The National Philanthropic Trust UK (NPT-UK) have today published the UK’s first ever donor-advised fund report, which suggests that charitable assets held in these accounts are reaching their highest point, at £1 billion in the UK.
Contributions to donor-advised fund accounts in 2015 was an all time high at £225.7 million. Grants from donor-advised fund accounts to charitable organisations reached £183.3 million, the largest total over the past five years.
John Canady, CEO of NPT-UK said: “In the US donor advised funds outnumber foundations three to one. Relatively unknown in Europe, it is very pleasing to see this positive growth trend in the UK and I expect to it continue as we are seeing more people being attracted to the DAF model to provide flexibility over their charitable giving.
“Our ambition is to make it easier for people to give money to charities globally and for everyone to understand that you don’t have to be a millionaire to have a strategic and organised charitable vehicle.”
• Not just cash – Donating Appreciated Assets: Philanthropists are increasingly contributing a wider range of assets to their donor-advised funds – such as shares or property – toward charitable purposes. Few charitable organisations have the expertise or willingness to accept appreciated shares or tangible property but for donors, these assets often comprise the largest share, if not the entire source of their wealth.
• Estate Planning: Donors and their estate planning advisors are recognising the potential use of a donor-advised fund as the beneficiary of a will. Often the largest gift a donor will ever make to charity is through his or her estate plan. Contributions to charity are not subject to inheritance taxes and donating 10 per cent of an estate to charity can lower the inheritance tax rate. By naming their donor-advised fund as a charitable beneficiary, donors can support charitable causes beyond their lifetime and pass along the value of philanthropy to the next generation. This should continue to gain momentum as the Baby Boom generation reaches retirement age.
• Converting Charitable Trusts and Foundations to DAFs: There is increased interest from individuals and families in converting or replacing their charitable trusts or foundations with donor-advised funds. Compared to other charitable entities, donor-advised funds are faster to establish, less costly to administer and more convenient to manage.
• Giving Anonymously: For many philanthropists, the driving factor in establishing a donor-advised fund is the ability to give anonymously. This feature protects donors from unwanted charitable solicitations. A family foundation or charitable trust must publicly disclose all grants and charitable activities. A related trend is the use of donor-advised fund accounts as a complementary giving vehicle – that is, donor-advised fund accounts being used in conjunction with another charitable giving vehicle or entity, like a family foundation or charitable trust.
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