also need] cultural change, which is not about policy and regulation, but how we really shift norms and expectations about giving and encourage more giving.”
Another beneficial change would be allowing PAFs to give to public ancillary funds (PuAFs), increasing the flexibility of giving, and clarifying some matters to make start-ups and family businesses give more.
Looking to the future
With so many people doing it tough, it’s important to remember that giving is a privilege – but it’s also a responsibility, Seibert argued, “if we want to have a more inclusive, cohesive society and if we want to address entrenched social and environmental problems, then growing giving is part of how we do that”.
“Government, of course, plays an important role, but we need funding from a diverse range of sources and structures,” he explained.
“I think it’s incumbent on those that have wealth to… use a portion of it for the public benefit through philanthropy. It’s a good thing to do. It feels great, and it makes a real difference.