Australian Philanthropic Services Foundation

Australian Philanthropic Services Foundation v.9.2017

Sub-funds in the APS Foundation Setting up a sub-fund in the Australian Philanthropic Services (APS) Foundation enables you to put aside money in a trust to support charities over the long term. It is a simple and tax effective way to put a structure around your philanthropy. By setting up a sub-fund, you can: Make a tax deductible donation now and decide which charities to support later. Provide an enduring revenue stream to charities. Have peace of mind knowing that all administration, compliance and governance is looked after. Grow your philanthropic capital in order to set up your own private ancillary fund in the future. Involve family members, children, grandchildren and generations to come. Create a lasting legacy. This brochure outlines the key features and benefits of setting up a sub-fund in the APS Foundation. 2

Key features of the APS Foundation Name of Fund Australian Philanthropic Services Foundation (ABN 38 981 887 768). Name of Trustee Australian Philanthropic Services Foundation Pty Limited (ACN 158 036 349), a wholly owned subsidiary of Australian Philanthropic Services Limited. Directors of Trustee Christopher Cuffe, David Ward and Antonia Ruffell ATO status of Fund Deductible Gift Recipient (DGR) Item 2 - Public Ancillary Fund; Income Tax Exempt. Governance Australian Philanthropic Services Foundation (APS Foundation) is subject to the Public Ancillary Fund Guidelines 2011, as amended, and NSW Trusts Law. The Financial Statements and compliance with Guidelines are audited each year by an independent auditor. Minimum amount A minimum amount of $50,000 is required to establish and maintain a sub-fund. Minimum additional amount A minimum amount of $5,000 is required for any additional donations. Donations to the APS Foundation All amounts contributed to the APS Foundation are tax deductible, and you can elect to spread that deduction over a period of up to five years. Donations are irrevocable, meaning they cannot be returned. You can add to your sub-fund whenever you wish, including via your Will. Naming Each donor may have a named sub-fund and grants to charities from the sub-fund will refer to this name. Anonymous grants are also possible. Fees 1.025% per annum of funds under management, calculated and accrued on a monthly basis. This fee covers all aspects of administration, compliance, internal investment management and audit costs of the APS Foundation. Where fees are charged by external fund managers, such extra fees are paid by the fund and are in addition to the 1% APS Foundation fee. Refer to page 5 for details. Investment objective To achieve a return after fees at least equal to CPI inflation + 5% per annum, measured over rolling 7 year periods. Grants to charities from the APS Foundation The APS Foundation is required to donate to charities at least 4% of its 30 June funds under management during each following financial year. As such, donors will be requested to do the same. The minimum grant is $1,000 per charity. Eligible recipients of grants Organisations with DGR Item 1 status this includes charities, public hospitals, libraries, museums and other organisations. Advisory committees Each sub-fund may nominate a person or persons to make recommendations to the Trustee on the grants to charities relating to that sub-fund, and nominate successor arrangements. Establishment timeframe Immediately, upon receipt of a completed Establishment Form (see pages 9-10) and cleared funds to the APS Foundation bank account. 3

