HOW TO RAISE

MONEY FROM PAFS

PRESENTED BY: JACQUELINE CAMERON

CONSULTANT AND RESEARCH MANAGER

© AskRIGHT 2015

We are recording

this webinar.

No need to write everything:

you will be able to download

the recording and the PDF of

the presentation to review it.

Ask & Answer

questions

Use the chat box on the left

anytime to ask and answer

questions.

We will also run a Q&A session

at the end of the webinar.

Make the most of today’s webinar

Follow our updates: AskRIGHT.com

OPTIMAL FUNDRAISING STRATEGIES

IDENTIFICATIONOF DONORS

TRAINING

RECRUITMENT

WE CAN HELP YOUR ORGANISATION RAISE MORE MONEY

Today’s Webinar

What are PAFs?

History, key features, why have them

Where does the money go?

Raising money from PAFs

Q&A

Optional demonstration of The Complete

Guide to Australia’s Private Ancillary Funds™

POLL

Have you ever attended

a webinar before?

WHAT ARE PRIVATE

ANCILLARY FUNDS?

A brief history

Introduced in 2001 as part of Howard government

reforms designed to grow philanthropy in Australia

Originally known as Prescribed Private Funds (PPFs)

This measure will open up a new vehicle for private

philanthropy, similar to that existing in the United

States, so that families and individuals can donate

to a trust of their own, which then disburses funds

to a range of other gift-deductible recipients”.

“

A brief history

Various

problems

with PPFs

2008: Discussion paper on

improving the integrity of

PPFs (Rudd government)

New legislation and

guidelines 2009

PPFs become

Private

Ancillary

Funds (PAFs).

Key Features of PAFs

PAF Trustees must be a corporation

(existing Individual trustees of PPFs can continue)

• i.e. Trustees must be proprietary company, an

incorporated association, or a statutory trustee company.

Each PAF must have one director who has a

responsibility to the community

• The ‘Responsible Person’ cannot be the founder, family

member, donor of more than $10,000, associate of the

founder, or employee of the PAF founder (Jan 2012).

Other directors can be family members

or business associates

PAFs generally have a 5% minimum

distribution requirement.

PAFs are required to have a formal Investment

Plan and conduct an annual audit

Key Features of PAFs

Donations to a PAF are tax deductible

PAFs generally exempt from on-going income tax

No public fundraising is permitted

PAFs are Type 2 DGRs so they are operate more like a ‘giving’

body than a ‘receiving’ body

• so not competing with your fundraising.

Key Features of PAFs

• distributions can be made to a

relatively wide group of DGR

organisations (varies re state set up)

Income Tax

Exempt

Funds

• distributions must go to recipients

who have both TCC and DGR

status.

Charitable

Funds

Key Features of PAFs

Since 2005, there have been two main types of PAFs:

As of 1 January 2014, no newly established PAFs are to be ITEFs.

TCC – tax concession charity

DGR – deductible gift recipient

Check the PAF you are interested in

✓ Visit www.abr.business.gov.au to search ABN

lookup to determine what kind of PAF it is.

✓ Your non-profit organisation must be a DGR

but you may also be limited if you are not a tax

concession charity

Does your status align with their requirements?

Check the PAF you are interested in

And it can be a bit more complicated for some…

Visit the

Philanthropy

Australia

website

Different Types of PAFs

Individual or

family

established

PAFs

• The Forrest Family

Foundation, the

Balnaves

Foundation, or the

Kinghorn

Foundation

Corporate

PAFs

• Vodafone

Foundation, Coca-

Cola Australia

Foundation

PAFs created

by a wealthy

individual for

a single

purpose

• Scholarship or

Bursary Funds

• Local Clubs and

Community

Groups, etc.

2016 Guideline Amendments

Commissioner discretion to lower minimum distribution rate

Can provide non-cash benefits i.e. loan guarantees, direct loans,

social bonds, gifts of land, and subsidised office space etc.

Portability for Private Ancillary Funds

Reporting Requirements

2016 Guideline Amendments

Investment strategy rules

Reduced audit requirements for small PAFs

WHERE DOES THE

MONEY GO?

PAFs must distribute funds

The rules mean that funds must be distributed

$500,000 recommended initial capital of PAFs

5% minimum distribution requirement

(excluding the establishment year)

PAFs must distribute funds

The rules mean that funds must be distributed

At least 5% of net capital

value of the fund as at end of

previous financial year – or a

minimum distribution of $11,000,

whichever is the greater

If 5% of the net capital value of the

PAF is less than $11,000 then

the PAF is required to distribute the

remainder of the fund.

