Non-Profit Fact Sheets

What is a Public Ancillary Fund (PubAF)?

Published: January 19, 2024

Read Time: 7 minutes

What is a public ancillary fund

A Public ancillary fund (PubAF) is an entity that receives and distributes money or property to charitable organisations. PubAFs are run by a company that agrees to assume the role of a trustee. They are typically led by a group of individuals who are recognised in their community as having important responsibilities or positions such as school principal, member of parliament, or doctor. In 2020, Australia had 3,192 ancillary funds on record valued at a total of $10.33 billion. These funds received $2.12 billion in donations the previous year and distributed $871 million in grants to other entities1.

The Australian Charities and Not-for-profits Commission (ACNC) states that the purpose of an ancillary fund is to “provide a link between people who want to give (‘donors’) and organisations that can receive tax deductible donations as deductible gift recipients (DGRs)”. Not every ancillary fund is a charitable organisation, although it does have the option to register with the ACNC, Australia’s national regulator for charities. If the fund chooses to do so, it must meet certain requirements and criteria.

Public ancillary funds may be a good choice of structure for those wishing to pursue philanthropic goals. To learn more about how non-profits are regulated in Australia, read this Better Boards fact sheet.

What Are Ancillary Funds?

The Australian Centre for Philanthropic and Nonprofit Studies defines ancillary funds as “charitable trusts established by deed for the purpose of making grants for public benefit in Australia”2. In Australia ancillary funds come in two forms. A private ancillary fund (PAF) is a charitable trust that accepts tax-deductible donations in a similar way to private family foundations in other areas of the world like the USA. A Public ancillary fund is used for fundraising and community foundations and is intended for use by the public.

With the help of a PubAF, charitable funds can pool their donations together and evaluate and choose the causes they want to support. This structure can have a strong impact on the community and encourages charities to manage donations and grant making in a responsible way. Public ancillary funds can receive money, property, and other benefits from families, businesses, and individuals and reallocate them to entities with a Deductible Gift Recipient status. These funds help organisations provide services related to families, culture, health, welfare, research, fire & emergencies, the environment, defence, education, and sports & recreation.

To learn more about deductible gift recipients, read the Better Boards What is Deductible Gift Recipient (DGR) status fact sheet.

How do Public Ancillary Funds Work?

Public ancillary funds assist other organisations in distributing money needed to run community projects that benefit the public. Australian Philanthropic Services (APS) is an example of a public ancillary fund (PubAF). It helps other entities establish a giving fund (sub-fund) through its APS Foundation and offers a tax deduction in exchange for cash contributions donated to that fund. The foundation offers its contributors and beneficiaries two portfolio options, each with its own benefits. Donors can choose which charities to support, and the funds are pooled together and invested by APS Foundation. Returns on investment (which go back into the PubAF) are exempt from taxation, which allows the investment (donation) to grow.

Photo Credit: Fabian Blank on Unsplash
Photo Credit: Fabian Blank on Unsplash

APS is registered as a non-profit entity and any donations it receives are tax deductible. The organisation sets high standards for reporting and transparency and offer donors information through their online portal. It serves individuals, families and companies who want more structured fundraising activities but may not have the capacity to manage its own financial contributions. Typically, public ancillary funds require a minimum donation and must agree to reinvest a portion of the balance. For example, the APS Foundation limits investments to $40,000 or more and promises to grant 3% of the balance every year.

The benefit of working with a PubAF is that they are run by experienced and knowledgeable individuals who have experience managing and giving funds. The funds also offer a more reasonable fee compared to banks, which allows more money to be given to charities. Public ancillary funds are more transparent and provide critical tools and resources to organisations interested in grant giving. They are highly regulated, making them an excellent way to donate to charity in an ongoing capacity.

According to the Australian Taxation Office (ATO), a trust is only deemed a public ancillary fund if it complies with its written rules. The guidelines for these rules state that the following must be included:

  • The trust was established under a will or instrument of trust for the purpose of money, property, or other benefits to DGRs.
  • Trustees must represent a constitutional corporation OR a sole trustee must be assigned as the public trustee (prescribed trustee).
  • The trust is also required to ensure that no trustee has revoked the agreement set out in the entity’s guidelines.
  • PAFs can retain non corporate trustees with exceptions.

