What can you do with a donor advised fund?
We say gift, grow, grant.
Gift
You can gift all sorts of assets into a donor advised fund. DAFs can be funded with a variety of assets including cash, shares, non-cash assets and third party entities which you are connected to. Donations of shares have been quite frequent over the past few years, which is largely a reflection of stock market performance. The tax incentives associated with a reduction in capital gains taxes makes this option increasingly popular with donors. And not all charities are able to facilitate share gifts, however a DAF provider is set up with the functionality to do so.
In most instances, individuals make an initial gift into their DAF, followed by further planned gifts as and when circumstances allow. While the gifts are irrevocable and become the assets of the DAF provider, the individual will advise on where they would like the money to go.
Grow
You can invest the assets in a DAF for the long-term. You can bring in your investment advisor or financial planner to help design an investment strategy that works for your philanthropic plans.
Diversification can allow for a mixture of investment into growth funds or stocks, social impact repayable finance, or environmental, social and governance (ESG) and ethical investing, multi-year grants and one time gifts. This portfolio balance can allow for the original invested amount to grow and, in the case of social finance, for the impact to be multiplied with loans that are repaid and re-loaned on several occasions. Having this flexibility and personalisation makes DAF vehicles deeply satisfying. It allows trust holders to enjoy their giving while the charitable institution absorbs the responsibilities of account management.
Grant
The due diligence to confirm the charitable purpose of grants made by a donor sits with the DAF provider, or their delegated authorities. Once that has been completed, the grant is then made by the DAF on behalf of the donor.
At CAF we can give to charitable causes anywhere around the world. That's not an easy thing to do as HMRC has quite a lot of rules about using UK charitable funds to support charitable causes outside the UK. We deal with those. We can fund programmes and initiatives, multi-year donations and put in place legal agreements where required to underpin some of the more complex forms of support that you may wish to provide.
We also offer advisory services that can help you realise greater impact through your giving. These can include strategic planning, charity recommendations, and grant management.