Mitch Finnen
7 January, 2026
Peter Singer and the Moral Case for Giving
In 1972, Peter Singer wrote an essay titled Famine, Affluence, and Morality in which he posited that it was the duty of every resident in wealthy countries to donate away most of their earnings, eroding excess wealth to the point that you would narrow the global gap in living standards, until there was a near universal single standard. This standard would then be much higher than the existing standard in poor countries, and lower in the high-earning countries.
The essay delivers an incredibly powerful analogy that is intended to create a sense of moral urgency:
"On your way to work, you pass a small pond. On hot days, children sometimes play in the pond, which is only about knee-deep. The weather’s cool today, though, and the hour is early, so you are surprised to see a child splashing about in the pond.
As you get closer, you see that it is a very young child, just a toddler, who is flailing about, unable to stay upright or walk out of the pond. You look for the parents or babysitter, but there is no one else around. The child is unable to keep her head above the water for more than a few seconds at a time. If you don’t wade in and pull her out, she seems likely to drown. Wading in is easy and safe, but you will ruin the new shoes you bought only a few days ago and get your suit wet and muddy. By the time you hand the child over to someone responsible for her, and change your clothes, you’ll be late for work. What should you do?"
Singer's essay was highly controversial and attracted criticisms that ranged from his argument being unrealistic and over-demanding, promoting the neglect of systemic changes to address injustices, and impracticability of the effective redistribution of much of the world’s income.
These criticisms are genuine and raise valid points.
However, at the core, so does Singer.
Wealthy people can affect great change in the world by sacrificing relatively little. Excess, unused wealth has the capacity to save lives.
Charitable Giving and the Australian Tax System
Many Western democracies have recognised that encouraging their populace to contribute directly to charitable causes they believe in has utility. This recognition comes in the form of tax rebates for charitable giving.
In Australia, if you donate to a registered charity, you are entitled to an equivalent deduction in your taxable income. For those in the highest tax bracket, this may reduce your tax burden by 47 cents on the dollar (Note: I’m not a Tax Accountant and that isn’t advice). Notably, the people in this income tax bracket are Peter Singer’s target audience.
Measuring the Impact of Giving
It has been estimated that the most effective way to save a single life as it stands today is by donating $3,000 to the prevention and treatment of malaria in Nigeria. This estimate is found through a statistical analysis across many different charitable programs, with a goal of demonstrating the real effect donations can have and removing the obscurity. Where there is obscurity, it is easier to justify inaction.
Reasons for Optimism
I acknowledge that so far, this has been quite heavy reading. To temper that, I wanted to deliver two positive messages:
- Since 1990, more than 1 billion people have been lifted out of poverty. 800 million of those people were in China, where large-scale industrialization created a systemic change that is unlikely to ever substantially revert.
- By virtue of being a resident of a wealthy country, some portion of the income you generate each year already provides lifesaving opportunities for poorer countries through your taxed income.
This moves us through to the relevant portion for the readers of this article. How does philanthropic work fit within the remit of a private wealth firm? The short answer is the Private Ancillary Fund, or PAF.
What Is a Private Ancillary Fund (PAF)?
A PAF gives you the ability to create a structure that you fund from after-tax money, and you can collect a deduction from the ATO for the funding of this money. You retain control of the money which is then held for the benefit of charitable causes of your choosing.
Here is an example of how a PAF can work on your behalf to lower your taxable income:
James and Alice: Selling a family business
James and Alice have recently sold their business for $50 Million. This is a substantial capital gain, and the distributions to James and Alice will result in them having a combined taxable income of ~$25 Million for the year. They have long held an interest in philanthropic activity and have decided they would like to create a Private Ancillary Fund to engage directly in helping others through charitable distributions.
They establish a PAF and fund it with $5M. This reduces their taxable income to $20M, saving them $2.25M on their taxes when they are lodged. While this money can never be used for their personal benefit, it was surplus to need for their family.
Over the next 20 years, they distribute the minimum requirement of 5% per annum to charities. They manage their charity portfolio in conjunction with a professional adviser who achieves a rate of return of ~10%. At the end of their 20-year horizon, they contributed over $9M to their favored charitable causes and have grown the pool of capital to $13.9M. Using the $3,000 figure per life saved and adjusting for an average inflation rate, they will have saved ~2,500 lives.
This, assuming it continues to be well managed, will perpetuate through time.
From an initial $5M donation, they have, in their own way, changed the course of history and created a legacy for themselves and their family of generosity.
Next Steps
If you would like to discuss the options around establishing a PAF, please contact me. A PAF can be set up with a $1M contribution.
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