Private Giving Fund Setup for Accountants 2026

A private giving fund, formerly a private ancillary fund, is a trust that receives private gifts and funds eligible deductible gift recipients. To prepare its setup, separate the trust from its corporate trustee and document who contributes, decides and acts for each entity.

How a Private Giving Fund Works

Contributed assets remain in the private giving fund until the trustee distributes money, property or benefits to eligible organisations. The donor’s gift enters the fund. A later grant leaves the fund for a recipient approved by the trustee. Keep those transactions separate in the accounting records and donor advice.

The ACNC’s giving fund guidance confirms that the change from ancillary fund to giving fund is a name change. Existing funds retain their obligations and endorsements. The name change alone does not require a new deed or a different fund name.

Private funding comes with restrictions. The trustee must not solicit public donations. Contributions from outside the founder-related categories are subject to an annual limit of 20% of the fund’s previous year-end asset value. Classify each contributor under the guidelines before accepting a gift, particularly in the establishment year when there is no previous asset base.

A family seeking public fundraising needs to consider a public ancillary fund, now called a public giving fund. Its funding model and governance requirements differ from a privately funded family arrangement.

Resolve the Trustee and Decision Makers

Identify the trust’s corporate trustee and the individuals who exercise its powers before requesting signatures. ABN Lookup’s DGR guidance explains that each private giving fund trustee must be a constitutional corporation. Each trustee must also agree, in the approved form, to comply with the guidelines.

At least one decision maker must qualify as a responsible person. That person must be an active director of the trustee and belong to any other controlling body. A public trustee has a specific exception. A professional qualification can support eligibility, but the person’s relationship to the founder and donors still needs checking.

The responsible person cannot be the founder or a donor who has contributed more than $10,000 in total. The exclusions also cover their relatives and associates. An employee or agent of those people needs the Commissioner’s written consent. Record both the qualifying role and the relationship checks.

Use a role record to keep authority clear.

Role	Records to request	Decision the record supports
Founder and contributor	Legal identity, contributor relationship, ownership of the proposed gift and gift terms	Who establishes the fund and who gives away the asset
Corporate trustee	Company registration, constitution, director record and trustee appointment	Which company holds the trust property and accepts the duties
Directors and responsible person	Identity evidence, appointment consent, eligibility declarations and relationship details	Who can decide, sign and satisfy the responsible-person requirement
Grant recommender	Identity, relationship to the fund and written terms of any advisory role	Whether the person recommends grants or holds an actual decision-making power
Accountant and other advisers	Engagement scope and authority from the relevant client	Which entity authorises the work and who receives the advice

A donor’s recommendation does not replace a trustee decision. If an adviser or family committee can direct outcomes under the deed, examine its actual powers as a controlling body.

The guidelines prohibit direct and indirect benefits to specified related parties, subject to permitted fees and expenses. Record conflicts before investment or grant decisions. A payment described as charitable still needs a recipient and benefit analysis.

Build the Family Fund’s Client Record

Build the setup record around the proposed trust and each party’s legal role. Consider this hypothetical family file: a family member proposes a fund, a new company will be trustee and an existing family business intends to contribute cash.

Request the proposed deed, the trustee company’s registration records and evidence of the initial settled property. The deed establishes the trust’s purposes and powers. Company records identify the separate corporate trustee. Evidence that the settled property was transferred supports establishment of the trust. A draft deed and a planned bank transfer do not prove that settlement occurred.

Record the initial settlement separately from the intended later contribution. Keep the signed deed, trustee acceptance and the transfer evidence together. Ask the legal adviser to resolve inconsistent party names or execution before those names enter applications.

When the Donor Differs From the Trustee

In the hypothetical file, the family business owns the proposed cash. Obtain its authority to make the gift from its authorised decision makers. Separately obtain the fund trustee’s authority to engage you and accept the gift.

The family member’s personal instruction proves neither company decision. If the proposed donor changes to a family trust, request its deed and identify its trustee and authorised signers. Amend the donor advice and receipt details to match the entity that actually transfers the property.

For a cash gift, reconcile the donor’s payment with the fund’s bank receipt. The fund must issue a gift receipt showing its name and ABN, the donor’s name and that it received a gift. Confirm the endorsement covers the gift before advising that a deduction is available.

When the Family Gives Shares

If the family business proposes shares instead of cash, add the holding statement and acquisition history. Identify the beneficial owner, share class, quantity and transfer restrictions. Obtain evidence of the completed transfer and record the valuation method separately from the accounting entry.

The ATO’s share gift rules distinguish listed shares valued at $5,000 or less and held for at least 12 months. Different gift categories apply outside those conditions. A larger or unlisted parcel needs its own deduction and valuation analysis. A trustee’s annual asset estimate does not establish the donor’s deductible value.

For example, an assumed $40,000 shareholding needs more work than a $40,000 cash transfer. Resolve the applicable gift category and any required ATO valuation before finalising the donor advice. Also assess capital gains tax consequences.

A deduction reduces taxable income subject to the applicable rules. It is not a refund of the gift’s value. Keep that advice in the separate donation tax deductions file.