What is a public ancillary fund? The Australian Philanthropic Services Foundation is a public ancillary fund. A public ancillary fund is a type of charitable trust in which an individual, family or organisation can establish a sub-fund to put aside money for charitable purposes over the long-term. All administration, investment and governance activities are the responsibility of the trustee, leaving sub-fund holders to solely think about the charities they would like to support. Key advantages The APS Foundation is simple and hassle-free as the trustee handles the administration, investment and compliance, freeing sub-fund holders up to focus solely on grantmaking. A sub-fund can be established with a minimum donation of $50,000, much less than would be required to set up your own private ancillary fund (which are normally started with at least $1 million). There is no requirement to establish a new trust or trustee company, so a named sub-fund can be established immediately, and there s no set-up cost to do this. Donations to your sub-fund are tax deductible and you can elect to spread the deduction over a five year period. Public ancillary funds can accept donations from anyone, so friends and family members can also contribute to your sub-fund. A minimum of 4% of the assets must be given away to charities with Deductible Gift Recipient Item 1 status each year and there are well over 20,000 charities to choose from. You can choose the name of your sub-fund and grants to charities will be made in this name. Anonymous grants are also possible. Portability is allowed so you can transfer sub-fund balance to your own PAF in the future. Sub-funds are established in perpetuity you can nominate a successor to make grant nominations after your death or leave a statement of your wishes with the Trustee. Is a sub-fund right for me? A sub-fund in the APS Foundation may be appropriate for individuals, families and companies who: Are happy to leave the administration, investment and statutory aspects of running a foundation to the Trustee and focus solely on grantmaking. Can make a minimum donation of $50,000 to open their sub-fund. Would like a tax deduction for donations. Would like to provide sustainable, long-term support for charities. Donations A sub-fund can be established with a minimum donation of $50,000. Individuals can claim a tax deduction on donations made to their sub-funds. Deductions for a donation can be spread over a period of up to five years and are generally deductible up to the limit of an individual s taxable income (we recommend that donors obtain independent tax advice). Donations are irrevocable, meaning they cannot be returned. A minimum amount of $5,000 is required for any additional donations. You can contribute to your sub-fund as often or infrequently as you like. If the value of your sub-fund drops below $50,000, the Trustee will contact you to discuss granting all the funds away to a DGR1 charity of contributing extra funds to keep the value of the sub-fund over $50,000. There is no restriction about who can donate to your sub-fund so other people, such as friends and family, can also make tax deductible donations to your sub-fund. 4

Administration The Trustee handles all administration, accounting and investment activities for the APS Foundation, including arranging the annual independent audit. The Trustee ensures compliance with the ATO Public Ancillary Fund Guidelines, Australian Charities and Not-for-Profits Commission governance standards and NSW Trust Law. As a sub-fund holders, all you are required to do is to make recommendations about the charities that you would like to support from your sub-fund. The Trustee The APS Foundation is a public ancillary fund. The trustee for the fund is Australian Philanthropic Services Pty Limited, a wholly owned subsidiary of APS Limited. APS Limited is a not-for-profit organisation that inspires and supports effective philanthropy. APS sets up and administers private and public ancillary funds and provides grantmaking advice. Making grants Soon after the audit of the financial statements of the APS Foundation is completed each year (around November), the Trustee will write to you and advise you of the value of your sub-fund at 30 June, together with the minimum 4% that must be granted to eligible charities (or other eligible organisations) during that financial year. Each year you will be requested to recommend to the Trustee the eligible organisations your 4% proportionate share should be donated to. The minimum donation is $1,000 per charity. You can ask the Trustee to grant more than the 4% minimum in any year if you wish. As an example, if your sub-account balance was $60,000 at 30 June, then you would need to recommend at least $2,400 of grants to one or two charities before the following 30 June. The Trustee of APS Foundation welcomes and actively encourages donor involvement in identifying causes and organisations to be supported by grants. Expert assistance and specialist grantmaking advice is also available (at moderate extra cost). However, donors should note that under trust and tax law the final grant decisions ultimately rest with the Trustee. Who can I make grants to Public ancillary funds can only make distributions to Deductible Gift Recipient (DGR) Item 1 charities and, if incorporated in the Deed, to Government entities that have a purpose that is charitable i.e. public hospitals and public museums. DGR endorsement A deductible gift recipient (DGR) is a fund or organisation that can receive tax deductible gifts. The deduction is claimed by the person or organisation that makes the gift. DGR endorsements are managed by the Australian Taxation Office (ATO). There are two distinct categories of DGR endorsement. It is critical to understand this as public ancillary funds are limited to funding only one of these types. DGR Item 1 known informally as a doing DGR. Most organisations which are endorsed as DGRs will fall into this category, including public benevolent institutions, universities, health promotion charities, environmental organisations and cultural organisations. DGR Item 2 known informally as a giving DGR. This category includes public and private ancillary funds. These organisations exist only for the purposes of providing donations to doing DGRs. DGR Item 2 organisations must only provide funds to DGR Item 1 organisations. A DGR Item 2 may not fund another DGR Item 2, i.e under no circumstances can a public ancillary fund distribute funds to another ancillary fund. To check the DGR status of an organisation you can check the Australian Business Register at www.abn.business.gov.au Fees Australian Philanthropic Services Limited (APS) manages all aspects of the APS Foundation (including administration, compliance, internal investment management, and facilitating the yearly audit) and charges a single, all-inclusive fee of 1% per annum, excluding GST, on the amount held in each sub-fund. This fee is calculated and paid on a monthly basis. As the APS Foundation is able to claim back 75% of GST paid, the final cost on sub-funds is 1.025%. The investments of the APS Foundation are managed directly by APS as well as utilising the services of external specialist fund managers. To the extent possible the services of external fund managers are secured on a pro bono basis. However, where a pro bono arrangement cannot be secured with a particular fund manager, APS may still choose to use them where they believe the particular investment will produce an attractive post fees return for the APS Foundation. Such fees charged by the external fund managers will be in addition to the 1% APS Foundation fee and the aggregate amount of any such fees will be disclosed in APS Foundations s six monthly investment reporting. Should we ever need to alter these fees we will advise you in advance. 5

