Private Ancillary Funds (PAFs) are becoming an increasingly popular way for Australians to make a long-term impact through structured giving. Whether you’re looking to give back, involve your family in philanthropy, or manage a significant donation in a tax-effective way, a PAF can be a powerful tool. But who exactly can set one up — and is it the right option for you?
What Is a PAF and Why Set One Up?
A Private Ancillary Fund is a type of charitable trust designed for long-term giving. It allows individuals, families, or businesses to donate money into a fund, claim a tax deduction, and then distribute those funds to eligible charities over time.
Some of the main benefits include:
- Immediate tax deductions for donations
- Full control over which charities receive funding
- The ability to invest and grow the fund’s assets
- A structured approach to leaving a lasting legacy
Who Can Legally Set Up a PAF?
There are no strict limitations on who can legally set up a PAF, provided certain requirements are met. The fund must be registered as a charity and endorsed by the Australian Taxation Office (ATO) as a Deductible Gift Recipient (DGR).
A PAF can be established by:
- Individuals
- Families
- Private companies
- Family offices
- Legal or financial advisers acting on behalf of clients
Essentially, anyone with the philanthropic intent and financial means can initiate the process.
Ideal Candidates for a PAF
While there are no legal barriers for most people, a PAF is generally best suited to those who can commit both financially and strategically to long-term giving. These include:
- High-net-worth individuals and families looking to make a significant impact
- Business owners with strong values around giving back
- Those experiencing a capital gains event, such as selling a business or property
- People planning for intergenerational wealth transfer, wanting to engage younger family members in philanthropy
- Investors wanting to support causes they care about while maintaining control over timing and distribution
If you’re considering your options, setting up a fund focused on private ancillary funds can provide structure, flexibility, and long-term impact.
Key Considerations Before Setting Up a PAF
Before diving in, it’s worth considering the following:
- Start-up funding: While there’s no formal minimum, a fund of $500,000–$1 million is typically recommended
- Administration: You’ll need to ensure compliance with annual reporting, audit, and distribution requirements
- Long-term vision: A PAF is designed for ongoing giving, so a commitment to long-term strategy is important
If you’re not ready for these responsibilities, there may be alternative options.
Common Motivations for Setting Up a PAF
People are drawn to PAFs for many reasons:
- To create a family legacy of giving
- To manage large one-off donations, especially in high-income years
- To plan giving over time, rather than in a single lump sum
- To involve family members in discussions around charitable priorities
It’s not just about giving money — it’s about creating a structured, values-based approach to philanthropy.
Read also: Unlocking the Power of Magento B2B E-commerce for Business Growth
Alternatives If a PAF Isn’t the Right Fit
If a Private Ancillary Fund feels like too much of a commitment, other options include:
- Public Ancillary Funds (PuAFs) or donor-advised funds, which offer less control but fewer responsibilities
- Direct giving to DGR charities
- Leaving a bequest in your will as part of estate planning
A philanthropic advisor can help you choose the model that best suits your needs.
Next Steps
Anyone with the capacity and intention to give can set up a PAF — but the most successful funds are those built on clear purpose, strong governance, and a long-term commitment to positive impact. If you’re exploring ways to give meaningfully and strategically, a Private Ancillary Fund could be the right vehicle for you.
