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A recoverable grant instrument for deploying capital assets — equipment, infrastructure, physical resources — into public-benefit institutions without creating debt, contingent liabilities, or balance-sheet recognition. An existence proof that the capital architecture the PPP literature calls for is constructable today within Australian charitable and accounting frameworks, with no legislative change required.
A New Way to Fund Our Future — CADA in 3 minutes
Worked example: diagnostic imaging in a regional public hospital
A charitable foundation wants to deploy a diagnostic imaging system to a regional public hospital. A PPP would structure this through an availability payment concession — 15–20 years of service fees, senior debt secured against the hospital revenue stream, equity returns for the sponsor. The hospital's balance sheet absorbs the contingent liability. The public bears the renegotiation risk. The concession extracts value for two decades.
A CADA structures it differently: the foundation retains title to the equipment, deploys it to the hospital under a right-of-use agreement, and accepts voluntary contributions from the hospital (impact-receipted for DGR compliance) if and when the hospital chooses to make them. If the hospital cannot contribute, the foundation's worst case is that the deployment becomes a completed grant. There is no enforceable consideration. There is no debt on the hospital's balance sheet. There is no extraction. The accounting treatment reflects the underlying economic reality because the foundation is, in fact, the party bearing the risk.
Two prior IRSA papers established a connected diagnosis. The first showed that public–private partnerships fail structurally — not because of poor contracts or weak governance, but because their capital architecture embeds extraction, temporal misalignment, and fragility into systems whose missions require long-horizon continuity. The second showed that PPPs persist not because they perform well, but because public accounting systems lack the categories to represent capital continuity, mission cycles, or deferred fragility — making PPPs appear fiscally responsible when they are merely accountably convenient.
Both papers call for new capital architectures. Neither specifies one.
This paper specifies one.
CADA is the third paper in a connected series. Diagnosis → opacity → instrument.
Structural diagnosis. Five recurring failure modes — fragility coupling, temporal misalignment, extraction, contractual rigidity, civic opacity — embedded in the capital architecture itself, not in drafting or governance.
Fiscal opacity. Public accounting systems lack the categories to represent capital continuity, mission cycles, or deferred fragility — so PPP failure remains invisible even when it is happening.
The instrument. An existence proof that the capital architecture the prior papers call for is constructable — within existing Australian charitable and accounting frameworks, today, without legislative change.
Five structural failure modes recur across PPP configurations regardless of jurisdiction, asset class, or contractual sophistication. They are not operational failures that careful drafting might prevent. They are architectural features embedded in the capital structure itself.
Private capital stack transmits market stress to public service delivery. Mission continuity held hostage to capital market conditions.
Concession horizons optimised for capital return, not mission horizon. Structural rupture at the point of renewal, not deployment.
Structural transfer of value from public system to private capital through availability payments, usage fees, and equity returns.
Long-duration enforceability becomes liability as conditions change. Enforcement becomes institutional capture.
Accrual treatments systematically obscure the true public cost of private capital. The public cannot see what it has committed.
Any capital instrument that proposes to function as an alternative to PPP architecture must satisfy four requirements. These are derived from the five failure modes — they are not arbitrary design preferences, they are the structural specification that any viable alternative must meet.
Financial and political market stress must not transmit to the public service the instrument supports.
PPPs couple private capital market stress to public service delivery through senior debt service, equity returns, and availability payment obligations. A viable alternative must place the risk entirely with a capital holder whose financial distress cannot become a source of public exposure.
The instrument's termination logic must match institutional continuity — not capital return horizons.
PPP concession periods are designed around private capital return horizons (20–30 years for infrastructure equity), creating artificial discontinuities bearing no relation to the mission horizon of the public asset. Hospitals need generational continuity. Infrastructure operates on century-scale cycles. A viable instrument must have natural states — active, renewal, termination — compatible with these cycles rather than destructive of them.
The instrument must not require a financial return as a condition of its operation.
Commercial capital expects and requires return. In PPPs this is extracted through availability payments, usage fees, equity dividends, and refinancing gains — structural, not incidental. A viable alternative must draw on philanthropic or catalytic capital deployed for mission rather than return, without converting it into a commercial instrument at the point of deployment.
Off-balance-sheet status must reflect economic reality, not contractual arbitrage.
PPP off-balance-sheet classification is typically achieved through contractual allocation of defined risks across a multi-party structure while retaining economic exposure on the public balance sheet — cosmetic, not substantive. A viable alternative must achieve the opposite: genuine transfer of economic exposure such that the accounting treatment reflects the underlying economic substance.
This is the intellectual crux of the paper. A well-drafted PPP contract — however careful, however comprehensive — still operates within commercial law. It can allocate defined risks between parties. It can specify remedies. It cannot alter the underlying economic interest of a commercial lender holding senior debt on a hospital concession.
The contract determines who bears the loss in specified scenarios. It does not change the fact that the loss must be borne somewhere, and it does not alter the structural incentive of private capital to avoid bearing it. The four requirements cannot be satisfied by contract alone — they require a capital instrument whose worst-case outcome is a completed grant, not a renegotiation. That is the instrument this paper specifies.