Investment objective and strategy The Trustee of the APS Foundation has complete control over all aspects of the investment objective, strategy and investments held. The Trustee s decision in relation to such matters has taken into account the following: the need to donate a minimum of 4% per annum to eligible charities; the likelihood of inflation affecting the value of the investments and income generated; the risk of capital or income loss; the liquidity of the investments; the costs of investment alternatives and transactions; and the benefits of diversification of trust investments. Furthermore, public ancillary funds are prohibited from: making investments that are not on an arm s-length basis; investing in collectables; trading or operating a business; borrowing money (except in limited short term bridging circumstances); or providing security over any of its assets. Taking into account the above, the investment objective set for the APS Foundation is to achieve a return after fees at least equal to CPI inflation + 5% per annum, measured over rolling 7 year periods. The Trustee believes that the best way to achieve the investment objective is to invest a significant portion of the assets in growth-oriented investments (such as shares) with a bias at most times to Australian listed shares (because of the additional benefits from franking credits attaching to dividends). The Trustee also believes it would be prudent to have some exposure to income-oriented investments (such as cash and/or fixed income securities), with an increased emphasis on such investments when sharemarket valuations appear stretched or where there appears to be a better risk/return trade-off in the immediate future from holding such securities. Based on the investment strategy outlined above, the Trustee has decided that the broad investment ranges for APS Foundation should be as follows: 25% 75% 25% 75% Growth-oriented investments (e.g. shares and/or property) Income-oriented investments e.g. cash and/or fixed interest securities) It is expected that from time to time the investments held in the APS Foundation will include unlisted investments that may be valued very infrequently. Directors are required to estimate values each year taking into account information available to them. When changes in the valuation of these investments do occur it will be reflected in the sub-fund balances at that time which may not be the same as those that existed at the time of the investment. The full investment strategy document for the APS Foundation is available upon request. Investment Performance The performance (after all fees) of APS Foundation for various periods ended 30 June 2017 was as follows: One year Three years Five years Since inception Australian Philanthropic Services Foundation 8.4% 9.4% pa 10.7 pa 12.8% pa Australian shares (S&P/ASX300 Accumulation Index) International shares currency unhedged (MSCI World ex-aus Unhedged AUD Total Return) Australian cash (Bloomberg AusBond Bank Bills Index) Australian inflation (ABS All Groups CPI index) 13.8% 6.6% pa 11.6% pa 11.6% pa 14.7% 13.0% pa 18.2% pa 18.2% pa 1.8% 2.2% pa 2.5% pa 2.5% pa 1.9% 1.5% pa 2.0% pa 2.0% pa The performance of APS Foundation is calculated on a time-weighted basis from monthly valuations. APS Foundation commenced operation as a Public Ancillary Fund on 18 May 2012 and on 11 July 2012 the first investments were made. Before that time APS Foundation held cash on deposit. The since inception date used above is 1 July 2012. Figures greater than one year are expressed as annual compound returns. 6

