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4 min read

COVID-19: Credits for ancillary funds

The Australian Government has just announced changes to the guidelines for private and public ancillary funds, incentivising donors to give support at a time when communities across Australia need it most.

Recognising the impact COVID-19 may have on charitable giving, the Government has announced a credit will be given to public and private ancillary funds whose total distributions across 2019-20 and 2020-21 are at least four percentage points above the minimum required level.

This credit will be equal to half the percentage points by which the fund exceeds the minimum and can be used to reduce the minimum requirement by up to 1% in 2021-22 and future years until exhausted.

Currently, public ancillary funds are required to distribute at least 4% of their fund to eligible charities each year, while private ancillary funds must distribute at least 5%.

The Australian Tax Office and peak body Philanthropy Australia have provided the following examples to demonstrate how this will work in practice.

Private Ancillary Fund

  • A private ancillary fund makes an annual distribution of 8% in 2019-20 and 7% in 2020-21. This is 5% above the minimum over two financial years.
  • The fund will be entitled to a 2.5% credit.
  • The fund is now able to reduce their annual distributions by up to 1% from 2021-22, until their credits are exhausted.

Public Ancillary Fund

  • A public ancillary fund distributes 6% in both years, the requirement is satisfied because the total distribution is four percentage points higher than the minimum.
  • If it distributes 7.5% in one year and 4.5% in the other it would also meet the eligibility test and so on for the many other combinations, subject to the 4% minimum distribution being made in each year.
More info from Philanthropy Australia

The Federal Government also confirmed that if an ancillary fund has special circumstances affecting their ability to meet the minimum distribution requirements during this time, they may still apply to the ATO Commissioner to request a reduction. However, it should be noted that these are only granted in exceptional circumstances.  

For ATO guidance regarding how your ancillary fund can take advantage of the recently announced amendments to give more during this critical time please read here.”

What we recommend

The COVID-19 pandemic is unprecedented in recent history and hits Australia after a summer of devastating bushfires. We recommend a planned increase in giving for both 2019-20 and 2020-21 as the full impact of these disasters is felt throughout our nation.

At Australian Communities Foundation, our philanthropic community exceeds the minimum requirement and we encourage all givers to be driven by need and a well-planned granting strategy first and foremost. Australia and our planet will benefit enormously from thoughtful, strategic philanthropy at this time.

How we can support you

With nearly 350 funds and foundations making up our giving community, we routinely advise people on all aspects of philanthropy.

We offer all our services to ancillary funds and can meet with fundholders to:

  • transform their granting wishes into a granting strategy that will guide them effectively for years to come
  • talk through their granting interests and provide a list of tailored recommendations featuring aligned and trusted organisations and charities.

When granting sums are substantial or a multi-year commitment is sought, we can evaluate and validate an organisation’s business model and results to provide a high level of confidence prior to granting.

Contact us

Get in touch to discuss how we can support you to make the most of these new guidelines.