Don’t put away that passport yet! Our summer abroad isn’t over yet. This final part of our tour takes place in the UK. We’ll explore the diverse options that DAF donors have to make their philanthropic gifts in the UK, how that compares with giving in the US and how, just as here at home, DAFs in the UK have grown in popularity over the past several years. The first UK donor advised fund sponsor, the Charities Aid Foundation, was established in the 1970s. Although the US has had a 50 year head start, DAFs in the UK are catching up!
Smart Philanthropy, a consulting firm, created an incredible comparison guide to UK DAFs. Not only does the report give the audience insight into the numerous sponsors available, it also breaks down the time needed to establish a DAF, what the minimum contribution is to open a fund, fee calculations, and the complex assets that are accepted (cash, art, crypto, property). It even shows a list of which sponsors invest in ethical funds, which I found especially interesting for donors who are pursuing specific interest areas or simply want to know where their money is being invested.
The level of the detail in the report is impressive- such as full charts for each of the sponsors, breaking down their specifications and fee structure. Incredible! It even shows who the sponsor banks with. For those of us (*waves*) who have spent hours trying to find comprehensive information on DAFs and sponsors, this site is enough to make a researcher cry tears of joy.
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Philanthropy Impact is another great resource for UK DAF information. Although some information is limited to members, many of their resources are publicly available. For example, their 2024 DAF Report is free for all and includes some of the most detailed sponsor information that I’ve been able to find.
Similar to the Smart Philanthropy guide, Philanthropy Impact’s report includes regulations, the minimum investment to open a fund, the minimum grant size, and niche details such as whether a fund can participate in cross-border (international) giving.
I really liked that each sponsor had their own page in the report with relevant information, which could serve as a great tear sheet for quick reference. The detailed information on affiliated advisors and programs from each organization was great context for comparison with the other UK sponsors. Nonprofits will be pleased to see that the report even shows the average time for grant funds to be distributed.
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The National Philanthropic Trust (NPT) UK’s 2023 UK Donor-Advised Fund Report, another helpful and comprehensive resource, studied how UK sponsors evolved from 2018 to 2022. They found that:
- Grants from DAFs increased 21 percent in 2022 from the prior year, totaling £554.7 million ($705.6 million US dollars).
- Contributions from donors to their DAFs rose even higher- 37 percent over 2021 to £868.5 million ($1.1 billion US dollars).
- Total assets across all funds rose 12 percent to £2.5 billion ($3.2 billion US dollars).
- DAF contributions in the UK equated seven percent of individual giving for 2022.
For comparison, a report from the same period noted that in the US, DAF contributions equated to 27.2 percent of individual giving. For further comparison, the US NPT report for the same year noted that total grants rose nine percent to $52 billion and contributions rose by the same amount to $85 billion.
An interesting trend in UK DAF contributions was the increase in non-cash assets. The NPT UK report noted that an individual that contributes to their fund via stock saves on capital gains tax and receives an income tax deduction on the market value of the shares.
Another angle on DAF giving in the UK that I hadn’t thought about is the impact on due diligence for the donor and the sponsor. The NPT UK conducts due diligence on grant recipients, including a financial due diligence review. In the report, NPT UK notes that there is a “rise in the use of donor-advised funds to ensure regulatory compliance….particularly around trustee responsibilities and grantmaking due diligence. Using donor-advised fund ensures that a donor is assured of regulatory compliance with the latest regulations.”
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Lastly, for dual citizens, IFC Review wrote in 2022 that dual-registered DAFs are a less-known option but can be attractive. Although many cross-border DAFs exist in Europe, those in the US and UK don’t have as many options.
Sponsors such as NPT Transatlantic, Charities Aid Foundation and CAF American Donor Fund offer funds for donors in the UK and US. In an interview with Joe Crome, head of the CAF American Donor Fund, he noted that in 2022, the fund had more than 400 US/UK dual citizens and distributed £94.8 million (nearly $122 million in US dollars). By the time the Fund’s 2023 report was released, more than £1 billion ($1.28 billion US dollars) had been distributed, which included £103 million ($132 million US dollars) from dual US/UK donors.
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Phew! What a journey we’ve had. Many of us in research know that researching individuals in the UK can be challenging due to privacy regulations. So it was really enlightening to find out so much about UK DAF donors’ philanthropic options to give at home and abroad. And, DAFs have a much larger presence in the UK than I was anticipating.
Was there something that surprised you in this post? Let us know at hello@dafinitive.com!
