08/04/2010 - 00:00

Growth in private ancillary funds

08/04/2010 - 00:00

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THE most recent statistics from the Australian Taxation Office regarding private ancillary funds show strong growth in donations and assets in the philanthropic sector.

THE most recent statistics from the Australian Taxation Office regarding private ancillary funds show strong growth in donations and assets in the philanthropic sector.

The statistics for the 2007-08 financial year revealed donations to private ancillary funds – previously known as prescribed private funds – increased from $533 million in 2006-07 to $728 million in 2007-08.

PAFs are tax-deductible philanthropic trust funds set up with a corporate trustee. Distributions must be to deductible gift recipients, such as public benevolent institutions, public hospitals and environmental organisations.

They are designed to encourage private philanthropy by providing individuals and families, as well as businesses, with greater flexibility to create their own trust fund for philanthropic purposes.

The latest ATO data further showed that PAF assets increased from almost $1.5 billion to about $1.9 billion over the same period.

The number of PAFs registered during 2007-08 increased 28 per cent, bringing the total number of the funds to 769.

When PAFs were established in 2001 there were just 22 with donations totalling almost $79 million.

That figure dropped substantially to $53 million during both 2002 and 2003, before tripling to $155 million in 2004 when 221 PAFs were approved.

By June 2007, almost 600 funds contained about $1.2 billion in total, making grants of $117 million to other charitable organisations.

According to the ATO, the largest recipient of fund distributions in 2007-08 was the welfare sector, making up 31 per cent of total distributions, while educational, environmental and cultural organisations also received a large proportion of donations.

Philanthropy Australia research and training manager, Vanessa Meachen, said the national peak body for philanthropy believed the trend highlighted by the ATO’s data would continue in coming years.

“We’re delighted by the new figures, but not surprised as there’s been a boom in philanthropy since the establishment of the PPF/PAF structure,” Ms Meachen told WA Business News.

“They’re vital to the not-for-profit sector and will continue to be so, because they represent a long-term, substantial commitment to giving and community engagement by high-net-worth individuals and families.

“There’s every indication that they will continue to grow; the PAF provides a relatively simple tax-effective structure as a catalyst to focus the skills and passions of donors, and to harness the generous spirit which Australians have demonstrated flourishes even in tough economic times.”

Assistant Treasurer Nick Sherry said the sector’s growth would continue following Rudd government reforms and regulation to PAFs, which he said supported private charitable initiatives.

Senator Sherry said support for the welfare sector was the core business of philanthropic funds and made a significant difference for many disadvantaged members of the community.

“It’s great to see the philanthropic sector continuing to grow, and grow very strongly,” he said.

“The Rudd government is firmly committed to supporting private charitable initiatives and we’ve backed that up with wholesale reforms to how these funds are regulated.”

Senator Sherry said while donations from growing PAFs were welcomed, it was important to retain accountability during that growth.

 

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