Happy 21st birthday, PAFs!

Rupert Myer AO   |   President of The Myer Foundation, and co-founder of a family PAF

Good things don’t always come to those who wait. The enabling legislation for the 2000 PAFs (private ancillary funds) came about through deliberate and highly purposeful advocacy that built upon a powerful evidence base that Australian philanthropy was being stymied by antiquated rules that discouraged most people from setting up their own philanthropic structures. So, bravo to Liz Cham, and the Prime Minister’s Community Business Partnership and to Philanthropy Australia that pursued the idea, and the many individuals, Parliamentarians, Australian Tax Office and Treasury officials who supported it, and do still. There was no certainty that this was ever going to happen, but it did, and frankly more public policy should be born in the way these rules came in to effect.

I began the PAF journey with some familiarity with other governance structures that existed at the time – one of those was created in the late nineteenth century and came in to effect in 1904 – that is the Felton Bequest – and one was created in the middle of last century and that is the Myer Foundation.

Both these structures have their place but also their limitations. The regulatory requirements of both are fairly demanding, and neither is terribly appealing to an individual or family who just wishes to give some more structure to their giving. So, when PAFs came into being, they were a breath of fresh air. From a personal perspective, the role I play at Felton and Myer is helping to administer someone else’s philanthropic act. But the PAF that Annabel and I created exists as a consequence of our philanthropic act and it feels personal and close as a consequence.

We’ve found the PAF annual returns and the audit processes to be reasonably straightforward and possibly even more straightforward now than was initially the case. I acknowledge that the level of oversight is in most instances appropriate for the entity. With respect to the minimum five per cent distribution, our PAF has overdistributed, so it hasn’t caused any concerns. I acknowledge that, whilst there may be some donors who like to donate very large sums infrequently according to particular circumstances, those particular donors would find the annual distribution requirement an impediment but prospectively there might be other structures that suit them better, or potentially even special arrangements could be made in those circumstances.

But coming to what the PAF is to us, it’s certainly enabled us as a family to do things that we identified we wanted to be able to do through structured giving and, we’ve managed to match community service with philanthropic support, whether that community service comes from first-hand volunteering, serving on the board or the committee of different organisations, or wanting to support various appeals that have come our way.

It’s given us a way in which to formally match what we want to do personally with what we want to do philanthropically. Consciously and consistently divvying up time, treasure, talent if you want to use that expression….is something that really does require a structure.

We found the PAF well suited for that. So, in our circumstances the giving focus has predominantly been within the realms of arts and culture, Indigenous empowerment, health and education. Outside Mutual Trust’s continuing administrative support and additional secretarial assistance, we have had no research role or formal staff engaged. Our modus operandi has been to observe, engage and participate and then to use our head, heart, hands and belly to give agency to what it is that we want to do. The PAF structure is well suited to that.

I think often about the other side of structured giving and that is random acts of kindness and why they matter too. I think structured giving is very important but so too is everyday generosity and I think of the example of avoiding giving to the homeless man in the street as you rush off to the meeting to make a grant to support homeless people. The two should come hand in hand and you don’t need a strategy or a business plan to be generous. Maintaining something outside of structured giving is probably a really important thing to do in any circumstance.

I think a lot about the role of the kitchen table in a family PAF and, whether with others or by yourself, in a PAF style of philanthropic giving, I’d encourage people to spend more time at the kitchen table than at the board room table. It gives more opportunity to talk informally about what your interests are, what matters to you.

Don’t let your philanthropic capital act like a becalmed boat waiting for wind to push it in some direction: work out where you want it to go, what you want to do, what you want to see, how you want to serve the community. We’ve enjoyed connecting the grantmaking to where we and our children spent our time volunteering in various capacities. The organisations that we serve and the issues and the causes we talk about around the kitchen table become what we do through the PAF. It makes sense that it’s an everyday discussion, rather than a structured discussion. You can have structured giving but it’s the everyday discussions that bring it to life.

