Amendments to Private Ancillary Fund Guidelines 2009 and Public Ancillary Fund Guidelines 2011: Submission to Treasury in Response to the Exposure Draft

This submission to Treasury responds to the exposure draft of amendments to the Private Ancillary Fund Guidelines 2009 and the Public Ancillary Fund Guidelines 2011, and addresses only the proposed change to minimum annual distribution requirements. Writing from the perspective of charities that receive philanthropy, Research Australia notes that health and medical research is estimated to benefit from more than $300 million a year in charitable donations and that JB Were data identify researchers as significant recipients of Private Ancillary Fund (PAF) distributions. It maintains that linking minimum distributions more closely to the previous year’s investment performance and the Reserve Bank cash rate would make distributions more volatile, harming universities and medical research institutes that depend on stable, long-term funding, and welfare charities that face higher demand in downturns. The existing minimums of 5% of net assets for PAFs and 4% for Public Ancillary Funds (PuAFs) are sufficient to preserve capital over the investment cycle, whereas lower minimums could encourage overly conservative investment strategies with lower long-term returns and less attention to fees. Because donors and funds receive immediate tax concessions while the community benefit is deferred until funds are distributed, the change would tilt the balance too far towards individuals. Research Australia recommends retaining the existing minimum annual distribution requirements and refers Treasury to Philanthropy Australia’s submission.