Strategic Philanthropy

Helping you make a positive impact through tax-effective, charitable giving.

Impacting tomorrow, today

Your charitable donations can impact a life, a family or a community of your choice. Our advisers can assist you in setting up a sustainable giving structure in a tax-effective way.

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A positive impact, in a tax-effective way

Clients have different social causes and goals they wish to support across a wide variety of sectors. Our team can advise on setting up a charitable giving structure that is tailored to your unique circumstances. This can cover everything from identifying the causes you’d like to support, to finding suitable organisations that can provide a positive social return on your investment, through to choosing a tax- effective charitable trust structure that suits your individual goals.

Experience

Over the last 40 years, Ord Minnett has proudly assisted clients in giving to more than 100 charitable organisations.

Knowledge

Ord Minnett has an Investment Research team, which selects suitable charities and analyses their performance, using comparable methods that our investment teams use for companies and trading.

Family

Strategic philanthropy can be a family endeavour. Many clients use the tax-effective strategy to give back as a collective, bringing in the wider family to make investment and charitable decisions together.

Philanthropy Services

Sustainable giving

To maximise your philanthropic contributions to your chosen organisations and communities, you want every dollar you donate to count. Structured giving allows you to plan how, when and where your money is invested and distributed, to the causes you care about. Rather than a one-off donation, it allows you to give in a sustainable way, providing a lasting impact. Importantly, this process ensures your donations align with your current financial goals and are tax deductible, in addition to providing a platform to involve your children, should you wish to set up your philanthropic giving for your family.

Strategic analysis

Once we know your goals a wealth of research and strategic analysis by the Ord Minnett team goes into selecting charities that fit your giving criteria, ensuring they not only align to your social causes but offer tax deductibility options. Ord Minnett has five key principles of effective giving, which ensures we can best align your charitable giving with your financial goals.

1. Growth Bias

Organisations go through a lifecycle of five stages, starting with the idea, start-up phase, growth, maturity and then institutional. To be an effective giver, you could focus on organisations in the growth phase. The growth phase represents the time in an organisation when resources and funding are vital to its success, which is often when you can become an “angel donor” and provide the greatest impact for a social cause.

2. Optimal Diversification

Like investing, effective and strategic giving means you don’t put all your eggs in one basket. Diversifying your portfolio to moderate the risk of exposure is important when considering your philanthropy strategy. While we generally recommend an equity portfolio include 20-25 stocks, a philanthropic portfolio can be more focused, including anywhere from three to six organisations.

3. Risk Management

When donating to an organisation, you should always remember that not all organisations or ventures are successful, particularly if they’re in the start-up or infant growth stages, and therefore we need to consider the risk of the organisation.

4. Selective Reinvestment

Investing in high impact, well-managed organisations in the growth stage of their lifecycle can enable you as the philanthropist to have a significant impact. Our advisers can assist you in thinking about whether you want to reinvest and continue your support for your organisations. The review process is important to test whether you should move your donations to higher returning organisations, where returns can be reinvested for the greater good. Similar to poorly performing investments, it is often important to put your money into organisations that will provide the greatest return, whether that be financially or for your social cause.

5. Regular Review

Just like any financial investment, it’s important donations to the organisations you are supporting are regularly reviewed. Our team of analysts at Ord Minnett will ensure your philanthropy strategy continues to align with the organisations and social causes you choose to support and your philanthropic giving objectives.

Setting up a tax effective structure

A Private Ancillary Fund (PAF) is a type of charitable trust which provides individuals and families with an effective and strategic way to manage their philanthropy. A PAF allows a person to donate money into the trust and receive an immediate tax deduction, then use the money in the trust to give to charities or organisations each year. A PAF is a structure which is often used to engage a whole family in the management and distribution of funds to charities.

Key benefits of a PAF include:

· Upfront tax deductions: Donations to a PAF are fully tax-deductible. Creating a PAF can be a useful strategy for a one-off cash flow event such as an exit or partial sale of a business or investment property. The tax deduction can also be spread over a period of five years, maximising your tax benefit.

· Tax-free earnings: Returns earned within the fund are exempt from tax, and franking credits* are also reclaimable.

· Timing of Distributions: Once a PAF is created and finances are deposited, you do not need to immediately distribute the funds to charities. This allows you to have a strategic and considered approach to giving and can also allow your contribution to grow in value. The minimum distribution is 5 per cent of the opening value of the fund each year.

*A franking credit is a type of tax credit paid by corporations to shareholders, in addition to dividend payments. Australia allows franking credits to reduce or eliminate double taxation.

Leaving a legacy

Philanthropy can be an engaging way to build a collective family culture of giving. Involving your family, including children and grandchildren, in your philanthropy can help teach them about the social issues and causes that matter to you most. Ord Minnett can assist families in creating regular meetings to decide where funds should be directed, providing a great way to encourage family engagement and for you to leave a positive legacy.

To engage your next generation, steps may include:

· Involving children and grandchildren
· Inclusive discussion of what, who, where, when and how much to give
· Opportunities to bring ideas to the table
· Opportunities to engage with charities
· Income distributed to charities chosen by the family

Socially responsible

Socially Responsible Investing (SRI) is an ethical approach to investing offering an additional option beyond establishing a Private Ancillary Fund (PAF). Where a PAF is designed to help you donate to causes and charities, SRI is investing money for yourself with socially responsible companies.

An SRI portfolio is designed for investors who want to share in the long-term prosperity of Australian companies and wish to take into consideration a company’s environmental, governance and social impacts.

Ord Minnett has been running a Responsible Equities Portfolio for clients since 2015, due to a growing desire of Australians to solely invest in specific causes or socially beneficial initiatives.

What environmental, social and governance (ESG) factors does our Responsible Equities portfolio consider?

· Environmental factors includes carbon emissions, water use, waste production, environmental disclosure, forest degradation, biodiversity and wildlife impact, air pollution, spills or dumping, and lack of environmental certification.

· Social factors includes human rights violations, alcohol and tobacco, human trafficking, indigenous people’s rights, labour practices, discriminatory employment practices, and the use of sweat shops in supply chains.

· Governance factors includes corporate ownership and control, accounting, executive remuneration and board composition.

Interested in learning more about Ord Minnett’s Responsible Equities Portfolio and performance?
Download our latest benchmarking study – Responsible Equities Portfolio 2023.

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