Portability The Public Ancillary Fund Guidelines 2011, as amended, allow, in certain circumstances and with the approval of the Trustee and the Australian Tax Office: The transfer of assets between public ancillary funds The transfer of the balance of a public ancillary fund sub-fund into your own PAF. The APS Foundation trust deed provides for this flexibility. Estate planning A sub-fund continues on past your lifetime. You can nominate a successor to take over grant nominations after your death. Alternatively if you do not want to pass this responsibility to family or friends, you can leave a statement of wishes with the Trustee, Australian Philanthropic Services Foundation Pty Ltd, to continue your granting program. You can also use your will to direct additional money to your sub-fund. A correctly constructed will clause ensures that leaving a gift to your sub-fund is a smooth process. It is important that the will clause is worded carefully to help avoid unintended tax implications. Please contact us if you would like more information. Online access Once you have established a sub-fund you will be given online access to a variety of information to help you keep track of your activities. This will include the monthly value of your sub-fund, listing of donations and grants, six monthly investment report, annual audited accounts and various other useful reference materials. Getting started To establish a sub-fund: Complete the establishment form on pages 11-12 of this brochure and return it to us. Make a donation to establish your sub-fund. Details of how to make a payment are on the form. A tax deductible receipt and welcome pack will be send to you upon receipt of your donation. Australian Philanthropic Services Australian Philanthropic Services is a not-for-profit organisation that inspires and supports effective philanthropy. Our team is highly regarded in the sector for its expertise and is backed by a vastly experienced Board, all of whom are philanthropists. We set up and administer private ancillary funds for individuals and families, and work with wealth advisers to help them help their clients do the same. We offer a public ancillary fund, the APS Foundation, in which people can establish a named sub-fund. We provide grantmaking support and advice. We re unique because we re completely independent, not-for-profit, and charge very modest fees. Contact us If you have any questions, would like more information, or you would like to arrange an introductory conversation, call us on 02 9779 6300. Website: www.australianphilanthropicservices.com.au Email: foundation@australianphilanthropicservices.com.au Address: Level 9 8 Spring Street Sydney NSW 2000 Phone: 02 9779 6300 This publication is intended as a guide only. For details of the APS service and private and public fund regulations please contact APS on 02 9779 6300 or hello@australianphilanthropicservices.com.au Australian Philanthropic Services Foundation Pty Limited (ACN 158 036 349) is a wholly owned subsidiary of Australian Philanthropic Services Limited. Australian Philanthropic Services Limited (ACN 155 905 829) (APS) is a public company limited by guarantee. It was registered under the Corporations Act 2001 on 24 February 2012. Australian Philanthropic Services Limited is a not-for-profit company registered with the Australian Charities and Not-for-profits Commission as a charitable institution. 7

Supporters of the APS Foundation We are extremely grateful for the support we receive from a number of generous fund managers, who provide Australian Philanthropic Services (APS) with their investment services pro bono, to assist with the management of the APS Foundation. We sincerely thank the following companies for their kind support. Aberdeen Asset Management is a global asset management company based in the UK and listed on the London Stock Exchange. Operating out of 25 countries, their clients are typically large institutions, including central banks, national and corporate pension funds, insurance companies and sovereign wealth funds, as well as retail investors. Anacacia Capital is an award winning Australian private equity firm focused on small-medium enterprises. Its Wattle Fund actively invests in small listed companies and its private equity funds invest in small private companies often managing ownership change, succession, management buyouts, growth and new acquisitions. Auscap is a value-based Australian equities manager. Auscap manages the Long Short Australian Equities Fund which targets solid absolute risk-adjusted returns, looking to invest in companies that generate cash flows and are trading at attractive prices. DS Capital is an independent equities fund manager established as a wealth creation vehicle to invest in a focused and disciplined way. DS Capital s aim is to deliver absolute returns comprising capital growth and distributions through a concentrated portfolio of listed investments. Commonwealth Securities Limited (CommSec) is an online trading platform that offers a range of industry products and resources. Centennial Asset Management is an independent Australian asset management business, the manager of the Level 18 Fund a long/short equity fund with a bias towards investing in smaller capitalised companies. Centennial is focused on building wealth over the long term by investing for absolute returns rather than for a return relative to any particular index. Evans & Partners is an Australian financial advisory group servicing private, not-for-profit, institutional and corporate clients with expertise in private wealth management, corporate advisory, institutional cash equities and debt, investment research and debt and equity capital markets. Impact Investment Group (IIG) is a leading Australian impact investment funds manager. IIG develops investments across various asset classes that not only generate social and environmental value and deliver attractive commercial financial returns for investors. Elstree Investment Management Limited is an executive owned funds management business. Elstree funds invest in a diverse range of floating rate credit securities called hybrids, designed to deliver capital stable franked income returns on a consistent basis. Magellan Financial Group is a specialist funds management business based in Sydney. Magellan Asset Management Limited ( Magellan ) manages global equities and global listed infrastructure strategies for high net worth, retail and institutional investors. Paradice Investment Management was established in 1999 and manages over $8 billion in assets for institutional and high net worth clients in Australian Small, Mid, and Large Cap equity strategies as well as a Global Small Mid Cap equities. Pengana was established with the goal of providing investors with strong long term absolute returns and reduced risk. continued... 8

