Donating Non-Cash Assets to a DAF: What Advisors Need to Know
Your clients may increasingly be choosing donor-advised funds (DAFs) as an alternative to setting up their own charitable trust or foundation. DAFs offer your clients the flexibility to gift a variety of assets for charitable impact. Gifts of cash are the most popular DAF contributions, but there are other non-cash assets which may be more suitable. As private client advisors, here’s what you need to know:
• While many charities are not able to facilitate non-cash gifts, a DAF has the functionality to accept a wide range of non-cash gifts. This is helpful for donors who are looking to maximise their charitable impact by donating a wider range of financial assets.
• 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.
• Privately held shares, interests in a closely held business, cryptocurrency, art, real estate or other personal property may also be gifted. For these types of contributions, NPT UK would need to conduct legal due diligence on the asset to ensure compliance with HMRC and Charity Commission.
• Your clients in the alternative investment sector may gift private equity or hedge fund interests to their DAFs. This is a relatively straightforward process for donors and whilst it is widely used in the US, it is also growing in popularity among finance professionals in the UK.
• For donors who are taxed in the UK on the remittance basis, NPT UK can accept contributions to a DAF offshore. Your clients can use offshore trusts and other fiduciary structures to make contributions to a DAF.
In summary, your clients can donate a wide variety of assets into a DAF beyond cash. Publicly listed shares, business interests, privately held shares, alternative investments as well as property or art are all acceptable and would in most cases qualify for a range of tax reliefs. For more information, please contact us.
Natalie Pinon is Director of Development at NPT UK. She has over 15 years of experience working with philanthropists and impact investors to manage their giving.
NPT UK does not provide legal or tax advice. This blog post is for informational purposes only and is not intended to be, and shall not be relied upon as, legal or tax advice. The applicability of information contained here may vary depending on individual circumstances.