29th November 2022
Giving Tuesday is a global movement to encourage people to do good and give back. In recognition of a day that celebrates philanthropy, we’re looking at the effective ways donors can maximise their giving through Donor Advised Funds.
What is a Donor Advised Fund?
A Donor Advised Fund (DAF) is a named, ring-fenced, charitable account under the auspices of a UK registered charity such as Prism the Gift Fund (Prism).
At Prism, DAFs provide a tax-efficient alternative for High-Net-Worth and corporates, groups and foundations giving significantly to charity without the ongoing and set up administration and costs associated with establishing a standalone charitable structure. DAFs are a simple, time and cost-effective alternative to a private grant-making foundation and donors have the joy of giving without the legal burden, costs and responsibility of operating a foundation. At Prism, we provide a flexible, efficient and personable service to clients. We offer private client philanthropy.
How can I maximise my giving with a DAF?
With Prism, donors can donate a variety of assets to their DAF which each have their own associated tax relief for qualifying individuals:
Cash funds come with the best-known UK charitable tax relief: Gift Aid. For donations eligible for Gift Aid, Prism claims an additional 25% of the donation from HMRC, topping up the balance of the DAF. Higher rate taxpayers may be eligible to claim back a further 25% on the gross donation in their end of year tax return. Click here to use our Gift Aid calculator to see what your donation could be worth.
Shares can be donated and come with tax incentives if they are listed on a stock exchange anywhere in the world. Not only are the gifted shares not liable to Capital Gains Tax, but the donor can also claim full Income Tax relief at their highest rate. Donors can also choose to ‘gift the gain’ on the shares and don’t have to sell the shares; their charitable pot can be contributed to by annual dividends from the shares. Prism also accepts private listed shares but there is no tax incentive.
Property and land can be powerful donations where the property can be sold on donation to the charity or the rental income attributed to their Donor Advised Fund. The same tax breaks apply to gifts of property as gifts of shares, so the donor is not liable to Capital Gains Tax, but can also claim full Income Tax relief at their highest rate.
Prism had a crypto-wallet and can accept donations of cryptocurrency.
With a gift of 10% of more in their will, donors reduce their inheritance tax from 40% to 36%. Instructions can be included in a will to establish a DAF on death or, donors can start giving with a DAF in their lifetime and leave a gift on death to their DAF at Prism. Anna Josse, Prism’s Founder, CEO always says, warm money is more interesting than cold money! So why not start giving in your lifetime, and why not start on Giving Tuesday?
For all of these tax incentives which could maximise your giving, Prism ensures that claiming the relevant tax relief is straightforward and simple by providing clients with an end of year tax statement.
Whatever you intend to donate, Prism exists to make the act of giving easy and efficient, leaving donors with the joy of giving whilst Prism takes care of the necessary due diligence, compliance and administration involved. Get in touch today to find out how you can start your giving journey through a Donor Advised Fund.
