Welcome, from Antonia Ruffell, CEO

As we enter the last quarter of the financial year, it’s time to think about who you would like to donate to (if you haven’t already).  It can be difficult to choose from the thousands of charities out there doing good work. In this issue you’ll meet Robin Craig and Mick Boyle of the Jaramas Foundation, and hear about how they involve their children in grantmaking decisions. You’ll also find some tips from the APS grantmaking team on how to go about assessing a charity to support. 

We’re finding there’s increasing demand from our clients for grantmaking support, and I’m delighted to welcome some new members to our growing APS team. After four years serving on the APS Board, Fiona Higgins has recently joined us to head up our growing grantmaking service. Fiona has worked in philanthropy and social investment since 1998 and brings with her an in-depth understanding of the charitable sector and unique insights into grantmaking practice and strategy. I’m also pleased to welcome Judy Foster and Stephanie Cappis to our Client Administration & Operations Team. 

In this issue, you’ll also find an update from our Technical Director David Ward on the Treasury’s proposed amendments to the Private Ancillary Fund (PAF) Guidelines, and Judith Fiander has a reminder on the importance of taking your PAF into account in your estate planning.

If you have any questions about any of the articles in this newsletter please feel free to contact the APS office on 02 9779 6300. 

Client Focus

The Jaramas Foundation
 

When Robin Craig and her husband Mick Boyle decided to establish their private ancillary fund (PAF), The Jaramas Foundation, giving was already an important part of their lives.

Since setting up their engineering firm Abergeldie 22 years ago, a percentage of the company’s annual turnover has always gone to charity. The funds support two main causes: a St Vincent de Paul van which distributes food nightly in western Sydney (Abergeldie staff also do volunteer work with the van); and Beyond Blue, in honour of an employee who committed suicide.

For Robin and Mick charity work is an integral part of their business, just as giving is also a core value of their family life. So it was a natural next step to establish the family’s PAF, the Jaramas Foundation. The couple have four children and the word Jaramas is a combination of the letters of each family member’s name.

Robin explains the thinking behind setting up the PAF: “We had a windfall through the business, and we wanted to allocate it to charity, but we were very busy at the time. When we found out about PAFs we realised that this would allow us to manage our giving over a longer time period. We could put the money into the PAF and then distribute a percentage each year to charity (PAFs are required to distribute a minimum of 5% of assets annually). It was also a way for us to involve the family.”

The children, now aged between 13 and 21, have been involved from the beginning. “Once a year we sit down and they help us decide what causes the family will support. It’s been great, and it’s also allowed us to have an open conversation about the financial windfall, and I think it’s given them a good perspective on things.”

Nine years on, the children are also becoming more involved in the administrative side of things. “Our oldest child is 21 and she’s begun to sit in on the PAF board meetings with Australian Philanthropic Services.  Philanthropy Australia also offers opportunities for young philanthropists, and both of the girls are independently involved in charities.”

When it comes to grantmaking decisions, Robin explains that she and Mick believe that philanthropy should not take the place of current government services and safety nets. “Philanthropy can play a role in supporting innovative initiatives which may be considered too risky for government but, when proven to be effective, may then be incorporated into public policy and funding.”

The family has a passion for the environment, which is reflected in the focus of the Jaramas Foundation’s grantmaking in recent years. One of the projects that they’ve funded is a Landcare initiative to build a wildlife corridor in the Gundagai region of NSW. Robin visited the site and met those involved. “It was all about teamwork and that’s what I loved about it. It was so successful in bringing together several of the local farmers. Local school kids also helped with planting, and a special needs group in the area tended to the trees as they grew. Because so much of Australia’s land is in the hands of farmers, I think it’s important to support them in their endeavours to improve land for the environment and develop new ways of farming that protects waterways.”

