11th February 2020
Prism the Gift Fund is a UK registered charity that encourages money into the charitable sector by providing administrative support services to individuals, groups and foundations gifting significant amounts. We do this by operating a Donor Advised Fund (DAF) as a time, cost and tax-effective alternative to having a Foundation. Last year, Prism the Gift Fund had an income of £45 million and distributed £32 million to charities around the world.
What Problems Does A Donor Advised Fund Solve?
The problem Prism the Gift Fund is trying to address is two-fold. With the ongoing rules and requirements in regulation, setting up a standalone charitable foundation is extremely onerous and costly. In addition, there are too many foundations that are run inefficiently and ineffectively in part due to the people involved not having the necessary financial and regulatory charitable expertise.
Parallel to this, the number of HNW and UHNW individuals in the UK has been growing, with the Sunday Times Rich list reporting that there were 151 UK-based billionaires identified in 2019. Whilst the proportion of HNW and UHNW individuals giving to charity is increasing, barriers to giving still exist, which prevent more funds flowing into the charitable sector.
Barriers identified relate to ‘the perceived level of impact, administrative costs and bureaucracy, and issues surrounding well-publicised financial scandals.’ There was also a considerable lack of understanding about the tax incentives that these people may be eligible for when donating to charity. In a major donor giving research report, supported by the Institute of Fundraising, it was highlighted that, ‘there is room for improvement for charities to better explain tax breaks and help donors with planned giving.’
Lack of understanding and knowledge on tax-efficient ways to give and on the rules and regulations governing the charitable sector are the very problems that Prism the Gift Fund’s Donor Advised Fund seeks to solve.
We are unique within the marketplace, providing a tailored, flexible service to best assist grantmakers in their aims. We emphasise relationship management, to best understand our clients’ changing requirements and make sure that we are always doing the best for our clients.
What Can I Do with A Donor Advised Fund?
A Donor Advised Fund is a named, ring-fenced, charitable account within Prism the Gift Fund, itself a registered charity. A DAF follows the same premise as a foundation and can be named as such under the auspices of Prism the Gift Fund. These act as a tax-effective UK hub for High-Net-Worth and Ultra-High-Net-Worth individuals’ giving, without the ongoing and set up costs associated with establishing a standalone charitable structure.
Prism the Gift Fund removes the administrative burden of ensuring that donors are claiming all the relevant UK tax reliefs. Prism the Gift Fund targets the mid-upper end of the market and offers a flexible, efficient, personable service to clients.
So, What Can I Do with My DAF?
- A DAF is flexible, efficient and cost-effective. Each client has a Relationship Manager who looks after their account.
- A DAF provides the donor with autonomy (should they choose) over onward grants that are sent swiftly to their suggested charities
- A DAF gives a donor flexibility to make grants to causes all around the world.
- A DAF at Prism the Gift Fund can make grants to a charity, exempt body, not-for-profit and social enterprises around the world.
- A DAF at Prism the Gift Fund enables donors to elect where to have a balance of assets managed.
- Prism the Gift Fund has a dynamic gifting proposition. Donors are able to donate a variety of assets to their DAF which each have their own associated tax relief for qualifying individuals;
- Who most commonly contribute Cash to their accounts (which comes with the best-known UK charitable tax relief: Gift Aid).
- Shares – gifting the gain and the full share amount alleviating Capital Gains Tax and Income Tax.
- Open-ended investment company (OEIC) and Unit Trusts – on gifting these types of assets to Prism the Gift Fund, we become a shareholder in the structure itself, drawing down the dividends when the donor wishes to make a cash donation.
- Property; a powerful tool with estate planning where the property can be sold on donation to the charity or the rental income attributed to their Donor Advised Fund.
- Land – receiving full Income Tax relief when eligible and pay no Capital Gains tax.
- Cryptocurrency – Prism the Gift Fund are in the trialling stage for accepting crypto donations.
- Legacy Giving – donors can create a DAF in their will, nominate a successor and if they’ve left 10% or more to charity will be taxed 36%, instead of 40%, Inheritance Tax.
Corporate Philanthropy with a Donor Advised Fund
Prism the Gift Fund offers an in-house ‘Own Name Foundation’ for firms looking to engage in corporate philanthropy. Prism the Gift Fund provides the charitable structure and the due diligence knowledge, whilst encouraging the fund to have ownership over their grantee selections without the liability and responsibility of creating a foundation.
A fund within Prism the Gift Fund offers organisations a named and branded pot to which they can contribute or raise funds. The funds collected in that account can then be requested to go to causes in the UK or overseas, depending on the groups’ charitable objectives. This removes the administrative burden of ensuring that donors are claiming all the relevant UK tax reliefs.
