Private giving funds: investment and governance strategy  

Private giving funds play an increasingly important role in Australian philanthropy. While the recent renaming of Private Ancillary Funds reinforces their charitable purpose, long-term impact ultimately depends on how these funds are governed and invested. Clear trustee arrangements, thoughtful governance and a robust investment strategy may help preserve a giving fund’s effectiveness, sustainability and alignment with its founder’s intent over time.

This article explores the practical considerations that matter most – from governance structures and trustee responsibilities to strategic asset allocation – so private giving funds can continue delivering meaningful outcomes for generations.

For most donors, day‑to‑day operations will look much the same. But the new name is a timely reminder of what these structures are designed to do: support meaningful, enduring giving.

We recently worked with a client – let's call her Elizabeth - who is in the process of establishing a private giving fund. She plans to give most of her wealth to charity during her lifetime and beyond. She has chosen her causes, identified willing trustees and articulated a clear, long‑term philanthropic intent.

For Elizabeth, the tax benefits matter, but the primary objective is long-term impact.

What became clear, however, was that limited attention had been given to how the fund would operate on a day‑to‑day basis in the future. How would it be managed once she’s no longer involved? How much time and expertise would trustees realistically have to devote to it?

These practical questions often determine whether a giving fund becomes a lasting legacy - or an unintended burden for the people entrusted with its stewardship.

When establishing a giving fund, appointing a corporate trustee is commonly recommended, depending on the structure and governing rules. This typically involves ongoing governance requirements, including board meetings, directors’ duties, balance sheet reviews and ongoing interactions with lawyers and accountants (specific obligations may vary by structure and jurisdiction).

For some families, this level of involvement is valuable and even educational. For others, it may be unrealistic over the long term. If that’s the case, simplifying the structure early can help maintain trustee engagement and support their confidence in their role.

One effective step is to clearly document expectations. Recording how the fund should operate, the values that should guide decisions and the extent of ongoing adviser support can help reduce the interpretive burden on trustees. Clear guidance helps preserve evidence of the founder's intent and reduces ambiguity, even as circumstances change.

Most donors in Elizabeth’s position benefit from working with a financial adviser to develop a strategic asset allocation (SAA) that guides the fund over its lifetime.

Trustees are expected to adopt and document an investment strategy consistent with their fiduciary duties and applicable regulations. It’s important to check the fund’s governing rules and to consider how the investment strategy will be monitored.

Key questions include:

• Who is responsible for reviewing the investment strategy?
• How frequently will performance be assessed against objectives?
• What role, if any, will an external adviser play on an ongoing basis?

These decisions are more than administrative. In practice, they often separate funds that compound effectively over time from those that gradually drift way from their intended purpose.

The SAA should also be sufficiently flexible to accommodate potential legislative change. Draft government legislation, for example, proposes increasing the minimum annual distribution from 5% to 6%. In that context, a reasonable cash allocation and genuine portfolio flexibility become structural requirements, not optional add‑ons.

To keep trustees appropriately distanced from day-to-day investment decisions, as required by legislation, outsourcing may be worth considering. Options include:

• Managed private portfolios (such as  the Mercer Private Portfolio), which appoints a dedicated portfolio manager aligned to the SAA and who manages daily investment decisions.
• Public ancillary funds (now called a public giving fund), where a third‑party trustee assumes responsibility for legal, administrative and investment functions. As at February 2026, there were more than 1,300 active public ancillary funds in Australia (Australian Business Register, accessed February 2026).
  

Selecting the right structure depends on the founder’s objectives, the trustees’ capacity, and the desired level of ongoing involvement.

Elizabeth is building something intended to endure well beyond her lifetime. With the right governance framework and investment structure in place today, the people she trusts will not be left to interpret her wishes—they will be better placed to carry out a clear and considered vision on her behalf.

That is what a well‑structured giving fund makes possible. And we believe it is why getting the foundations right matters.

For more information on how we can support private giving funds, please contact your Mercer representative or complete the form below.