Interestingly,

average annual

distributions have

exceeded the

minimum 5%

requirement

(averaging around 8-9%)

How many PAFs are they?

Number of PAFs is growing

>1,627PAFs as of June 2017

(1,464 active PAFs from 1,627 that have been established)

Breakdown of PAF numbers by state

0

100

200

300

400

500

600

700

800

NSW VIC QLD WA SA ACT TAS NT Internationally

No of active PAFs registered in State No of active PAFs that provide funding

PAFs have a long way to go

Chris Cuffe

PAF holder, former executive

director of Social Ventures Australia

and founder of Australian

Philanthropic Services (APS)

www.youtube.com/watch?v=q8ohiWbG63E

✓ easily the potential to establish

30 or 40,000 PAFs in Australia.

✓ large possibilities for

growth in the market

Understanding WHY …. matters

Why do people create PAFs?

key motivations behind structured giving*3

*study by QUT

Reaching a life turning point

Acting on an obligation to give

Reaching a stage of ‘having enough’

1

2

3

Understanding WHY …. matters

Why do people create PAFs?

key motivations behind structured giving*3

*study by QUT

Reaching a life turning point

Acting on an obligation to give

Reaching a stage of ‘having enough’

1

2

3

The tax benefits are important

but they are not the primary

motivational factor

A quote from the Forrest family

It was your logic, intuition, focus, foresight, good fortune, relentless

determination and work capacity that produced the wealth you now

ponder the future of. Yet it is also these same powerful talents that

cause you to ask yourself, could I become a major philanthropist and

responsibly use my wealth to improve communities and the lives of

those less fortunate, potentially touching millions of people?

We shared the fundamental understanding as a family that to do your

best in life, to achieve, to make a real and positive difference, and as

most importantly to enjoy our few days on this earth, then considerable

inherited wealth could get in the road.”

“

- Andrew and Nicola Forrest

Sometimes – other issues matter

Anonymity is a

factor …

Where children

and families fit in,

inheritance issues

Views about the future, perpetuity

and spending down

Sometimes – other issues matter

✓ PAFs aren’t only perpetual vehicles for philanthropy,

there are a number that adhere to the ‘give while you

live’ model.

✓ Often the PAF will start out undecided and then

change the model according to how the family fits in

with the PAF. AskRIGHT is aware of one PAF that aims

to spend 20% per year and close in 2018.

Sometimes – other issues matter

I originally had – and am still uncertain

whether the PAF environment was to be

perpetual in its nature or whether I’ll give while

I live type model [sic]. That will depend on how

the kids go with this going forward and I’ll

make the decision a little bit later. At the

moment, its set up as being a perpetual

model”

Source: http://eprints.qut.edu.au/48801/1/48801.pdf

“

It can be about MORE than the money

high level

volunteering

provision of pro

bono expertise

networking with

like minds

collaboration

and information

exchange

For some it is about more than the money - many

have firm views about also giving time, experience

and advocacy through:

It can be about MORE than the money

✓ PAF holders can become very strong advocates

for causes they become close to.

✓ Expect more to join the Boards of organisations

they develop a particular affinity with.

How much went in …and what went out?So

urce: A

TO

statis

tic

s

‘06 – ’07 ‘07 – ‘08 ‘08 – ‘09 ‘09 – ‘10 ‘10 – ‘11 ‘11 – ‘12 ‘12 – ‘13 ‘13 – ‘14 ‘14 – ‘15

($ M) ($ M) ($ M) ($ M) ($ M) ($ M) ($ M) ($ M) ($ M)

