The story of prescribed private funds just keeps getting better. The latest figures from the Australian Tax Office shows there’s more of them and they’re giving away increasing amounts of money. Myles McGregor-Lowndes lays out the figures, including which types of nonprofits are attracting the strongest support from PPFs.

The growth of prescribed private funds (PPFs) continues unabated on all fronts. The latest figures (released in January) from the Australian Taxation Office (ATO) indicate that there will soon be 610 PPFs with combined funds under management of more than $1 billion.

The new statistics reveal that the financial year ending in June 2006 (the latest information available) was another positive chapter in the life of PPFs. During that year wealthy Australians donated $342.6 million into their PPFs, and the combined funds under management in these PPFs was $820.6 million.

But what levels of donations are being made by PPFs to eligible charities and nonprofits (ie those with DGR status)? In 2006, $73.7 million was given away to eligible nonprofit organisations, and a total of $183.6 million has been gifted to nonprofits between 2002 and 2006.

Where Is The Money Going? (2002-2006)

The types of nonprofits that PPFs are making gifts to reflects the interests of PPF trustees and perhaps the efforts of fundraisers to engage with these trustees. The five years of data reveal some trends in the distribution patterns with some areas stable and others showing volatility.

The welfare category, which has the highest number of nonprofits (52%), has received the largest amount of distributions from PPFs – $67.7 million since 2002. This is followed by education with $33.2 million, which makes up 20% of the nonprofit population; international affairs with $14.2 million; $13.7 million for cultural (including the arts) organisations (14% of nonprofits); and health received $10.4 million (4.5% of nonprofits).

Environment, Culture and Health on the Money in 2006

During the financial year ending June 2006, funds given by PPFs to the welfare category increased marginally, and education actually declined fractionally.

Funds Under Management in PPFs

However, environment, cultural and health organisations are the ones beginning to make a charge.

Environmental nonprofits increased their grants from PPFs by just over 200% to $5.8 million in 2006. Cultural nonprofits increased their share of the PPF distribution pie by 126% to reach $5.2 million, and health jumped 132% over the same period to $5.7 million.

For the first time in 2006 there were gifts to sport and recreation organisations and nonprofits focused on family issues.

Nonprofit Sub-categories 2002-2006

Within the broad categories of nonprofits that PPFs give to there are various sub-groups, and the top five of these receiving gifts from PFFs since 2002 are public benevolent institutions ($63.2 million), school building funds ($20.4 million), environmental organisations ($9.5 million), public universities ($8.7 million) and research institutes ($4.6 million).

It is interesting to speculate why school building funds have attracted more funds than the large universities and medical research institutes. Is it a passion of PPF trustees or are school fundraisers able to claim some credit for influencing PPF trustees? Is it just the sheer number of school building funds?

Nonprofit Sub-categories in 2006

In 2006 the nonprofit sub-groups which rose most significantly over the previous year were public hospitals – up 182% to $3.1 million; prevention of disease in humans – up 313% to $0.7 million; public universities up 95% to $3.3million; and research institutes up 270% to $2 million.

It was the cultural group again which showed fairly steady growth with public libraries up 124% to $0.7 million; museums up 65% to $0.7 million; art galleries up 96% to $0.7 million, and combination cultural institutions up 161% to $0.9 million.

Cumulative Number of PPFs

In 2006 for the first time there were gifts made to an overseas aid relief fund ($4.8 million).

Will it Continue?

Although PPF funds with an exposure to the currently volatile share markets may decline in value, distributions should still flow at an increasing value as PPFs finish their accumulation terms.

Where the Money Goes – PPF Grants in 2006

Grants Made by PPFs

It will be interesting to watch how PPF trustees deal with the issue of smoothing distributions in the face of market volatility.

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