Better contracts don't fix PPPs. Different capital does.
A recoverable grant instrument. The deploying foundation retains title to an asset, deploys it under a right-of-use agreement to an eligible public-benefit institution, and receives voluntary contributions from the recipient on a non-consideration basis. Three mechanisms hold the structure together.
Title remains with the deploying foundation throughout the deployment period. The recipient institution receives a right to use the asset for its charitable purpose, not ownership. This is the structural basis for the off-balance-sheet treatment — the foundation, not the recipient, continues to bear economic exposure.
A specified condition under which the instrument converts the deployment into a completed grant — ownership transfers, the right-of-use period ends, or the instrument's active state otherwise concludes. The trigger is driven by institutional circumstances aligned with mission continuity, not by capital return cycles.
The recipient may make contributions to the foundation on a voluntary, non-consideration basis — explicitly not as payment for the use of the asset. Contributions are receipted as charitable donations (DGR-compliant) rather than as service fees. If the recipient cannot or does not contribute, the foundation's worst-case outcome is a completed grant. There is no enforceable consideration.
The deploying foundation retains title and bears all risk. No senior debt. No equity. No availability payments. The recipient institution bears no financial exposure — in the worst case, the foundation treats the deployment as a completed grant and the recipient retains use of the asset.
The instrument's natural states (active deployment, renewal, Transfer Trigger, completed grant) are driven by institutional continuity logic, not capital return logic. Termination doesn't rupture — it conforms to the institution's own decision horizon.
Recipient contributions are structured as voluntary, non-consideration transfers — compatible with DGR impact receipting and explicitly not a return condition. If the recipient cannot or does not contribute, the foundation's worst-case outcome is a completed grant. There is no enforceable consideration. There is no extraction.
Title remains with the foundation throughout. The recipient's right-of-use does not trigger lease classification under AASB 16 / IFRS 16 as a matter of economic substance — the foundation retains actual economic exposure, and the worst-case scenario is borne by charitable capital, not the recipient's balance sheet.
Does a CADA trigger lease classification under the recipient's accounting framework? This is the critical test — and the answer is where cosmetic and substantive off-balance-sheet treatment diverge.
AASB 16 / IFRS 16 classifies an arrangement as a lease when it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Two elements must both be present: control, and consideration.
CADA falls outside this framework on the consideration element. Voluntary non-enforceable contributions do not constitute consideration as a matter of economic substance, not merely contractual form. The recipient does not owe, and the foundation cannot compel. The arrangement conveys right of use, but the absence of enforceable consideration places it outside lease classification.
This is the substance-over-form distinction the paper is built on: the accounting treatment reflects the underlying economic reality, not a contractual reclassification of one.
The paper is careful about its own scope. CADA is an existence proof, not a universal replacement for PPPs. Public infrastructure operates across a scale range no single instrument can address. A regional hospital acquiring diagnostic imaging equipment and a national government procuring a motorway network are structurally different problems.
Works when a single foundation can bear total asset loss without distressing its own charitable function. Scope: equipment, small-to-mid infrastructure, physical resources.
Example: Diagnostic imaging equipment deployed into a regional public hospital.
Extends CADA to higher-value deployments by distributing asset risk across multiple deploying foundations under a coordinated structure. Retains the substantive off-balance-sheet treatment while expanding the capital base.
Example: Multi-foundation deployment of a specialist imaging suite or research facility where single-foundation capacity is exceeded.
CADA is Layer 2 — standards, not theory. It is written for practitioners who need an actionable instrument, not for researchers who want a theoretical argument. You do not need to accept any broader claim from the IRSA canon to use it.
You need to know whether this is actionable under current charitable instrument law. It is.
You need a capital deployment path that doesn't trigger lease classification or contingent liability. CADA provides one.
You need to understand how voluntary contributions are structured to remain DGR-compliant without creating consideration.
You need an alternative to PPP structures for capital asset deployment where the diagnosis of PPP failure applies.
You need a recoverable grant template for capital assets that uses existing legal instruments only.
CADA is the second Layer 2 paper in the IRSA corpus — following Valuing the Unlicensed Commons. Together they establish that the standards layer is a layer, not a one-off.
Layer 1 papers argue for how the world should be organised — they advance theoretical positions. Layer 2 papers hand practitioners the tools to begin building it. CADA is infrastructure: a foundation counsel can read it, open existing Australian legal instruments, and structure a deployment without ever reading the theory.
The instrument specified in this paper is not theoretical. It is constructable, operable, and legally deployable within existing frameworks today.
The full working paper: architectural specification, instrument design, mapping against PPP failure modes, AASB 16 / IFRS 16 treatment, worked example, scale limits, and tripartite extension.
View PaperWalk a specific deployment through the four-requirements check, AASB 16 test, and structure recommendation. Built for foundation counsel and institutional CFOs.
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