Three Reasons to Talk to Your Clients About DAFs
Donor-advised funds (DAFs) are increasingly used by individuals and families to advance their philanthropic goals. They are growing in popularity in the UK as an alternative to setting up a foundation or charitable trust. A DAF is a philanthropic fund that allows donors to make charitable contributions, receive immediate tax benefits, and recommend grants from the fund over time.
Here are three reasons to talk to your clients about how a donor-advised fund can help them.
Tax efficient giving
Your client establishes their DAF at an umbrella charity, like NPT UK, and makes a charitable contribution to fund it. This irrevocable contribution can be in the form of cash, shares, or other assets, including offshore assets. Because it is a charitable contribution, the donor receives all relevant tax benefits for the contribution, including, if applicable, the addition of Gift Aid to the DAF. Donors with tax consequences in both the UK and US can establish a DAF with NPT Transatlantic and receive both US and UK tax benefits. Donors can continue to make contributions to their DAF at any time. NPT UK issues a gift receipt for each contribution to a DAF. NPT Transatlantic provides both UK and US gift receipts.
Easy to be philanthropic
Once the DAF has been established, your clients can recommend grants to charitable organisations virtually anywhere in the world. NPT UK completes the compliance and due diligence required by HMRC and Charity Commission to make the grants. All the donors have to do is make their recommendations using the online DAF portal. Donors can recommend one-time grants or request that grants are paid monthly or annually to their favorite charities. Domestic grants are usually paid out within two weeks of the recommendation and work begins immediately to process the requirements for international grants.
Grow the charitable assets
A major benefit for your clients is that though they receive immediate tax benefits when making their charitable contribution, they can recommend investments to grow the DAF assets, tax free. NPT UK has a selection of investment options for your clients, including impact investment options. For DAFs with balances over £500,000, your clients may recommend that their DAF is managed by an investment manager of their choice.
For further information on how NPT UK can help you assist your clients, please contact us. Our advisors will be happy to help.
About the Author
John Canady, CEO of National Philanthropic Trust UK, has 25 years of experience working across the business, nonprofit and government sectors. He specializes in creating and managing philanthropic funds for donors and family offices around the world who wish to base their philanthropy from the UK.
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.
NPT UK is not affiliated with any of the organisations described herein, and the inclusion of any organisation in this material should not be considered an endorsement by NPT UK of such organisation, or its services or products.
