We define philanthropy as the giving of resources in an engaged and strategic way for maximum impact and in a tax efficient manner. It can include the giving of money, assets, time, talent, voice and one’s social capital. We believe in the power of philanthropy as a great social connector and the source of many great opportunities.

City Philanthropy

A Wealth of Opportunity

Donor Advised Fund contributions could top £1bn in a decade says new report

Oct 31st 2017

Donor Advised Funds (DAFs), the ‘foundation-light’ option for philanthropists who want control over where there money is charitably invested but without the heavy infrastructure of a foundation, are growing apace in the UK according to a new report from Charities Aid Foundation and UK Community Foundations – two major providers of DAFs in the UK.

The Philanthropy Comes of Age report shows that £370m was deposited in DAFs in 2015/16 while £280m was made in grants from them in the same year.  Overall, there has been a 51% increase in contributions over the period 2013/14 – 2015/16 with more than £1bn charitable assets now housed in the UK's nine funds. The report identifies a potential growth in contributions to £1bn in 10 years.

In the USA, these funds have grown massively to over $80 billion in assets and around 300,000 accounts.

According to CAF ‘an important benefit of this way of giving for many donors is the chance to pause, think and develop a vision for the causes they wish to support and the difference they want to make, allowing them to achieve their charitable objectives over time'.

The report says: 'DAFs and their equivalents can be an effective solution when a client has a windfall and wants to give but isn’t sure where to give – an example is that of entrepreneurs who sell businesses and decide to give a proportion to charitable causes, alongside gifts to their family and longer-term security for themselves. This has become increasingly popular when individuals have inherited money. With changes to inheritance tax and rules around second properties in recent years, there has been an upsurge in those donating inherited properties into funds.'
 
One misconception around this way of giving is that it is only relevant for those with vast wealth. Although some funds hold millions of pounds, the entry point is around £10,000 with some providers.

Community Foundations’ donor advised funds are known as named funds and are usually held in the form of an endowment, so that the donor’s gift will have a sustainable, long-term impact. Donors with named funds receive advice from their Community Foundation, so they understand where the greatest need is and how best to address it.

The report includes examples of the impact of some of the DAF funds including helping young people into employment and an initiative to help charities build resilience.

Read the full report here

 

 

 

 

 

 

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