Charitable giving

Charitable giving – are you getting the most from your donation?

10 November 2016

If you had said the word ’philanthropy‘ 20 years ago, most people would have looked at you with a quizzical look. Today this word has become as common as the word ’footy’.

Many people associate philanthropy with the wealthy of our society, but this is not always the case. Philanthropy means ’love of mankind‘, and in simplest terms ’it is an act or gift done or made for humanitarian purposes‘ (Oxford Dictionary). Anyone can be a philanthropist if they choose to be.

What should I know before I donate?

In this article we discuss options available to persons wanting to make a financial contribution to one or more charities or Not-for-Profit organisations.

Firstly, before you take your hard earned cash and deposit it into the rattling tin on your local street corner, you should consider: ‘Why do I want to make a cash donation? What do I hope it will achieve?’ The next thing to consider is the best way to successfully support your goal.

Is my money going to the right place?

There are a number of ways you can donate your money to ensure you receive value for your dollar. Direct giving is one way to donate, and means that the charity decides where your money will be allocated, while you receive a tax deduction for your contribution. However, this method does not provide the donor with the ability to direct their money to a specific cause, project or research. Instead, your contribution can be used by the organisation as they see fit, which may include for administration costs or supporting other charitable interests.

For those of you who like a little more control and would like something to do in retirement, then perhaps establishing a private ancillary fund (PAF) is more your style.

What is a PAF?

A PAF is a class of fund created by the tax office to encourage people to give to charity while they are alive and not wait until they have died to create a charitable trust. Principally, when the PAF is created, any money you donate to it is tax deductable. The income generated by the assets of the trust (your donation) is distributed each year to deductable gift recipient (DGR) charities. You control who receives the money and you can set parameters around how the donation is to be spent or used by the charity.

Unlike an individual making ongoing gifts to charities during their lifetime, a PAF can contribute into perpetuity – meaning it can contribute forever; helping charities achieve their goals and benefiting the community at large.

A PAF can also create a legacy for your family. It can engage your children in giving and promotes social justice by helping the less fortunate. It can also advance medical research to work towards developing cures to life threatening diseases.

It should be noted here, not everyone will have the money or assets to establish a PAF. A viable PAF will have assets of at least $300K.

If you like the idea of leaving a legacy but don’t have the spare few hundred thousand to make setting up a PAF viable, then you may wish to contact one of the few Trustee Companies still in existence that have their own foundation. They can set up a sub-account in your name from as little as $10,000. This ‘sub trust’ will contribute in perpetuity and you can set out your wishes as to how you want the income spent. Your funds will be pooled with other donors to build the income and capital of the foundation.

We can help

If you would like more information about options tailored to your or a client’s particular circumstance and philanthropic goals, Rigby Cooke are only a phone call away and we would be more than happy to assist you implement your tailored giving strategy.

This article originally appeared in the Spring 2016 edition of InSuccession. Other articles in this newsletter included:


Disclaimer: This publication contains comments of a general nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional advice. No responsibility can be accepted by Rigby Cooke Lawyers or the authors for loss occasioned to any person doing anything as a result of any material in this publication.

Liability limited by a scheme approved under Professional Standards Legislation.

©2016 Rigby Cooke Lawyers