8th December 2020

Building Your Legacy and Philanthropy: A Balancing Act


Sanlam and Prism the Gift Fund co-host the first webinar in Sanlam’s Family Office series. The series focuses on the key issues in the life-cycle of a family office, offering practical and actionable advice.


Penny Lovell, CEO at Sanlam Private Wealth, speaks to Anna Josse, CEO and Co Founder of Prism the Gift Fund (Prism), to discuss the need for education in philanthropy, some of the reputational challenges involved in giving, and Own Name Foundation accounts – Donor Advised Funds – at Prism. Prism is a UK registered charity that administers the giving of individuals, groups and foundations making significant gifts to charities globally.


Penny Lovell – I would like to start by asking you about some of the stories about Prism’s Collective Funds and what they have achieved. It is through this that we can inspire families and wealth managers to talk to their clients.


Can you tell me about Resourcing Racial Justice?


Anna Josse – Resourcing Racial Justice (RRJ) is supporting grassroots projects and individuals, identifying where funds are needed most. RRJ are supporting the elderly and combating loneliness with a radio station in Bristol. In three months they have raised £1 million. Due to the Black Lives Matter movement this year, the founders wanted to set up very quickly. That is one of the best things about Prism, we can facilitate speed. That is our whole ethos: efficiency, speed and responsiveness.


PL – Another of your Collective Funds is The World Food Programme – How did that relationship start?


The World Food Programme (TWPF) came to Prism in July 2015 looking for a UK charitable roof through which to raise funds tax effectively during the World Rugby Tournament in October 2015 through a campaign on ITV. TWFP is not a UK charitable entity, they are owned by the United Nations in Rome. We deal with all the governance and compliance on their grants. They have just won the Nobel Peace Prize!


PL – How can a family create something similar if they are passionate about a cause?


AJ – It is relatively straightforward, much more so than creating your own charitable entity under the Charity Commission. Today, this will take you months and costs tens of thousands of pounds in legal fees and auditing fees. Instead, a next generation family member might really care about the refugee crisis and instead of setting up their own foundation, they can create a Collective Fund at Prism.


When a family has its own foundation but the next generation cares about a cause that is not part of the original charitable objectives, or they want some independence of their own, they can create their own group that operates under Prism outside of that family foundation structure.


It could be family and friends, maybe 11 to 20, on a quasi-board. They each put in money, and they decide annually where the funds go. It is a fantastic way of motivating the next generation and giving them independence.


In order to get through Prism’s doors, there are extensive applications. We need to understand what you are doing, what the budget is and whether it is charitable.


PL – Do I need a huge budget?


AJ – No, you don’t. You need to show us that you have donors and a stream of income.


PL – What is a Donor Advised Fund (DAF)? How does it work either for a major philanthropist or within the collectives?


AJ – A DAF is an ‘Own Name Foundation’, charitable account into which a Donor can give cash, shares, property and art. All of which come with tax breaks that are underutilised or unknown.


Increasingly, private client intermediaries are pointing donors to Donor Advised Funds as a time cost and tax effective alternative to a charity. The DAF market is growing in the UK, because of the strict regulatory backdrop of the Charity Commission – people don’t want their own foundations anymore because of the legal responsibility that befalls trustees.


Donors have a personal Relationship Manager at Prism – we offer a very personal service. The balance of assets is looked after by the bank of the donor’s choosing. Every quarter, the donor will be given a quarterly statement so they can see what their giving looks like. We also provide an end-of-year tax statement so their accountant can very easily deal with any tax reclaims.


And then there is the Collective Fund. There is a lead donor, raising money for a cause from a number of donors. It could be cause-related like Resourcing Racial Justice, it could be a memorial fund raising money in the name of a loved one.


We also operate a British Friends of Model -overseas charitable entities that come to the UK and want to fundraise tax effectively at a big dinner event for example, can raise funds under Prism’s umbrella. Prism will do all the financial back-office administration, pay expenses, and any net profit goes back to the overseas entity.


PL – Prism did an interesting Think Piece on the Paradox of Philanthropy. What interested me is that people love to see the benefits and fruits of philanthropy but the philanthropists are often criticised. Can you tell us more about the piece?


AJ – We did a survey with NatCen and found that one of the key paradoxes is that people approve of donations, but the donors are being knocked for their giving. We do need to be more open and transparent as a sector. Some donors don’t like their name in shining lights and don’t agree with donors that do. To me, it doesn’t matter the reason you give. It is a good journey if you end up giving.


In 2012, the government tried to put a ceiling on Gift Aid. Within six weeks the charity sector had overturned that. The media were criticising the tax reliefs donors receive, but people don’t seem to understand that when you benefit from Gift Aid, you are still giving money away. It is misunderstood.


PL – What could we do to better inform people on Gift Aid?


AJ – We need to better educate private client intermediaries around the tax reliefs so they feel confident and comfortable to have a discussion with their clients about philanthropy.


PL – Social investment, ethical investment and ESG are increasingly on our radars now. How engaged are your clients with that?


AJ – Social investment is growing, but again, it requires knowledge and education. A lot of the tax reliefs around social investment are perceived as not having worked, because they were too difficult to navigate.


For some of our clients, it’s not either/or. Social investment can be complementary to traditional philanthropy. You could support a gift to Cancer Research UK, and also support a loan for a capital build or a social enterprise.


PL – There is often a concern about how easy it is to give internationally. Is that something you can help the international families with?


AJ – Yes, Prism is expert in administering gifts overseas. International giving is increasingly complex. HMRC believe there is over £1 billion of fraud going through the UK charity sector overseas. Therefore, they and the Charity Commission have introduced greater oversight and rules and regulations on gifts overseas. We have a robust protocol and systems in place for overseas grants.


When you make a gift overseas, it has to comply with UK Charity Law. We need to have a clear report on where the funds are being used and that safeguarding and data protection policies (amongst others) are in place.


Question from the audience: What are the types of gifts that Donor Advised Funds give?


AJ – Each donor is very different and they begin their journeys in different ways. It could be a personal tragedy or health issue, or they could start supporting a charity that friends are raising money for.


For example, I have one donor who is very involved in the arts, in the National Gallery and big British public institutions. I have another who came to us saying they care about social mobility and education. I connected him with The Sutton Trust, which is an enormous structure looking at social mobility.


It is massively varied. In our accounts, publicly available on the Charity Commission, you can see all of the causes we have supported with donations of £25,000 or more and see the full range. Over the last year, Prism distributed over £50 million to charities all over the world.


Question from the audience – If a donor wanted to make a gift of shares, what are the range of investment options they would have with that share portfolio and how do they choose where those assets are managed?


AJ – A gift of shares on any listed stock exchange around the world will allow the donor to benefit from CGT relief and 45% income tax relief. You can make the gift of shares to Prism, get the tax relief, and then sell the shares on our behalf to create a cash pot or the shares are held in a portfolio and the client will draw down cash when they are ready to make a gift..


We have a number of hedge fund clients, whose hedge funds are deemed collective investments units where you can also get this tax relief. They make a gift of shares from their hedge fund to Prism and Prism becomes a shareholder. They only draw down when they want to make distributions out.


It is a very impactful way of giving. All of these tax reliefs are largely under utiliesd but a fantastic incentive to encourage people to give. Prism run workshops with families and private client intermediaries to educate them on tax effective giving and the language of philanthropy.