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Maximise your charitable giving using a Donor Advised Fund

We recently helped a client to achieve their charitable giving goals via a Donor-Advised Fund.

DAF case study article

We recently advised a client who wanted to establish a vehicle for charitable giving. Initially, the client wanted to make annual donations of £100,000 with plans to contribute a substantial lump sum in the future, following the sale of their business.

Our Solution

We recommended that the client use a Donor Advised Fund (DAF). This vehicle allows clients to direct giving to their chosen causes and benefit from tax relief, without the complexity that can be associated with other charitable structures (such as charitable trusts). DAFs also benefit from gift aid.*

Based on an initial £100,000 donation, and with the benefit of gift aid, the client’s DAF received a total of £125,000 (£100,000 + £25,000) in the first year. As the client was a higher rate tax payer, he was able to claim higher rate tax relief via his self-assessment tax return. This resulted in tax relief of £25,000 (£125,000 x 20%).  

The total cost to the client of funding a £125,000 donation to the DAF was therefore just £75,000.

Giving cash is not the only way to fund a DAF. It is also possible to give shares and other assets, maximising tax reliefs and the amount you can give to charity. See our case study on gifting cash and shares for further information. 

*Currently, for every £1 of cash contributed, UK charities can claim an extra 25 pence in Gift Aid. Donors must have paid sufficient tax in the year of the charity claiming the gift aid, otherwise HMRC will ask the donor for the balance.

Giving via a DAF: a quick guide

  1. Make a one-off or regular irrevocable gift of cash to your Cazenove Capital DAF.
  2. The trustees of the Cazenove Capital DAF claim gift aid from HMRC on the donation and credit the additional funds to your DAF account.
  3. You can reclaim further income tax relief if you are a higher or additional rate tax payer via your tax return.

Statements concerning taxation are based on our understanding of the taxation law in force at the time of publication. The levels and bases of, and reliefs from, taxation may change. You should obtain professional advice on taxation where appropriate before proceeding with any investment.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.