Private Ancillary Funds

Private Ancillary Funds are charitable trusts that allow sustainable donations to registered charities and involve family in philanthropy.

Warlows is part of the 1% PLEDGE
Warlows are now members of HOPE NOW’s mission
For those wishing to develop a longer term and substantial grant making program, it is worthwhile considering the development of a private ancillary fund.

What is a Private Ancillary Fund?

A Private Ancillary Fund (PAF) is a kind of charitable trust. It serves as a link between donors and charities that have tax-deductable gift recipient (DGR) status. Simply put, PAFs are investment vehicles designed to provide sustainable donations to registered charities and DGRs. PAFs are established by an individual or a family group to coordinate and maximise the grants made to charity. A trustee, usually a corporate trustee, manages the PAF and is responsible for its investments and charitable distributions.

Why use a private ancillary fund?

A PAF may be suitable for someone who:

  • Wishes to keep on giving after their death
  • Wants a structured way to involve their children or family in philanthropy
  • Has recently disposed of an asset and wishes to obtain a tax deduction in the year of sale

Are any investments are prohibited?

  • A PAF can only invest in shares or property; it cannot run a business.
  • A PAF can only borrow money under limited circumstances, such as for settling specific transactions.
  • All investment dealings must be held at arm’s length; meaning they must be on commercial terms, beneficial only to the trust or recipient DGR. They cannot benefit the trustee, donor, or their employees, either directly or indirectly.
  • A PAF cannot invest in collectables.
  • A trustee cannot give a security interest over trust assets unless as a guarantee for an eligible DGR.
  • The trustee must follow any investment directions or restrictions specified in the trust deed.

The trustee has an obligation to exercise appropriate care and skill in managing the PAF

The State Trustee Acts require that a trustee must exercise “the care, diligence and skill that a prudent person would exercise in managing financial affairs of others”. However, if a professional trustee or finance professional is appointed as trustee, they have a higher duty of care: they must “exercise the care, diligence and skill that a prudent person engaged in that (particular) profession, business or employment would exercise in managing financial affairs of others”.

A PAF must have an investment strategy, which directs the investment activities of the trustee. The trustee may also take advice from outside sources or appoint an outside manager, both of which can be paid for with trust funds. An annual review must be conducted to document the actions taken to implement the investment strategy and to examine the effectiveness of the strategy.

Indeed, the use of a PAF is a strategic way to manage not only the destination of charitable giving, but the extent of the targeted capital designated for this purpose as well as how it is managed. If you are considering setting up a PAF, the Warlows Legal team can assist you in this process.

You may also be interested in

Our Legal Team

Behind our brilliant results are a team of talented and agile lawyers. Committed to legal excellence, our practitioners deliver balanced solutions to commercial issues. We bring together a wide range of legal expertise and experience to create the right result, in the right manner.

Areas of Law

The Warlows Legal team efficiently provides advice and strategic solutions for a wide range of legal issues. By combining technology with talented lawyers, you benefit from legal excellence.


Our commitment to legal excellence, innovation and social justice means you benefit from legal advice of the highest quality. These key values form the basis of our firm’s perspective on every case we undertake. As a firm, it is our responsibility to provide ethical, efficient and results-driven services.

Client Testimonials

Please call us to arrange an initial consultation

Our expertise in our respective fields is widely acknowledged. Drawing upon our practical experience, we consistently produce the positive and reliable results our clients expect. We would love to stay connected with you and keep you up to date with all relevant legal issues and expertise.

Subscribe to our email updates by entering your email below, or simply message or call us on +61 3 9212 0238

Talk to Us

How can we help?

Sign up for our Newsletter

Scroll to Top