Morgan Stanley focuses on providing individuals and institutions with specialist strategic advice and helps to implement these strategies through superior investment execution. EGP is a Sydney based private investment company that invests in Australian listed businesses (was Eternal Growth Partners, now EGP) Mint Partners has a strong research and relative value focus and targets predominately investment grade bonds to produce truly diversified and liquid investment portfolios. Antipodes seeks to take advantage of the market s tendency for irrational extrapolation around change, identify great businesses that are not valued as such and build high conviction portfolios with a capital preservation focus. Wentworth Williamson is an independent, boutique value fund manager established by ex-investec Bank executives in 2013. As a wholesale fund, they invest on behalf of highnet-worth individuals, families and charitable offices who have long term investment time horizon. VGI is a high conviction global equity manager. VGI manages capital for high net worth individuals, family offices and endowment funds. VGI s Investment Team is based in Sydney and New York. Armitage Associates invests alongside outstanding owner operators of growing, profitable businesses across Australia and New Zealand. They actively partner with companies, working closely with founders and leveraging the extensive Armitage network to support growth. They have a long-term, patient capital and adopt a long-term ownership mentality. CHAMP Private Equity The primary investment objective of CHAMP is to achieve long-term capital appreciation in businesses located in, or otherwise having a material portion of their business plan centering on Australia and New Zealand. 9

Background of the Directors of the Trust Chris Cuffe AO Chris has many years of experience in building successful wealth management practices, most notably at Colonial First State which he joined in 1988. He was instrumental in taking the company from a startup operation to become Australia s largest investment manager during his fourteen-year tenure. Chris then joined Challenger Financial Services Group Limited in early 2003 as Chief Executive Officer. Chris is now involved in a portfolio of activities including a number of directorships, managing public and private investments, and in various roles assisting the not-forprofit sector. In addition to being Chairman and Founder of Australian Philanthropic Services, this includes: Investment Committee Member of UniSuper (the $60 billion superannuation scheme servicing the staff of universities and related institutions across Australia) Non executive director of Fitzpatricks Private Wealth (a national advisory and wealth management firm) and of EGP Capital, a boutique Australian shares manager Non executive director of the listed investment companies Argo Investments Limited, Global Value Fund Limited, and Antipodes Global Investment Company Founding director and portfolio manager of Third Link Growth Fund (a managed investment scheme investing in Australian shares where the management fees received are donated to charity) Director of Cuffelinks Pty Ltd, which produces a weekly newsletter called Cuffelinks which is directed to engaged investors and professionals in the financial services industry. Chris holds a Bachelor of Commerce from the University of NSW and a Diploma from the Securities Institute of Australia (now the Financial Services Institute of Australasia). He is a Fellow of the Institute of Chartered Accountants in Australia, a Fellow of the Institute of Company Directors and an Associate of the Financial Services Institute of Australasia. In 2007 Chris was inducted into the Australian Fund Manager s RBS Hall of Fame for services to the investment industry. In 2017 he was appointed as an Officer in the General Division of the Order of Australia. David Ward David worked in banking for nearly 20 years before moving into the philanthropic sector. In that time he held senior positions at ANZ, including Chief Economist (New Zealand) and General Manager, Investor Relations. Notably, he spent 4 years as Managing Director of ANZ Trustees, which administered over 200 charitable trusts. David is considered a leading authority on ancillary funds. He sat for a decade on the Council of Philanthropy Australia and has written three trustee handbooks for Philanthropy Australia, including the Public Ancillary Fund Handbook. He also conducts Governance seminars for Philanthropy Australia as well as lecturing at Swinburne University as part of their Asia Pacific Centre for Social Investment and Philanthropy. In addition to being a director of Australian Philanthropic Services, David is also a director of ShareGift Australia, another public ancillary fund. In 2008 David and his wife Jeanette established Te Anau Consulting, a professional consulting firm specialising in the non-profit sector, specifically in philanthropic structures, governance, and risk management. David holds a Bachelor of Science (Hons) First Class from the University of Canterbury. He was a Member of The International Panel on Code of Conduct for Endowed Foundations for the CFA Institute (2010). Antonia Ruffell Antonia Ruffell is CEO of Australian Philanthropic Services. She has 20 years experience in leadership, fundraising, business development, marketing and philanthropy across the corporate and not-for-profit sectors. Prior to joining Australian Philanthropic Services, Antonia held senior roles with Perpetual, the Royal Agricultural Society Foundation, Mission Australia, ING Australia, and The Prince s Trust in the UK. Antonia sits on the board of The Social Outfit, a Sydney-based social enterprise that works with refugees. She holds a BA (Hons) from the University of Sussex in the UK, is a graduate of Social Leadership Australia, and is a graduate of the Australian Institute of Company Directors. 10