All Australian ancillary funds must also meet the requirements for DGR endorsement categories. These include health, education, research, welfare and rights, defence, environment, family, international affairs, sports and recreation, cultural organisations, fire and emergency services, or other ancillary funds 3.

To receive a DGR endorsement, registered charities must take several steps, including obtaining an Australian Business Number (ABN), operating in Australia, and establishing internal rules for the transfer of surplus gifts and deductible contributions when the organisation winds up.

Are all ancillary funds charities?

No. Not all ancillary funds are charities. Charitable organisations must be registered with the ACNC and meet the legal definition of a charity. Not all ancillary funds are registered charitable organisations. To be considered a charity, the funds must operate as a not-for-profit entity, have a charitable purpose that benefits the public, remain in compliance with the ACNC Governance Standards, avoid having any disqualifying purposes, and not be an individual, political party or government entity.

What is the definition of a fund?

A fund is 'a pool of money or property that is managed or held to make distributions to other entities' (ATO). Rather than delivering direct services to the public, a fund is meant to receive contributions from the public and redistribute them to other segments of the public by providing grants, property, and other benefits to other charities. A fund must have the following characteristics: have a trust deed, operate on a not-for-profit basis, be allowed to invest money, and be administered by members of the public.

What should I include in a public ancillary fund’s governing rules?

The ATO states that the governing rules of an ancillary fund must reflect its objects of purpose. Receipts to donors must be issued in the name of the fund and efforts should be made to invite the public to contribute. PubAFs must have a non-profit status, and trustees, employees, and officers cannot be indemnified for a financial loss attributed to their negligence, omission, dishonesty, recklessness, or a deliberate act. Trustees, directors, and Board committee members should have a degree of responsibility to their community to be considered an appropriate choice. The selection process should be included in the governing rules and when the entity winds up, the trustee must transfer any surplus to another eligible DGR.

What is the role of a public trustee?

A public trustee is an independent specialist skilled at estate administration. Once appointed, the trustee receives statutory powers to assist in dealing with estate decisions such as caring for a property. They must keep trust beneficiaries informed, share information about assets and liabilities, pay debts, and distribute assets or benefits. Public trustees can operate in any Australian state or territory, but they may be subject to different regional laws, governance rules, and accountability measures. All trustees of public ancillary funds must be corporate trustees, meaning that they must represent a constitutional corporation. Constitutional corporations are financial or trading companies.

Are there any limits to the investments, donations, and disbursements a public ancillary fund can make?

Yes. A PubAF cannot borrow money or distribute security over an asset held by the fund. It cannot purchase collectables but may hold them if they are gifted by a donor if the gift is sold or distributed within the year. A public ancillary fund can only distribute a minimum level of the assets it holds and after it meets its expense obligations. It can distribute 4% of the market value of the assets to charities with a DGR status. If the fund pays expenses from its assets, it is obligated to distribute at least $8,800 or 4% of the market value of the net assets, whichever is greater.

Additional Resources

To learn more about the ACNC’s recommended governance standards.

Australia’s Treasury published fund distribution guidelines in 2022.

Learn more about the Charities Act and other relevant legislation.


  1. Mcgregor-Lowndes, M., Balczun, M., & Williamson, A. (2022) Ancillary Funds 2000–2020: ACPNS Current Issues Information Sheet 2022-1. [Working Paper] ↩︎

  2. Australian Centre for Philanthropy and Nonprofit Studies. (2022). ↩︎

  3. Australian Taxation Office ↩︎

This fact sheet is intended as a simple overview. Non-profit law is incredibly complex and there are many components, allowances, restrictions, exceptions and important qualifications that are not described above. Dedicated legal advice should be sought from a legal practitioner before taking action.



Better Boards connects the leaders of Australasian non-profit organisations to the knowledge and networks necessary to grow and develop their leadership skills and build a strong governance framework for their organisation.

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