Contributing Non-Cash Assets to a DAF: A Guide for Advisors

For many philanthropic individuals and families, cash is not the only way to give. As the number of donors with complex wealth profiles has grown, the gifting of non-cash assets has also increased. Donor-advised funds (DAFs), such as those offered by NPT UK, are particularly efficient vehicles for accepting and processing non-cash contributions, enabling donors to unlock philanthropic value from a wide range of appreciated assets. For advisors, understanding how to guide clients through these contributions will help maximise their benefits.

 

Why gift non-cash assets to a DAF?

Many of your clients will hold a significant portion of their wealth in non-liquid assets such as shares, business interests, or property. Contributing these directly to a DAF can offer several advantages:

• Tax efficiency: Donating appreciated assets eliminates the capital gains tax that would otherwise be due upon sale. This can increase the value of the gift and reduce the donor’s taxable estate.
• Greater giving capacity: By contributing pre-tax assets, donors often find they can give more than they expected, enabling them to support a wider portfolio of charitable causes.
• Strategic wealth management: For clients with concentrated positions or upcoming liquidity events, gifting assets through a DAF is a valuable tool for diversification and long-term planning.

 

Which assets can be gifted to a DAF?

• Gifts of shares: This is one of the most tax efficient ways to make charitable donations and includes donating shares, bonds, and OEICs. Your clients can make gifts of shares listed on any stock exchange recognised by HMRC. For UK taxpayers, gifted shares come with income tax relief at the highest rate and are also free of capital gains tax.
• Illiquid assets: From tangible property to business interests to art, such gifts would be liquidated once the contribution has been made. For these types of contributions, NPT UK would need to conduct legal due diligence on the asset to ensure compliance with HMRC and the Charity Commission.
• Alternative investments:  Your clients with alternative investments may gift assets such as private equity or hedge fund interests to their DAFs. While the process is widely used in the US, it is also growing in popularity among finance professionals in the UK.
• Legacy gifts: For clients where legacy is a key driver behind their philanthropy, a DAF can be named a beneficiary of a bequest under a will or trust or designated as beneficiary of a life insurance policy or pension plan.
• Grants from other charitable entities: Your clients may transfer funds from an existing charitable trust, UK charity, other charitable entity or from another DAF.
• Offshore contributions: Your clients can use offshore trusts and other fiduciary structures to make contributions to an NPT UK DAF.

As charitable giving becomes increasingly sophisticated, advisors who understand the nuances of non-cash asset contributions can offer immense added value to their clients. For donors who wish to combine tax planning with meaningful impact, a DAF at NPT UK provides an efficient and flexible solution.

If you have a client considering a gift of non-cash assets or would like to discuss a potential contribution, please contact us.