What is a donor advised fund?

A DAF is an alternative to a charitable foundation. Instead of registering with the Charity Commission, you can set up a fund with our CAF Charitable Trust. This fund acts as a one-stop shop for your giving needs, enabling you to make tax-efficient, irrevocable charitable contributions, and then recommend for the fund to be invested or make grants on to organisations that you suggest over time.

DAFs offer several advantages over charitable foundations, namely cost savings, tax-efficiency, flexibility, and ease of administrative, fiduciary, and reporting requirements.

This gives you everything you get from a standalone foundation but it comes under the provider’s umbrella. It takes out a lot of the hassle associated with running your own foundation.

Learn more about the CAF Charitable Trust

What can you do with a donor advised fund?

We say gift, grow, grant.

Gift Box

Gift

DAFs can be funded with a variety of assets including cash, shares, non-cash assets and third party entities. The tax incentives associated with a reduction in capital gains taxes make donating shares increasingly popular.

Individuals make an initial gift into their DAF, followed by further gifts as and when circumstances allow. While the gifts are irrevocable and become the assets of the DAF provider, the individual will request where they would like the money to go.

Plant growing

Grow

Assets in a DAF can be invested. Your investment/financial advisor can design an investment strategy that works for you. A portfolio balance can allow the original amount to grow or, in the case of social finance, the impact to multiply.

DAF's allow investment into growth funds or stocks, social impact repayable finance, environmental, social and governance (ESG) and ethical investing, multi-year grants and one time gifts.

Money in hand

Grant

You can request distribution of funds to charitable organisations and initiatives anywhere in the word and via a range of financial structures from one-off grants to structured loans.

Our charity verification team undertakes due diligence on any requested charities, social enterprises and charitable projects on a local and global scale, ensuring that our clients’ assets are deployed and protected for their intended purpose.

Are you a professional adviser? 

We'd love to discuss how CAF philanthropy services can support you and your clients. As the UK’s leader in donor-advised giving, we’re a trusted philanthropy partner of some of the largest wealth management firms in the UK.
 
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Tax relief available with donor advised fund:

For UK tax payers, Gift Aid may be applicable on cash gifts to a DAF.

In addition Donors who pay tax above the basic rate can reclaim the difference between the rate they pay and basic rate of tax via their personal tax returns to unlock further potential tax savings.  

Example for a gift of £100,000 where the donor pays tax at higher rate of 45%:

  • You donate £100,000 to charity
  • The DAF can claim Gift Aid on the donation at 25% so the charity ultimately receives £125,000
  • You can reclaim £31,250 via your personal tax return (i.e. the difference in tax rates (45% - 20%) x gross donation of £125,000).*

*In order to qualify you have to be a UK taxpayer and subject to an income or Capital Gains Tax liability equating to the same amount.

In summary, a donor advised fund allows:

  • Ring-fenced money for long or short-term charitable giving
  • Estate planning which can be modified without extensive legal fees
  • Flexible gifting options
  • Tax efficiency
  • The ability to name the fund as you choose, or stay anonymous
  • Ease of reviewing giving history and investments within one trust account
  • Freedom to give to charities all over the world from one vehicle without time constraints or pressures, or the need to do your own due diligence
  • Family to be involved and planning for your giving to continue beyond your lifetime
  • Additional advisory and strategic support to help you have more impact and achieve your philanthropic goals.
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CAF Charitable Trust

Setting up a donor advised fund?

The CAF Charitable Trust is our flexible, secure donor advised fund for managing and maximising your long-term giving. If you're thinking about setting up a donor advised fund, our expert philanthropy team are here to help.

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