There are also fees involved. Generally, the fee charged for a PuAF is 1%-1.5% p.a. of the value of the sub fund. This covers all aspects of running expenses such as administration, compliance and investment costs. You should speak to your financial adviser who can help you understand the fee structure of PuAFs and how this might impact your investment position.
Total giving to Australian charities in 2016 was $10.5 billion, according to data from the Australian Charities and Not-for-profits Commission1. About $1.5 billion of that was ‘structured philanthropy’ – that is, philanthropy through legal structures such as a PAF, PuAF or testamentary trust.
“Philanthropy is open to every member of society,” says Ward. “However, using a long-term structure makes most sense for those with more resources starting from $50,000 for a giving or sub-fund (some providers allow lower amounts) through to over $1m for those wanting a standalone independent foundation.”
“Ancillary funds, whether a PAF or a giving fund in a PuAF, have the advantage of donations being income tax deductible,” explains Ward. “Utilising other structures such as testamentary charitable trusts established under a will are not as tax effective. While philanthropists are driven by the desire to give back or contribute to the community, doing it in a tax-effective way maximises the benefits that flow to the community organisations being supported.”
You may decide to establish a separate legal giving structure for a variety of reasons. You may wish to build a solid governance structure around your giving to enhance its effectiveness; you may want to involve your family; or, you might just simply want to build a legacy that can continue to contribute to the community. Whatever your motivation, there are efficient and tax-effective ways to put a structure around your particular style of philanthropy and ensure your legacy continues for many years to come.
1 ACNC, Australian Charities Report 2017.
This article has been prepared by Godfrey Pembroke Limited ABN 23 002 336 254 AFSL 230690. Any advice provided is of a general nature only. It does not take into account your objectives, financial situation or needs. Please seek personal advice before making a decision about a financial product. Information in this article is current as at 19/11/2019. While care has been taken in the preparation of this article, no liability is accepted by Godfrey Pembroke Limited or its related entities, agents or employees for any loss arising from reliance on this article. Any opinions expressed constitute our views at the time of issue and are subject to change. Any tax information provided in this article is intended as a guide only. It is not intended to be a substitute for specialised tax advice. We recommend that you consult with a registered tax agent.