Donors commonly contribute cash, which comes with the best-known UK charitable tax relief: Gift Aid. Donations that qualify for Gift Aid are not only topped up by 25% by HMRC, but an individual donor may also qualify for a rebate, if properly recorded on their tax return, to the value of either 20% (for 40% ratepayers) or 25% (for 45% ratepayers) of the gross donation.
In addition to encouraging employees of the firm to contribute to the Corporate Foundation, the firm itself can raise their profile around CSR by making a gift to their Corporate Foundation at Prism the Gift Fund.
Prism the Gift Fund provides an ‘Own-Name Foundation’ account under Prism the Gift fund’s auspices and the expertise of our Board of Trustees. As a charity, we can claim Gift Aid on all eligible donations from donors in the firm’s fund, receipt and thank donors on behalf of your firm; removing the burden of administering the donations correctly with HMRC. The firm can then gift out to charities, not-for-profits and social enterprises around the world whilst Prism the Gift Fund ensure accurate records of gifting, receipting and reporting.
Collective Giving with a Donor Advised Fund
Prism the Gift Fund enables individuals and groups who are raising funds for a specific charitable cause to create a collective fundraising pot. A Collective Fund is a unique and easy way to set up a charitable fund for groups raising over £25,000 a year.
These groups benefit from Prism the Gift Fund’s charitable status, and donations can be gift aided to support global initiatives. This is essentially a Donor Advised Fund with multiple donors instead of one that gives towards a single cause rather than many. Where a Donor Advised Fund is seen as substituting a private grant-making foundation, the Collective Fund provides the back-office administration for operational groups.
The model enables groups to focus on the cause while Prism the Gift Fund provides the administration, compliance and governance; removing the obstacles involved with setting up a standalone charity. These groups are able to claim gift aid on eligible donations, without having to go through the long, expensive and complex legal process of setting up a standalone charity.
A Collective Fund Enables Individuals and Groups:
- Create and name your own ‘restricted fund’
- To determine your charitable objectives – be it cause-related, to raise funds for an overseas charity or in the name of a loved one (memorial funds)
- Operate under Prism the Gift Fund’s registered charity auspices
- Provide you with the ability to fundraise online
- Receive 25% more in gift aid on all eligible donations
- Benefit from the oversight of Prism the Gift Fund’s experienced Board of Trustees
- Gain transparency in your charitable activities – Prism the Gift Fund conducts all due diligence on your behalf
- Receive a dedicated account manager at Prism the Gift Fund
- Outsource all financial administration to experienced charity professionals – Prism the Gift Fund receives and administers all income and expenditure
The Collective Fund model is a testament to Prism the Gift Fund’s entrepreneurial spirit and flexibility, and the many various different Collective Funds operating under our auspices have achieved huge success and impact with their charitable projects.
A few of our figures below exemplify the reach and importance of our Collective Fund’s work:
- 1,000,000 meals provided so far through Help Refugees
- 3,000 unused medications donated
- In Nepal 240 individuals given health tests, 3 volunteer doctors
- Provided funding towards helping some of the 450,000 + women rebuild their lives in post-conflict countries Bosnia/Rwanda/s. Sudan/ DRC and Afghanistan
To see a full list of our Collective Fund clients visit our website.
Next Generation Giving with a Donor Advised Fund
There is set to be the largest transfer of wealth in history from the ‘baby-boomers’ with an expected $4 trillion to pass to inheritors or be left to good causes.
Prism the Gift Fund acknowledges the importance of engaging the next generation with philanthropy and their own giving journey. There is often not a space on the Board of a Family Foundation for the next generation, or they have different goals and objectives to the Family Foundation. For example, the Family Foundation may have been set up with the charitable objective of alleviating poverty, whereas the next generation may be more passionate about Climate change or women’s rights.
Prism the Gift Fund provides a service for second, third and fourth generations to engage in philanthropy and the family’s legacy. We do this by creating a ‘giving circle’ consisting of family members operating an ‘Own Name Foundation’, which are ring-fenced accounts DAFs, running under the auspices of Prism the Gift Fund. The Next Generation philanthropists decide on where and how to give, and Prism the Gift Fund provides efficient and personal administrative support overseeing the compliance and governance on gifts made.
Surprisingly, not as many wealth transferrers as you’d expect are putting plans in place to ensure their wishes are met or that their beneficiaries are adequately prepared. In creating a next-generation giving circle, wealth becomes a family discussion. This helps heirs to understand how hard the generation before them have worked. The Next Generation Giving Circle at Prism the Gift Fund enables families to share their experiences and educate their children about wealth; starting sooner rather than later to develop their understanding and build a sense of legacy.
If a group wishes, they can have a balance of assets managed by a firm of their choosing. This allows the group to discuss motivations behind investments and encourages heirs to see the value of managing that wealth properly. Groups may choose to impact invest with their balance of assets and so Prism the Gift Fund’s Next-Gen philanthropy service is an example of additional and complementary philanthropy that can exist alongside sustainable and responsible investments. Get in touch to find out more.