In a further long-term commitment to the environment, the Foundation has donated $500,000 to Sydney University to support the study of engineering solutions to provide sustainable power generation and water supply. The donation was sufficient to establish a scholarship, in perpetuity, which will be awarded annually to an engineering PhD student. Robin and Mick are both alumni of the university, and they hope the scholarship will also inspire others. “We are hoping that if more people do what we do then somebody, somewhere, will come up with something significant to change the world.”

Robin Craig and Mick Boyle’s long-term goal for their philanthropy is to have an impact on creating a sustainable environment, and to involve the family in that process. And the synergy between the family’s engineering business and their philanthropic vision is always there. Robin explains: “Our firm has always been about building better communities, through infrastructure, and that’s what we’re trying to achieve with the PAF.”
 

Giving Insights

with Fiona Higgins

Sometimes it can be difficult to assess whether a charity will put your donation to good use, and we're often asked by clients how to do that.

The team at APS has reviewed hundreds of charitable organisations over the years and, while there’s no single ‘formula’ for gauging charitable effectiveness, here are some basic steps for due diligence:

1. Check in the public domain
Get a copy of the organisation’s constitution, annual report and last audited financial statements (you can find all of these on the ACNC website).  Get comfortable and spend a few hours combing through them. You’ll get a good insight into the organisations’s original purpose, management and staff profiles, key governance structures and controls (including the board mix and level of engagement), historic performance and financial health.

2. Eyeball the organisation
This isn’t always possible, but there’s nothing better than kicking tyres (within limits). Visit an organisation, meet the staff and its clients (if that’s appropriate). Try not to do this as part of a fancy event.

Remember, proportionality is key: don’t be forensic if the likely level of support is limited. Be respectful of the organisation’s time and limited resources; sometimes a cup of tea is just the ticket. The important question is, does the ‘feel’ of the organisation match its brand in the public domain?

3. Ask some curly questions
These will vary, depending upon the nature of the organisation’s work, but could include:

• What risks is your organisation managing?
• What constitutes success, and how will you know if you’ve arrived?
• Who else do you work with and how?
• What are the main policy-level or structural drivers facilitating or impeding your organisation’s work?

4. Phone a friend
Check the list of funders in the organisation’s annual report and choose one that you respect. Call that entity and ask them for any feedback on their experience of the organisation – what has worked, or not, in their partnership to date?

5. Going deeper
It’s a relationship, and in the spirit of mutual respect, it’s worth asking ‘Apart from funding, what else would you like to see occur as a function of this relationship?’ (Is funding the only thing you need right now? What else could we help with?) The answer may surprise you, unlocking opportunities for a longer-term partnership of shared value.

Need help? Life is busy. If you don’t have time for this kind of due diligence on the organisations you’re considering supporting, APS can help.  We can also provide a standard funding template for charities to submit to your PAF. If this is of interest, please do not hesitate to contact your Governance & Giving Adviser or email hello@australianphilanthropicservices.com.au

What happens to the PAF when I die?

with Judith Fiander

One of the benefits of establishing a private ancillary fund (PAF) is that the fund can continue in perpetuity; unlike other trusts there is no vesting or end date. Founders like to know that their children, their grandchildren and future generations can, if they wish, continue the philanthropic work started by the Founders’ in their lifetimes.

The control of the PAF sits with whoever owns the shares in the corporate trustee.  The shareholders appoint the directors and the directors make decisions around the PAF’s investments, governance and grantmaking.

It is important that whoever owns the shares in the corporate trustee includes them in their estate planning arrangements.  That is usually the Founders but not always, and often not exclusively the Founders, sometimes other family members are also shareholders.  Each of the shareholders needs to deal with their shares in their will by leaving them to whoever they wish to be involved in the future management of the PAF.

Whenever APS establishes a PAF we always ask you as shareholders to discuss the shares in the corporate trustee with your estate planning advisers.  You are unlikely to be revisiting your wills at exactly the same time as establishing your PAF so it is important that the issue is not forgotten when your wills are next reviewed.  If you haven’t already dealt with the shares in your current will, now is a timely reminder. Also PAFs can of course be topped up through a donor’s will, although the tax concessions are limited to Capital Gains Tax exemptions rather than full deductibility.

