What the latest ATO figures tell us about ancillary funds

By: Dr Alexandra Williamson   |   Postdoctoral Research Fellow, Australian Centre for Philanthropy and Nonprofit Studies, Queensland University of Technology   |   https://research.qut.edu.au/australian-centre-for-philanthropy-and-nonprofit-studies/resources/giving-statistics/private-and-public-ancillary-funds/

Ancillary Funds are a highly visible part of Australia’s philanthropic sector, and the only philanthropic organisation types on which the Australian Taxation Office (ATO) specifically reports financial data. Another class of foundations (beyond Ancillary Funds) for which there is almost no public data is testamentary trusts established through Wills.

Why is the data made publicly available on Ancillary Funds? One possible answer is that it allows a close check on possible misconduct.

The word ‘ancillary’ in the name of these funds refers to the supporting role they play, as a ‘holding place’ between a gift being made by a donor, and the funds being granted to a beneficiary organisation. 

Each year, the Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) at QUT publishes an Information Sheet that examines data released by the ATO on Private Ancillary Funds (often family foundations) and Public Ancillary Funds (often fundraising organisations for a single charity such as a hospital or school).  Our analysis of the data for 2018-19 (released in 2021) is the latest in a long-term series of reports that track data from 2000-01 for PAFs, and 2011-12 for PubAFs.

The overall picture for 2018-19 for PAFs is one of increasing net numbers, distributions (grants) and net assets, while donations received have decreased. Against hopeful predictions of growth for the broader philanthropic sector, the number of new PAFs established has fallen 30 percent from the previous year (from 155 in 2017-18, to 108 in 2018-19). 108 new PAFs is in fact the lowest number of new funds since 2012-13. On the positive side, PAFs reversed a 3-year decline by distributing $564.58 million in grants during 2018–19. This represented 7.86 percent of their net assets of $7,183.14 million as at 30 June 2018, comfortably above the required minimum distribution rate of 5 percent.

For PubAFs, the overall picture shows steady net numbers and distributions (grants), while donations received have increased and net assets have decreased. 

The net number of PubAFs has in fact fallen by 78 since 2011-12 when the ATO began reporting data. This net loss is despite the approval of 623 new PubAFs during that 8-year period, and is probably attributable to the Australian Charities and Not-for-profits Commission (ACNC)’s work since its establishment in December 2012 to ‘clean up’ the Register of Charities to ensure that inactive organisations are deregistered.

Such a trend, however, would be largely invisible within the ATO data, as an increase in the net assets of PubAFs will be hidden within the approach of many PubAFs and sub-funds to act as ‘flow-through’ channels for donations that are distributed as grants within the same financial year.  For example, in 2018–19 PubAFs distributed 47.51 percent of their donations received, a decrease from 57.77 percent in the previous year.

The ATO’s focus on Ancillary Funds through the selective release of their data allows for a level of financial scrutiny that is not possible for other philanthropic organisation types. But the data are limited, and consequently so is the possible analysis. 

The analysis provided in the Information Sheet raises some thought-provoking questions about the population of Ancillary Funds as a whole. PubAFs are distinct in that they may offer named sub-funds or management accounts within the fund to donors. There is emerging data from individual large PubAFs, as well as through a Swinburne University Centre for Social Impact (Seibert, K. 2019. Snapshot of sub-funds in Australia - Factsheet. Swinburne University of Technology). that suggests that such sub-funds are becoming a popular, simpler alternative to the costs of the establishment and ongoing governance of a PAF. 

Useful additional information to help the sector understand trends and best practices would be a breakdown of Ancillary Funds into size groups, data on distribution patterns (whether funds make grants to single, two or multiple issue areas), and data about trustees, including number, age, gender and tenure.

  1. McGregor-Lowndes, M., Balczun, M., & Williamson, A. (2021). Ancillary Funds 2000–2019: ACPNS Current Issues Information Sheet 2021-1.QUT, Brisbane.  doi:10.5204/rep.eprints.211850.
  2. The Australian Centre for Philanthropy and Nonprofit Studies is seeking respondents to its survey on philanthropic culture.

Aug. 12, 2021

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