What is a Charitable Trust?
What a charitable trust is and what is required
- A trust allows a person or entity (trustee) to hold money or property for the benefit of another (beneficiary)
- A trust must be non-profit, charitable and beneficial to the public
- A trust must be endorsed by the Australian Taxation Office in order for its donations to be tax deductible
- Setting up a trust can be daunting and expensive. The alternative is contributing to an existing funding in support of your cause
A trust allows a trustee, or individual or company, to hold money and property for the benefit of someone else (the beneficiary). A charitable trust promotes charitable purposes, directly provides services, or distribute funds. A charitable trust must be non-profit, have charitable purposes, and benefit the public in order to be endorsed as a charity for income tax concessions. Charitable trusts are setup so that donations can be made tax deductible. For this to happen, the trust must be endorsed by the Australian Taxation Office as a Deductible Gift Recipient (DGR).
The process for setting up a trust can very complex. The cost and difficulty of setting up and managing a trust can be daunting. A simpler alternative to this would be to find an existing trust to contribute to in support of your cause. There are trusts that will allow you to be named sub-funds or special accounts. These trusts will also manage the administrative aspects for you as well. This allows you to set up a trust without the cost or difficulty of managing your own foundation.
Finding an existing trust should you choose not to set up your own
- Contact the Financial Services Council for contact details of trustees, both public and private
- Discuss options for setting up a sub-fund or account
- Be aware that some trusts or foundations may require a minimum contribution, like the 20,000AUD minimum required by the Australian Communities Foundation.
- Trusts are a way of distributing funds and being charitable
To find an existing trust, contact the Financial Services Council. This council has the contact details for public and private trustees. This will allow you to find trusts that are of interest to you as well as trusts that align with your goals. Once you find a trust that you want to be a part of, contact the trustee to discuss the possibility of setting up a sub-fund or account with their trust. Trustee companies will also help you set up these accounts as well as assisting in the management of these accounts. The Australian Communities Foundation and Lord Mayor’s Charitable Foundation can help in setting up a sub-fund. Be aware that some foundations or trustees may require a minimum contribution, in the case of the Australian Communities Foundation the minimum contribution is 20,000 AUD.
A charitable trust is where a trustee, usually an individual or company, holds money or property for the benefit of another person (called the beneficiary). Charitable trusts are non-profit, with charitable purposes and benefit the public. They are required to be endorsed by the Australian Taxation Office in order to make donations from individuals and companies tax deductible. The process for setting up and managing a trust can be daunting and expensive. The alternative is to set up a named or unnamed sub-fund or special account with an existing trust which can be found by contacting the Financial Services Council. Some trusts or foundations may require a minimum contribution in order to be set up with a sub-fund or special account. The way a person chooses to set up a trust depends on whether or not they can afford the process setting up and managing of the trust.