Creating a private ancillary fund (PAF) is just the first step towards making a impact for the causes that matter most to you. To truly make a difference, you need to manage your PAF strategically, ensuring your fund grows over time and your charitable contributions are used effectively.
In this blog post, we’ll explore how to maximise the financial growth of your PAF to help you ensure that your charitable giving is as impactful as possible.
How to grow your private ancillary fund
Maximising your private ancillary fund (PAF’s) impact requires strategic investment management. Since PAFs are designed for long-term giving, it’s wise to prioritise growth investments, such as shares. Growth assets generally provide strong returns over a long-term investment horizon and increase your capacity for future donations.
But while a focus on growth assets should be prioritised, it’s smart to diversify your investments by spreading them across a range of asset classes. That way, you can manage risk while aiming for steady returns and ensure your PAF remains stable during market fluctuations.
Many PAF holders choose to align their investments with their values by opting for socially responsible or ethical investment funds. This way, your investment choices reflect what’s important to you.
How to make every dollar donated count
In Australia, PAFs are required to distribute at least 5% of their value to eligible charities each year. To make sure your contributions are as impactful as possible, it’s recommended to focus on giving to charities that can provide measurable outcomes for your donations. This ensures your money is being used effectively to create tangible results.
It’s also wise to consider supporting a variety of charities can help broaden your overall impact.
Engaging family in your private ancillary fund
Another way to ensure your PAF has impact is within your own family. PAF enables a family to create a lasting legacy of philanthropy, promoting values of giving and social responsibility across generations. It strengthens family bonds by encouraging shared goals and collaboration, while also involving younger members in philanthropy, leadership and financial management.
To make this effective at having an impact for the charities your PAF supports, as well as your own family, it’s important to hold regular meetings to discuss which causes to support and why. This can foster a shared sense of purpose and ensure that everyone is aligned with the family’s values.
Consider appointing younger family members as trustees or advisors to the fund. This helps prepare them to continue the family’s philanthropic legacy for generations to come and teaches important financial management skills.
Evaluating the impact of your private ancillary fund
To ensure your PAF is making the desired impact, regularly assess how your PAF is performing and how your donations are being used.
Review your PAF’s performance each year. Ensure that your investments are growing as expected and that your donations are still aligned with your goals and values.
Work closely with the charities you support to track how your funds are being spent and the outcomes they’re achieving. This helps you evaluate whether your donations are meeting your expectations.
How Financial Spectrum can help
At Financial Spectrum, we’re here to help you make the most of your PAF. From crafting investment strategies to engaging your family in your philanthropic journey, we offer tailored support to ensure your fund maximises its impact for the causes you care about. We are committed to supporting our clients’ philanthropic efforts and are open to considering the waiver of any associated costs on a case-by-case basis for existing clients who establish a PAF. Contact us to learn more.
Antony specialises in family practice, guiding families through significant life transitions and ensuring their money aligns with their values to empower their lives and legacies. Read his full bio here.