PAF DONATION INCOME 533 779 272 321 304 354 293 517 1847

DISTRIBUTIONS MADE

Welfare & Rights 37 44 50 49 42 70 72 na na

Cultural 40 11 19 26 28 23 41 na na

Research 2 12 3 25 5 33 9 na na

International Affairs 6 11 10 16 18 18 20 na na

Education 10 16 15 20 10 25 36 na na

Health 8 10 14 18 14 33 28 na na

Environment 8 14 13 13 13 8 9 na na

Other 17 14 22 24 23 33 21 na na

Ancillary Fund DGRs 6 7 7 5 12 6 4 na na

Not a DGR 1 1 2 0.5 na na

Sport & Recreation 0.5 na na

Not a DGR but a TCC 1 1 2 na na

Insufficient info 1 na na

TOTAL 133 141 155 197 165 252 244 300 390

PAF Distributions - by year

Sources: ATO Tax Statistics

0

50

100

150

200

250

300

350

400

450

$M

Year

PAF Assets – by year

Source: ATO Tax Statistics

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

$M

Year

Total PAF Corpus VS Avg. PAF size

Number of new PAFs - by year

Sources: ATO Taxation Statistics

0

20

40

60

80

100

120

140

160

180

Ne

w P

AFS

Year

Total number of PAFs - by year

Sources: ATO Taxation Statistics

0

200

400

600

800

1,000

1,200

1,400

Tota

l N

um

be

r P

AFS

Year

AVERAGE vs REQUIRED DISTRIBUTIONS

Tax deductible giving, PAFs and ASX

$ M

illio

ns

Financial Years

N = Negative ASX share market year

© AskRIGHT

Sources: compiled from ATO statistics, The Australian Centre for Philanthropy

and Nonprofit Studies (QUT) data AskRIGHT’s The Complete Guide to

Australia’s Private Ancillary Funds™.

The Paul Ramsay Foundation

$3.3 BILLION added to

the PAF pool

RAISING MONEY

FROM PAFS

POLL

Have you attempted to raise

money from PAFs before?

• Less than 10% of PAFs with formal procedures

• Utilise grant-writing skills

• Follow guidelines

• Use same headings and language as the fund

• Write clearly, no errors

Formal

Applications

• Large majority of PAFs - no formal application process

• Identify those with a specific area of interest that relates

to your cause

Non-Formal

Application

Process

• Develop an understanding of the PAF’s current interests

• Submit a tailored proposal

• Unsolicited applications discouraged

Opportunity

for Contact

Applying to PAFs - Process

Applying to PAFs - Alignment

Mission & Values

• What are the PAF’s mission and values?

• Does your cause align with those of the PAF?

Founder/Trustee/Staff biographies

• What is background of those who are involved in the PAF?

• Are there backgrounds that would have a particular affinity

with your cause?

Philanthropic interests

• Does the PAF state it has particular philanthropic interest/s?

(keywords useful here)

• What causes have they previously given to?

• Is there a pattern in their giving?

Raising Money From PAFs

Identify PAFs you believe are good prospects

✓ Research the listing of 775 that were originally gazetted

✓ Philanthropy Australia have a small number of public PAFs

✓ ACNC Register

✓Australian Business Register (ABR)

✓ Research your donor base and see if you have PAFs giving to you

✓ The Complete Guide to

Australia’s Private Ancillary FundsTM

Important things to consider

POLL

Do you use a rating system

for your prospects?

Quantify the situation

Linkage (rate from 1-5)

How strong is the link of the PAF to you?

Ability (rate from 1-5)

What can you determine about the financial

capacity of the PAF?

Interest (rate from 1-5)

How would you rate the level of interest from the

PAF in your cause/project?

Use LINKAGE + ABILITY + INTEREST

Ratings can reveal the right strategy

Use your ratings to identify the next step…

Prospect

name

Linkage

(1-5)

Ability

(1-5)

Interest

(1-5)

TOTAL

Rating

Strategy

for next step

Jones Family

Trust2 2 4 8

Willy Wonka

Foundation4 3 1 8

Ratings can reveal the right strategy

Prospect

name

Linkage

(1-5)

Ability

(1-5)

Interest

(1-5)

TOTAL

Rating

Strategy

for next step

Jones Family

Trust2 2 4 8

- Strengthen the

connection, ask for a

moderate gift

Willy Wonka

Foundation4 3 1 8

- Research interests,

inform, make the

case

Use your ratings to identify the next step…

A checklist for best alignment

Ask the PAF for a gift

Usually a person or small committee

Some have formal processes but majority rely on personal contact

For what

purpose are

we asking?

How much

will we ask the

PAF for?

Who should

ask?

Who should

we be

asking?

What’s the

timing?

Strong relationships matter

If necessary and possible, ensure your leadership takes

the time to cultivate a productive long term relationship

with key PAF directors

✓ Professional network links?

✓ Lunch and dinner?

✓Other ways to experience your impact/service?

Be prepared to be patient

Develop a ‘high quality’ relationship

Your approach to Proposal Writing

✓ Be honest

✓ Assume nothing

✓ Take time to reach out and connect well

✓ Then follow process and submit…or not

✓ Write in a way that describes the benefits, difference

and/or impact their support can make, NOT reams of

text about how impressive your organisation is

✓ Follow up appropriately

Best practice….

Successful solicitation is …

The right person asking

the right PAF

for the right gift

for the right program

at the right time

in the right way.