One issue that can sometimes arise is if you were to leave the residual of your estate to your PAF.  Let’s say in your will you left a number of bequests to family members without specifically mentioning the shares in the corporate trustee.  You then left the residual of your estate to the PAF.  Under this arrangement the PAF has just inherited the shares in the corporate trustee; meaning it has inherited shares in itself.    That won’t work.  The shares in the trustee company need to be left to someone.

Don’t hesitate to speak with your APS Governance & Giving Adviser to clarify your current shareholding arrangements.  If you don’t wish to leave the shares to any specific person, but still wish your giving to continue beyond your lifetime, speak with us about what arrangements would support that outcome.  

APS is not able to give you legal advice but we are always willing to assist by speaking with your legal advisers as they make arrangements for the future of your PAF.
 

Technical Update from
David Ward 

On 20 December 2015, the Treasury released a discussion paper on proposed changes to the Private Ancillary Fund Guidelines. We and other sector organisations had been calling for an update of the Guidelines to tidy up a few areas which were not working or creating unnecessary red tape. Key among these is a recommendation to introduce portability provisions to allow the transfer of a PAF to an existing Public Ancillary Fund in circumstances when the PAF is of insufficient size to justify the expense of running it, or changed family circumstances mean devolving the trustee duties makes sense.

To the surprise of many, Treasury also proposed changing the minimum distribution requirement from the 5% to the lesser of a formula based on net income or the RBA Cash Rate. Philanthropy Australia and APS put in submissions arguing that the simplicity of 5%, one of the main reforms of the 2009 changes, was working well and there was no strong case to allow PAFs to distribute 2% or potentially less if the economy weakens and the RBA reduces the cash rate further. (The US equivalent Fed Funds Rate was at zero for over 4 years). A PAF's prime purpose is as a vehicle for supporting the community through grantmaking. To unnecessarily allow reduced distributions at times when the economy and community are suffering the most, seems to miss the point.

It is our hope that the debate around distribution levels does not unnecessarily delay the introduction of the more important portability and other changes (the issue could be set aside for more detailed consultation and discussion). Hopefully by the time of the next issue of this newsletter I will be in a position to outline the modifications to the PAF Guidelines.

PHILANTHROPY EVENTS & NEWS

24 May 2016 - Melbourne

We have negotiated a 20% discount for APS clients who wish to attend the Generosity Forum.    APS Chairman Chris Cuffe and APS Technical Director David Ward will both be speaking at this event.

Whether you’re an ‘old-hand’ or a newcomer to giving, the Generosity Forum is designed to help you get a grip on how things are evolving. Speakers and panellists at the Generosity Forum are some of Australia’s leading donors, industry experts, advisers and specialists in philanthropy.

To access this discounted price, please contact the APS office to request the promo coupon code and then register HERE.

 

Swinburne University’s Centre for Social Impact (CSI Swinburne) is undertaking the second Giving Australia study on behalf of the Prime Minister’s Community Business Partnership.  Their partners in this landmark study are the Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) at QUT, and the Centre for Corporate Public Affairs.   

CSI Swinburne is looking for people to complete a 20 minute online survey on philanthropic grant-making.  Participants therefore can be either:

• an employee of a grantmaking philanthropic entity (e.g. Foundation, Trust, Fund); or
• a trustee or board member of a grantmaking philanthropic entity (e.g. Foundation, Trust, Fund); or
• a donor to a grant-making philanthropic entity (including Sub-funds).

If you would like to participate, please complete the survey by clicking on the link below. The survey will close Thursday 7 April, 2016.   Click HERE to complete the survey. 

At the heart of Giving Australia 2016 is the drive to establish a robust, contemporary evidence base that can be used to inform giving policy and practice in Australia.  Please do take up this opportunity to contribute.