29th October 2019
If philanthropy is your passion or you’re a regular charity donor and want an efficient, bespoke charitable structure through which to channel your giving, starting a Donor Advised Fund is an obvious option.
Donor Advised Funds (DAFs) are an easy to establish, tax-effective vehicle for individuals and families giving globally. A DAF is a time and cost-effective alternative to a foundation and simplifies the giving process. If you’d like to find out more read: ‘The Difference between a DAF and Grant Making Foundation’.
When considering starting a Donor Advised Fund, donors and their advisors need to be aware of the differences between the DAF providers (a non-profit entity). Some are Dual Tax qualified (suitable for US Donors), others are also banks (charging a percentage on monies under asset management) and some can only give to UK charities.
Prism the Gift Fund, a UK registered charity and DAF provider, enables donors to contribute a mix of assets to their DAF: cash, shares, property, legacy gifts, artworks and now Prism the Gift Fund is piloting crypto donations. On donation, they receive immediate tax relief; donors should consult with accountants and tax advisers on their eligible tax relief. Prism the Gift Fund facilitates international charitable donations around the world and itself is not a bank but allows donors to have a balance of assets managed by a firm of their choice (often where their personal wealth is held).
The rules of using Donor Advised Funds:
- Donors need to remember that on gifting to a DAF, they’ve made an irrevocable donation to charity and cannot get it back.
- They can then recommend or advise which charity a grant from the DAF is made to; though this will ultimately rely on the receiving charity meeting the due diligence standards of the DAF provider.
- Some DAFs have a minimum amount to open an account.
- Source of funds must be proven on donation into the DAF.
- All DAFs charge a fee, be it investment and/or administrative.
- Donors can give anonymously or be recognised for gifts.
- Donors can name successors of the DAF.
- There can be no private benefit from a gift to a charity. Speak to a Relationship Manager at Prism to discuss the rules around pledging at dinners or auctions.