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Philanthropy upswing


PAF establishment numbers reflect adviser engagement and philanthropy upswing








Australian Philanthropic Services (APS) has experienced a significant increase in the number of individuals setting up private ancillary funds (PAFs), suggesting a growing number of financial planners who are having productive conversations with clients about structured philanthropy.

Chief executive officer of APS, Antonia Ruffell, says the firm has helped clients set up as many PAFs in the first nine months of the 2013-14 financial year as it set up in the whole of the 2012-13 year.

“Last year we set up 20 PAFs, and this year we have done that already, and it’s not even the end of the first quarter [of 2014],” Ruffell says.

“A couple of them are ones that we have transitioned into our service. A few are brand new. A few we have done establishment-only for, and they do not use our administration service. It’s exciting.”

There are now about 1100 PAFs in existence nationally, and while the concept shares many of the same characteristics as self-managed superannuation funds (SMSFs), PAFs are far less well known and understood by financial planners. Ruffell joined APS about 18 months ago and one of her first objectives was to raise the profile of PAFs.

“I’d done my first six months and I decided I was going to try to meet three advisers a week, and see what happens,” she says.

“I’d say the ones that really get it are the true high-net-worth [HNW] advisers. Everyone says that’s what they are, but they are really aspiring to it. There are pockets of advisers that really do deal with [HNW clients]. And they are the ones, generally, who are not transactional in their approach.”

Ruffell says talking to a client about setting up a PAF transcends the scope of a usual financial planning service.

“Talking about the loan you need for your house or your insurance needs – anyone can do that,” she says.

“These advisers engage with the family. It’s the values-based advisers.”

From January 1 this year, PAFs came under the jurisdiction of the Australian Charities and Not-for-profits Commission (ACNC). The Abbot government has signalled its intention to abolish the ACNC, and APS says if the abolition goes ahead it is likely to be in the second half of 2014.

“Nonetheless from 1 January 2014 all private ancillary funds (PAFs) came under its jurisdiction,” APS says in its Autumn 2014 newsletter.

“This means that all PAFs are now required to file an annual information return and many will also need to lodge financials. This is a requirement for all tax exempt charities.

“Importantly for PAFs, if you do not want personal details to be made public, you can have APS submit a form requesting the ACNC to withhold critical information.

“If the ACNC is abolished, this will likely take affect in the second half of 2014. The current plan is to replace the ACNC with a Centre for Excellence, but the question remains as to who the new regulator will be – the responsibility may return to the Australian Taxation Office (ATO).”


March 23, 2014
Simon Hoyle
Source:  Professional Planner