Prescribed Private Fund
From PhilanthropyWiki
PPFs are now PAFs
As of 1 October 2009, all Prescribed Private Funds became Private Ancillary Funds.
This page is retained for historical purposes but some of the information on PPFs may no longer apply to PAFs.
PPF Definition
A Prescribed Private Fund (PPF) is a legal structure which is often used by families, individuals or companies to establish grantmaking foundations. A PPF must only make grants and is not permitted to carry out charitable programs.
Prescribed Private Funds (PPF) are a relatively new category of private foundation - the first PPFs were approved in June 2001.
A PPF is subject to the same requirements applying to ancillary funds (sometimes known as public funds), with two exceptions:
- A PPF is not required to seek donations from the public
- A PPF does not need to be controlled by a committee of which a majority are considered Responsible Persons according to the ATO definition. A PPF can be controlled by a Responsible Person, by two persons at least one of whom is a Responsible Person, or by a body corporate whose board includes at least one Responsible Person.
PPFs cannot make grants to ancillary funds, other PPFs or political parties. The sole purpose of a PPF must be the giving away of funds to other deductible gift recipients; it cannot carry out other activities.
There are limits on the capital growth of a PPF. A PPF cannot accumulate capital indefinitely beyond the sum nominated in its accumulation plan; after reaching its target, it is limited to growing in line with CPI in order to maintain the real value of the capital. However, trustees can write to the Australian Taxation Office requesting a change to its accumulation plan to increase the target.
PPFs are a popular structure, as they allow individuals, families and companies to establish a private foundation which they can control and receive a tax deduction for. They are also relatively simple to establish and maintain, with guidelines and a model trust deed available for download from the non-profit section of the Australian Taxation Office's web site.