Private Ancillary Funds (PAFs) are often established by individuals or families looking to make a lasting impact through structured philanthropy. But what if others—such as friends, colleagues, or extended family—want to contribute to your fund? Can a PAF receive donations from people other than the founder?
The short answer is yes. A PAF can receive donations from other people, but there are some important rules and best practices to keep in mind.
Yes, a PAF Can Receive Donations
A PAF is a type of charitable trust, and like other deductible gift recipients (DGRs), it can accept tax-deductible donations from eligible donors. This means anyone—not just the founder—can contribute to the fund and claim a tax deduction for their donation, provided it meets the requirements under Australian tax law.
However, these donations must be unconditional. Donors cannot direct or influence how their contribution is used or which charities will receive grants. All decision-making remains with the fund’s trustee.
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Who Typically Donates to a PAF?
While most PAFs are primarily funded by the founder or their immediate family, others may receive contributions from:
- Family members across multiple generations
- Friends or business associates interested in supporting the fund’s purpose
- Community members with aligned philanthropic goals
- Estates or wills, where a bequest is made to the fund
These contributions can be one-off or ongoing, and can help expand the reach and sustainability of the fund.
Key Considerations for Accepting External Donations
Before accepting contributions from others, it’s important to consider:
- Transparency – Ensure donors understand how the fund operates and that trustees retain full discretion over distributions
- Receipting – Proper tax receipts must be issued for each donation
- Governance – Donations should be handled in accordance with the trust deed and PAF guidelines
- Reputation and alignment – It’s wise to consider whether a donor’s values and intentions align with the fund’s mission
Benefits of Welcoming Other Donors
Allowing others to donate to your private auxiliary funds can:
- Grow the capital base and increase your capacity to give
- Engage a wider network in your philanthropic vision
- Encourage intergenerational or community-based giving efforts
- Support legacy building by involving extended family or friends
Risks and Limitations
There are also a few potential risks to manage:
- Control must remain with the trustee – donors cannot expect influence over distributions
- Perceived conflicts – large donations from outside parties could raise concerns about decision-making influence
- Administrative burden – increased donations may mean more complex receipting and reporting requirements
Best Practices for Managing Outside Contributions
To ensure donations from others are handled appropriately:
- Create a gift acceptance policy outlining how external donations are managed
- Communicate clearly about the fund’s purpose and how decisions are made
- Keep thorough records of all contributions and receipts
- Consult legal or philanthropic advisers when accepting large or complex gifts
In Summary
A PAF can certainly receive donations from other people, and in many cases, doing so can amplify its impact. But it’s important to manage these contributions carefully, ensuring transparency, governance, and compliance at every step. With the right approach, your PAF can become a collaborative vehicle for long-term giving that engages more than just the founder.
