What can you do with a donor advised fund?
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. Not all charities can facilitate shares gifts, but a DAF provider has the ability to do so.
Your clients can 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 client advises on where they would like the money to go.
Grow
Assets can be invested in a DAF for the long-term. As an advisor, you can help design an investment strategy that works for your clients and their philanthropic plans.
Diversification can allow for a mixture of investment into growth funds or stocks, social impact repayable finance, or ESG and ethical investing, multi-year grants and one-off 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 multiple times. This flexibility and personalisation makes DAFs deeply satisfying and allows clients to enjoy their giving while the DAF provider absorbs the responsibilities of account management.
Grant
The due diligence to confirm the charitable purpose of grants sits with the DAF provider, or their delegated authorities. The grant is then made by the DAF provider on behalf of the client.
At CAF we can give to charitable causes anywhere around the world. HMRC has many rules on using UK charitable funds to support causes overseas. But 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 clients may wish to provide.