I often reflect on philanthropy and whether it’s family glue or occasionally, family solvent. And I’d say that’s a choice that you can deliberately make. If it’s a family PAF, the way the operations and strategy of the PAF get set is a discussion with the whole family – that’s critical. Involve them and challenge them. Family members play an important role and your network plays an important role, as the eyes and ears in the community. In our family PAF, we have a family grants program where we match some of the PAF’s giving with individual giving where our children support individual organisations. To that extent, they are field research officers for us, and they’re making their own assessments about which sorts of organisations they want to support. And we’re happy to accept that in good faith. If it’s good enough for them, then we’re happy to match them in what they do. And I know in some families that requires some radical listening as to what the younger people around the table are saying but frankly Annabel and I find that enlivening and we enjoy getting that first-hand experience from the children.

Advice, or what you need to know, is important when you have a PAF. The research you do gives a better understanding of what is needed. It helps to contrast the value in education support of scholarships, infrastructure, teaching staff or programs and equipment or hardship grants, or travel grants or art works, or sporting equipment, or the support for religious programs.  I guess it really depends on how data and evidence-driven you want to be in the decision-making: do you want to be building safety bridges on the road or funding rescue workers to attend the accidents in the ditch? And the impact on what is policy and what is societal change and then measuring impact, they’re all questions that are relevant and different PAFs will have different ways and approaches to each of those.

Giving with others or giving alone? We’ve often enjoyed the power of collaboration. But in collaborating the discussions often are – who is your partner? What do they bring?

I suppose we think about actually making it happen. Notwithstanding the kitchen table atmosphere, you do need an agreed process.  You do need to manage the philanthropic assets, the fund management aspects, the asset allocation, the income needs of the foundation itself, making the most of being a non-taxpaying entity, the mechanics of philanthropy – making decisions, the delegations, the schedule of meetings, the agendas and papers, reading the submissions, making payments, managing multi-year commitments, acquittals, measuring performances, even personal performance reviews. These are all very valuable life skills in addition to the role they play within the context of a philanthropic trust, We certainly found its helpful to acquire a number of these life skills early on in life.

I’d make the comment that with the existence of PAFs, there’s been less capacity within the philanthropic sector perhaps to contribute to the capital campaigns of others because the capital has generally gone into the building up the PAF rather than transferring the capital to another organisation seeking to build up its own capital base. In those circumstances, I would encourage multi-year giving and that’s certainly been the approach we’ve taken but it’s often disappointing when capital campaigns come to a PAF and get told it’s not a slab of capital you want to transfer, it’s part of an annual giving approach.

The other point we often remind ourselves of is that PAFs exist to benefit the community, not the giver. The PAF structure facilitates the giving and while it has had terrific outcomes for our family, that’s not its purpose. Its purpose is to guide us and facilitate us in the most effective way in which we can support those parts of the community that we wish to support.

Giving is a privilege and good giving is hard. But it need not be solemn duty. It can be made fun. It can certainly be transformative, both for the giver and for the receiver. I think it’s important to celebrate the great organisations and leadership that have been supported individually and encourage those whose success is yet to be realized.

Would any of this have happened without a PAF? In some form, almost certainly yes. But once the PAF exists it forms an important part of the family’s philanthropic capital and deploying that resource becomes mandatory, not discretionary. It exists to serve the philanthropic purpose for which it has been established.  Put simply, once the PAF is formed, the participants become its stewards. The family gives service to the PAF.  It’s quite a remarkable transition that takes place.

So, 21 years of PAFs, is a coming of age of sorts. This moment is well worth acknowledging. But let’s do it again when there are 5000 of them and let’s do it when their combined assets are $25 billion. So, happy 21st birthday to PAFs!  

This is an edited extract from Mr Myer’s address to the Australian and New Zealand Third Sector Research webinar presented with QUT’s Australian Centre for Philanthropy and Nonprofit Studies – Celebrating the 21st Birthday of PAFs.

PAF – (anztsr.org.au)