Prepare the Establishment Handoff

Prepare applications in the trust’s name while recording its corporate trustee separately. Use this sequence to prevent the company and fund from being treated as one entity.

1. Resolve the deed and trustee eligibility with the legal adviser. Confirm execution, settlement and acceptance before recording the trust as established.
2. Prepare the fund’s ABN application using the trust’s identity and the trustee’s details. Keep the trustee company’s ACN and any separate ABN in their own fields.
3. Determine whether charity registration applies and prepare the fund-specific DGR application. Use the private giving fund category and retain the trustee’s agreement to the guidelines. The DGR endorsement preparation addresses the category evidence.
4. Open the fund’s bank and investment records with the trustee’s capacity shown consistently. Match the account mandate to the deed and company authority. Resolve a bank account held solely for the company’s own business before transferring fund property.
5. Record each regulator’s decision and its effective coverage. Allocate annual work before closing the establishment engagement.

The handoff is complete when the signed governing document, settlement evidence and confirmed identifiers agree. Retain endorsement decisions, bank mandates and the people authorised to act. Name the person responsible for asset valuations, grant approvals, annual reporting and the distribution calculation. An application receipt records a lodged request. The regulator’s decision records the outcome.

Manage Grants and Annual Distributions

Approve grants only after checking the recipient’s eligible DGR status and the deed’s charitable restrictions. A private giving fund generally grants to item 1 DGRs. Another giving fund’s item 2 endorsement is not an ordinary eligible grant destination.

Retain the recipient’s ABN Lookup result and identify the endorsed fund where endorsement covers only part of an organisation. Check any relevant state trust-law restriction, including gifts to government entities. The recipient’s familiar name alone does not prove eligibility.

Calculate the Minimum Distribution

The operative private fund guidelines require an annual distribution of at least 5% of previous year-end net asset market value. If the fund pays any of its expenses from its own assets or income, the $11,000 minimum also applies. Use the greater requirement, limited to the remaining fund where its value is below $11,000.

A hypothetical established fund with previous year-end net assets of $800,000 has a $40,000 requirement under the 5% calculation. A fund with $150,000 has a $7,500 percentage calculation. If it pays its own expenses, its minimum becomes $11,000. Fund administration expenses do not themselves count as distributions.

No distribution is required in the financial year of establishment. The Commissioner can approve a reduced rate on application, subject to conditions. Retain the actual decision and apply its scope. A request for relief does not establish that relief has been granted.

Excess distributions do not create an unrestricted rolling credit. Section 31 contains specific historical relief based on excess giving across 2019-20 and 2020-21. Eligible funds use a 4% rate for the years the statutory calculation covers. Retain the original calculation and covered-year schedule before using that relief for an older fund.

Treasury’s distribution reform announcement proposes a 6% rate with transition arrangements. The operative instrument continues to state 5%. The giving fund name change does not itself implement the announced rate. Keep the working paper tied to the enacted rule applying to the fund’s year.

Keep Investments and Payments Traceable

Estimate asset market values annually, with land valued at intervals of no more than three financial years. A qualified valuer or the Commissioner must estimate land value. Retain valuation evidence and a written investment strategy addressing risk, diversification and liquidity for grants and expenses. Review it when the fund’s circumstances change.

For a hypothetical $15,000 cash grant, retain the recipient-status evidence, conflict assessment and trustee resolution. The resolution names the recipient and amount. Match the approved bank payment to the recipient’s receipt, then include the payment in the annual distribution working paper.

A donor’s personal school invoice fails this test. Paying the invoice relieves the donor of a private expense and cannot become a qualifying grant merely through a trustee resolution. A separate gift to an eligible school building fund requires its own permitted purpose and must avoid that private benefit.

Review Changes to the Fund

Revisit the file when the trustee, directors, responsible person or actual decision makers change. A vacant responsible-person position restricts the exercise of powers under the guidelines. Resolve the appointment before ordinary decisions resume, subject to the specified protective and urgent exceptions.

Changes to activities, investments or deed terms can affect endorsement and the trust’s charitable purposes. Governing-rule changes generally require notification to the ATO within 21 days. The guidelines provide an exception where the same information must be notified to the ACNC. Record the relevant obligation and retain the notification evidence. Update company and register details separately where their requirements apply.

Routine administration keeps the same fund operating. Conversion to a public giving fund changes the governing regime. Section 27 requires the Commissioner’s agreement before the governing rules are amended for conversion. Prepare the proposed public fundraising and governance arrangements, the legal review and the regulator’s agreement. Preserve the revised deed and endorsement records through the change.

The ATO’s private-group tax governance guidance identifies risks involving private fund investments, related-party dealings and donor benefits. That concern does not establish that every private fund is non-compliant. Review the actual transactions and retain the investment strategy, conflict decisions and commercial terms. Correct misallocated shared expenses or unapproved benefits through documented trustee action and appropriate tax and legal advice.

Before completing the review, reconcile grants paid to the distribution working paper and resolve each related-party exception. The next year’s administrator needs the governing documents and decisions that support the numbers, alongside a named owner for every remaining action.