As part of the Australian Government’s ambition to double giving by 2030, the Productivity Commission released the “Future foundations for giving” inquiry report outlining a number of recommendations to make this a reality.
One recommendation was the renaming of Private Ancillary Funds (PAFs) and Public Ancillary Funds (PuAFs) to a more palatable collective term “Giving Funds”, a decision that appears to have been welcomed by charities, financial advisers and philanthropists alike.
Far more definite is the government’s recent announcement that it will raise and standardise the minimum annual distribution amount for Giving Funds to 6% of net assets, up from 5% for PAFs and 4% from PuAFs.
This change will come into effect from the first financial year after amendments to the guidelines have been formally registered (early 2026) i.e. the 2026-27 financial year. It will apply to all new Giving Funds established from that date. For existing Giving Funds, there will be a two-year transition period and smoothing option which will allow funds to average their distributions over a three-year period, to accommodate large capital works or multi-year grant commitments.
You might be thinking “Surely more money being directed to charities is a good thing, right?”. Let’s unpack both sides of the debate.
What those in favour are saying
Giving funds shouldn’t always operate with the assumption of perpetuity.
Australia, and the world at large, is facing a polycrisis. Climate change, geopolitical instability, housing affordability, cost of living pressures and widening inequality are all interconnected issues requiring immediate attention, and investment.
Supporters argue that in critical times, philanthropic capital should be mobilised more quickly, rather than preserved indefinitely. The proposed changes are seen to facilitate this by unlocking additional, more immediate funding that will enable charities to respond to urgent demand and invest in solutions at scale. The Productivity Commission’s Inquiry Report suggests that increasing the minimum distribution rate for PAFs alone, from 5% to 6% pa, is expected to result in an extra $60 million distributed to charities each year.
Criticisms and concerns
The reform is short-sighted.
If we think about Giving Funds as a philanthropic version of superannuation, higher mandatory distribution rates are predicted to slow corpus growth over time. Modelling by Koda Capital shows that a Giving Fund distributing at the 5% rate will distribute more to charities over the long term when compared with a Giving Fund distributing at the proposed 6% rate. Critics argue the changes will reduce a Fund’s long-term capacity to provide sustained and increasing support to charities, while also limiting the ability of the next generation to continue their family’s philanthropic legacy. For many donors, this intergenerational intent is a key reason for choosing a structured giving vehicle over ad hoc annual donations, which are typically much smaller.
One Rule for Philanthropy, Another for Government.
Another criticism of the proposed increase is the perceived inconsistency between expectations placed on philanthropic Giving Funds and those applied to Government-run “future funds” such as the Housing Australia Future Fund and Medical Research Future Fund which are distributing at 5% or less, suggesting an implicit conviction that long‑term capital preservation is necessary to ensure sustained impact over time.
A missed opportunity to encourage more giving.
Some believe the Government’s focus should be on swiftly progressing other recommendations made by the Productivity Commission. Given that two-thirds of PuAFs and approximately half of PAFs have been distributing over 6% of net assets in recent years anyway (i.e. more than the mandatory requirement), leaders in the sector believe the benefits may not outweigh the costs. That is, changes are unlikely to increase support for charities in any significant way and the Government’s decision to “squeeze the golden goose”, as Koda Capital put it, may in fact negatively impact charities over time by unsettling and discouraging donors, potentially slowing the growth of Giving Funds in Australia.
What do changes mean for fundraisers?
The next step for Government is the formal amendment of the Public Ancillary Fund Guidelines and Private Ancillary Fund Guidelines, ahead of changes coming into effect from 1 July 2026. Until there’s clarity around how the transition period will operate in practice and we see how Giving Funds respond, there will be some uncertainty with regards to grants.
Whether Giving Funds decide to offer fewer but larger grants to more established organisations, or whether the increased distribution will result in a wider spread of charities receiving distributions remains to be seen. Only time will tell.
With the number of Giving Funds growing exponentially in recent years and a significant intergenerational transfer of wealth underway, these vehicles were already becoming a key focus for many charities hoping to diversify and increase their income. The announced changes will likely increase their importance, making good stewardship with both new and existing Giving Funds (and wealth advisers) more important than ever.
The ability to build strong relationships and clearly articulate impact will not only improve your chances of securing long-term support but may also open doors to new opportunities. Australia has a relatively small and connected philanthropic sector so reputation matters. Remember, funders talk.
Broader efforts to drive giving
It’s important to note that responsibility for encouraging greater philanthropic giving does not sit with government alone. Here in Australia, growing giving is arguably more a cultural challenge than a matter of policy change. Reflecting this, several significant reports and strategies have been released in recent weeks, highlighting opportunities to influence giving and the role of the broader sector in shaping – and encouraging – a stronger culture of generosity in Australia.
- Minderoo Foundation’s Unlocking Generosity highlights the significant potential to grow philanthropic giving through two levers:
- Educating and empowering financial advisers, accountants and lawyers to proactively discuss and support giving with their clients during key milestones e.g. bequests, intergenerational inheritances, large net capital gains.
- Strengthening and professionalising the fundraising workforce.
The report is informed by insights from the UK and US, and supported by some very compelling economic modelling showing the scale of additional funding that could flow into the sector.
- She Gives’ Growing Women’s Giving in Australia explores research that reinforces what many in the sector already knew – that women play a crucial role in the decision to give. Drawing on insights gathered from a national survey, several roundtables and interviews, the report highlights why women give, barriers that limit giving among women, and opportunities to enable and scale giving.
- Philanthropy Australia’s Strategy 2033: Mobilising Generosity. Shaping the Future outlines four guiding pillars for the peak body moving forward:
- Convening: Creating inclusive spaces to connect, collaborate, share, network and mobilise generosity.
- Amplifying: Generating insights, curating knowledge and supporting givers and investors to learn from each other.
- Influencing: Bringing people, capital and capability together to influence positive social and environmental change.
- Advocating: Strengthening the ecosystem by advocating for policy outcomes and partnerships that help philanthropy and civil society thrive.
Strategic Grants helps for-purpose organisations move from reactive grant seeking to a planned, relationship‑led approach grounded in best-practice.
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About the author
Erica Blaney is a Grants Strategist at Strategic Grants, based in Western Australia, with more than 19 years’ experience across the for‑purpose sector.
At Strategic Grants, she works closely with charities to strengthen their grant‑seeking practice, helping organisations navigate an increasingly complex funding landscape and adopt best‑practice strategies that maximise impact.
With a background in health promotion and a career spanning events fundraising, philanthropy, tender writing and grant‑seeking, Erica brings a deep understanding of how funders assess applications and make funding decisions. Her work is grounded in practical insight, sector intelligence, and a strong commitment to building sustainable funding capability within for-purpose organisations.