A new route for philanthropy
A new generation of donors is turning to donor advised funds to support good causes
The next generation of philanthropists is looking for innovative ways to support good causes and recent research suggests this has led to a rise in the use of donor advised funds (DAFs).
A DAF is essentially a charity savings account where a donor can make contributions, enjoy tax benefits and recommend grants from the fund over time. The Next Gen Donors research project by nextgendonors.org found that while the use of traditional foundations and charitable trusts was declining, DAFs were on the increase.
Making it simple
This may be in part because they allow the new generation to go ‘off mission’ from the family foundation while also outsourcing administration to a third party, making giving simpler. And if you’re giving to a variety of causes, it can also make it easier to claim ‘gift aid’ because the donor is often supplied with regular statements and a tax statement at the end of the year.
Although the explosive growth of DAFs in the US has been recent, they have been around since the 1930s, when they were used by community foundations to encourage local philanthropy and by single-issue organisations such as museums. They became more popular from 1969, following new rules in the US relating to foundations, but the first commercial provider wasn’t approved until 1991.
Growing in the UK
The US remains the epicentre of DAFs but they are beginning to grow in popularity in Canada and the UK.
The rise of DAFs supports the findings of another survey from the Johnson Center for Philanthropy, which found that while the next generation of donors, born between 1964 and 2000, are surprisingly similar to their parents in many of their goals, they simply differ in how they want to achieve them.
Wealth Planning Director
Lyn is a Wealth Planning Director and joined Cazenove in 2014. She is a Chartered Wealth Manager and Chartered Financial Planner. Lyn has over 15 years’ experience in advising private clients and leads on impact investing and philanthropy for Cazenove Capital.
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.