APS Foundation Establishment Form DONOR DETAILS DONATION DETAILS DONOR 1 Title: (Mr, Mrs, Ms, Dr) Amount you wish to donate to establish your sub-fund (minimum $50,000): First Name: Last Name: Name you would like your sub-fund recorded as: Postal Address: (Please note that sub-funds cannot include the word Foundation. However, the words Bequest, Gift, or Endowment are all acceptable.) Suburb: State: Postcode: Phone (daytime): Mobile: SUCCESSOR NOMINATION (optional) Indicate below the details of the person you nominate to take over grant recommendations in the case of your death or if you experience mental incapacity or other legal disability. Title: (Mr, Mrs, Ms, Dr) Email address: First Name: Last Name: DONOR 2 (optional) Postal Address: Title: (Mr, Mrs, Ms, Dr) First Name: Last Name: Suburb: State: Postcode: Postal Address: Phone (daytime): Mobile: Suburb: State: Postcode: Email address: Phone (daytime): Mobile: Email address: 11

PAYMENT METHODS ACKNOWLEDGEMENT CHEQUE If you are paying by cheque, please forward this completed application and your cheque, made payable to Australian Philanthropic Services Foundation, to the address shown below. ELECTRONIC FUNDS TRANSFER If you are directly depositing funds, payment details are as follows: Account name: Australian Philanthropic Services Foundation BSB: 124 001 Account number: 998782753 Reference: Sub-fund name (as nominated above) I/We have read the attached brochure for the APS Foundation and agree to be bound by the provisions of the Deed of Trust and any other additional terms and conditions contained in this brochure. I/We understand that any donation once accepted by the Trustee represents an irrevocable donation to the APSF and is not refundable to me/us. I / We certify that I/we will not receive any benefit, directly or indirectly, from the charitable or community organisations recommended to receive grants from my/our sub-fund. I/We understand that the Trustee ultimately decides which eligible organsiations will benefit from each sub-fund and is under no legal obligation to follow my/our recommendation. You should mail, email, fax or deliver this application form to us immediately so that we can match the details with your deposit. Signature X Date: A tax deductible receipt will be sent to you upon receipt of our payment. If the funds have come from someone else and the receipt should be in a different name to your name stated above, please advise us. Signature X Date: WHERE TO SEND YOUR APPLICATION Australian Philanthropic Services Level 9, 8 Spring Street Sydney NSW 2000 Phone: 02 9779 6300 Email: foundation@australianphilanthropicservices.com.au PROCESSING YOUR APPLICATION When we receive your money, whether to initially establish a sub-fund or to add to an existing sub-fund, no investment earnings (whether positive or negative) will accrue to the sub-fund until the commencement of the following month. 12