Successful solicitation is …

It takes

professional

effort, time and

resources to

line up each

element well

The right person asking

the right PAF

for the right gift

for the right program

at the right time

in the right way.

And when it all works out well …

Express your THANKS constructively

Next step to the

next gift

Best achieved in a

way the donor

enjoys

Something that needs

to be planned

Something you need to

manage carefully ...

especially for

anonymous donors

Part of the credibility test you

pass – you will likely be

compared to other

beneficiaries (keep this in mind

for securing further support)

A policy

And when it all works out well …

Express your THANKS constructively

Account for how the gift is used and the difference it made

Invite them back to

see the difference

their gift has made

Send them

regular reports

Send them a letter or

expression of

appreciation from

the end user or

your clients

Get creative

– e.g. record a short video message

from an end user/client on

smartphone for the funder (if

appropriate)

Report impact,

impact, impact

?Questions?

The Complete Guide

to Australia’s Private

Ancillary Funds™

POLL

Do you have a Prospect

Research Officer in your

organisation?

www.pafguide.com.au

An online

database

containing

all of PAFs

Prospect researcher

working on compiling

and updating the

database.

DGROnly available to

eligible non-profit

organisations

(only entities with DGR status)

Researched and

compiled from

information

available from

public and pay-for-

content sources.

www.pafguide.com.au

The Guide is an industry-insider resource for

organisations looking to generate new revenue streams

and identify new major gift prospects.

The information is not available

from any other source.

www.pafguide.com.au

THE COMPLETE GUIDE TO

AUSTRALIA’S PRIVATE ANCILLARY FUNDS™

1,627

PAFs

125+

Trustee Profiles

www.pafguide.com.au

Subscription Details (12 months):

State or national

subscription

interstate PAFs who have

a history of giving to

other states are included

PAF Director

profiles

Licence

Agreement

New PAFs added

monthly; existing

entries updated

Can be renewed

each year

25% of then current price

www.pafguide.com.au

What is included?

PAF address and

contact details

Director details including

biographical details

where available

Philanthropic

interests

Past distributionsGeographic

priorities

Application

guidelines /

procedures

where relevant

Note: the scope of information varies according to Fund

www.pafguide.com.au

✓ State

✓ Postcode

✓ Sectors including Health, Education, Research, Welfare,

Defence, Environment, Industry, Trade and Design, International

Affairs, Sports and Recreation, Cultural Organisations, Fire and

Emergency Organisations, Animal Welfare and Religion

✓ Free text searches (name of individual, organisation, etc.).

How can it be used?

The Guide allows you to search by:

www.pafguide.com.au

61Subscribers/NFPs with

access to this information

www.pafguide.com.au

• 270 PAFs

• 40 PAF

Trustee

profiles

QLD

• 783 PAFs

• 56 PAF

Trustee

profiles

NSW

• 626 PAFs

• 50 PAF

Trustee

profiles

VIC

• 168 PAFs

• 24 PAF

Trustee

profiles

SA

• 240 PAFs

• 38 PAF

Trustee

profiles

WA

• 129 PAFs

• 22 PAF

Trustee

profiles

ACT

• 109 PAFs

• 21 PAF

Trustee

profiles

NT

• 125 PAFs

• 23 PAF

Trustee

profiles.

TAS

Number of Active PAFs with distributions in PAF Guide

of PAFs65%

have distributions

listed in The Guide5

32

34

43

53

80

70

123

234

288

296

379

468

Defence

Fire and Emergency Organisations

Industry, Trade, and Design

Sports and Recreation

Animal Welfare

International Affairs

Religion

Environment

Cultural Organisations

Education

Research

Health

Welfare

www.pafguide.com.au

✓ We have a full-time researcher dedicated to the

Guide

✓ Mail out to PAFs

✓ Google Alerts

✓ A check each month for new or cancelled PAFs

Research

www.pafguide.com.au

Valuable resource if your organisation

does not have a Prospect Research Officer

Donor acquisition – major gift profiling

and prospecting tool

Resource development tool for your Trust &

Foundations and/or Partnerships program.

Please fill out the evaluation form so we can continue to improve.

Follow our updates: AskRIGHT.com

QUESTIONS??

Thank Youfor attending our webinar

Need further assistance?

If you would like to have a discussion about your PAF

strategy or have any questions, please contact us and we

will be happy to provide further guidance.

t 1300 758 812

e j.cameron@AskRIGHT.com

PAF Guide enquiries: pafguide@AskRIGHT.com