Judith Fiander

Despite the talk of global uncertainty, the fact is that many Australians have record levels of wealth, and they are thinking of giving back to society in meaningful ways during their lifetimes.

This does not apply to everyone of course, but overall, Australians have never been wealthier and some have much more than they need on which to live. Household wealth hit a record high in the December quarter of 2024, with total wealth rising to a staggering $17.0 trillion, which was 6.6 per cent, or $1.0 trillion, higher than a year ago.^[1] Household wealth rose for the ninth quarter in a row as more Australians accumulate wealth on the back of rising property and share values and a record $4 trillion held in their superannuation investments.

With so many Australians having more than they need on which to live and retire, this understanding is feeding into the philanthropic space. More Australians and their advisers are recognising the financial and emotional benefits of structured giving. 

When Australian Philanthropic Services (APS) was founded in 2012, few advisers or their clients knew much about structured philanthropy. That has changed as wealthy Australians become more conscious about giving back to society. Giving also feels good. Our clients talk a lot about the joy and satisfaction they derive from their giving, and ample research backs this up.

The tax advantages of structured giving

For families seeking to leave a meaningful impact, structured giving is a practical and enduring option, with the bonus of significant tax advantages. With investment returns tax-free, structured giving enables individuals to give and grow funds for greater future charitable impact, from first gifts to strategic funding rounds.

Givers can choose between establishing their own Foundation (private ancillary fund or PAF) or a giving fund in the APS Foundation (public ancillary fund). Both have the same tax deductibility and ability to support charities that match the giver’s focus.

Private Ancillary Funds (PAFs) and giving funds in public ancillary funds can be an ideal choice for donors facing a significant liquidity or business event in their lifetime, such as the sale of a business or property resulting in a large tax bill.  Donors can commit capital to their fund, receive a full tax deduction for the amount contributed now or even spread the deduction over up to five years. Funds are then distributed to charities gradually over time. 

The funds are invested while in the structure and ancillary funds are income tax-exempt and can claim franking credits, enhancing their financial efficiency and building more funds for future charitable gifts. They really are designed to “give and grow”.

Advisers who suggest structured giving to clients can often save their client a large tax bill. If the structure is a PAF, they will still have the care and management of the funds, allowing their client the time to think about their giving and engage with the charities they choose to support. Importantly too, the charitable sector benefits from structured giving, growing as it does a pool of philanthropic capital for the future that can only be disbursed to charities. 

While giving during one’s lifetime offers the greatest tax benefits, charitable gifts made through an estate can also be tax-efficient. Appreciated assets bequeathed to Deductible Gift Recipients (DGRs), like ancillary funds, can be exempt from Capital Gains Tax (CGT). 

Structured giving is often misunderstood as a rarefied mechanism only suitable for the extremely wealthy or only thought of in the sphere of estate planning.  While PAFs require a starting donation of $1-1.5 million, sub funds in a public ancillary fund can be set up with far less (a giving fund in the APS Foundation can be established with a minimum balance of $40,000), providing a far more accessible entry point. Advisers and accountants play a crucial role in correcting the misconception that structured giving is “only for the uber rich” by educating clients about the far-reaching benefits of structured giving and highlighting its suitability for a wide range of financial situations.

This trend of structured “giving while living” highlights a new era of philanthropy, one characterised by active engagement, strategic investment, and a commitment to systemic change. High net worth families and other Australians with more wealth than they need become not only donors but also active partners in creating a more equitable and sustainable future. Advisers who embrace these innovative approaches, are maximising their impact and redefining the very nature of giving, creating lasting and positive change for themselves, their clients and their communities. 

By Judith Fiander, Chief Executive Officer

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Notes:
[1] https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-finance-and-wealth/dec-2024

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