Emma Sakellaris

Discussing a client’s philanthropic objectives should be a key component of a financial planning conversation with all clients, not just clients considered to be wealthy or with the perceived greatest capacity to give, says Emma Sakellaris, executive general manager of Australian Unity Trustees Limited.

“Raising the idea of philanthropy with your clients regardless of their circumstances, as a matter of course, can result in stronger client relationships and provide a deeper understanding of client objectives – with the added bonus of providing better outcomes for the charities to which they wish to grant funds,” Ms Sakellaris says.

“Many advisers find that when they ask their clients questions around their charitable giving intentions – as well as explain the idea of structured giving and its associated benefits, it is a concept that is well received.

“Clients like the idea that unlike ad hoc donations, the underlying investment strategy of a perpetual charitable trust means they can grow the capital over time, whilst also generating a sustainable income for annual granting distributions.

“The easiest way to give is through a charitable account or ‘sub-fund’ – which is an individual account established under the umbrella of a public ancillary fund (PuAF). This structure is a great option for clients who want to start relatively small – but who still wish to develop a granting strategy in line with their areas of interest and passion, without the responsibility and obligation of managing the investment, governance and administration components of the fund.

“Considering that such a sub-fund can be established with an initial donation of $20,000 and the tax deduction from this initial donation can be spread over five years, it becomes an affordable and attractive option for many clients.

“Clients also have the option to continue to donate to the sub-fund, which will assist to further grow the capital and therefore increase the income generated for distribution to eligible charities over time. Clients can also contribute further by providing for a bequest or distribution to the fund in their Will. 

“Importantly, the donation made to initially establish the sub-fund attracts the same tax deduction and consideration as making a donation directly to a charity.”

For clients with larger amounts to donate to establish their fund – and who are seeking greater control with regard to the investment strategy implemented – a private ancillary fund (PAF) could be considered.

“A larger initial donation is required to establish a PAF, typically a minimum of a few hundred thousand dollars but it is often an attractive option for clients who inherit assets or who perhaps sell a business, and are seeking to incorporate structured giving into their retirement and estate planning.

“The initial donation to establish a PAF is tax deductible and the income generated by the investment of the donation is also tax free.”

Ms Sakellaris says, Australians are reasonably good at donating to charitable causes.

“According to the World Giving Index – a global index of donations, volunteering and generosity – Australia ranks third behind Myanmar and the United States.

“But despite the impressive world ranking, on average, Australians give just 0.4 per cent of their taxable income as donations.

“Australia is a wealthy country however not all Australians are wealthy.  A key component of structured giving is the ability to connect those with capacity to give and those with the need to receive.

“Whilst we need philanthropists with passion and capacity for medical research, the arts and similar substantial granting contributions, our communities also need philanthropists to assist those less fortunate with day-to-day services and support.

“From this point of view, structured giving simply makes good sense. It means a large number of Australians can allocate some portion of their budget to giving – even a small contribution can make a significant difference to the individual and to the broader community.

“The critical thing for charitable organisations is a donor’s commitment to consistent, longer-term granting.  This provides greater certainty for projects and initiatives, which ultimately means an improved outcome for those in need.

“Financial planners have an important role to play in helping to make philanthropy accessible for all Australians.”

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