What is a good donor advised fund for small UK donors?
post by Halstead
This is a question post.
I am trying to find a donor advised fund to do some patient philanthropy. Does anyone know of a donor advised fund that:
- Is for UK donors
- For someone with <£50k to donate straight away
- Offers an aggressive investment strategy (global stocks)
- Has low fees
- Doesn't charge for philanthropic advice
answer by Halstead
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The enterprising Phil Trammell says in an FB message
"I just got off the phone with Vanguard Charitable, and they say that there's no issue with setting up an account from overseas. The catch is that contributions have to come from a US-based bank or investment account...! Since anyone can contribute to anyone's DAF, this doesn't seem too hard in principle; you can just contribute by sending money to a US-based friend, or that rethink charity donor-swap org or something, and they deposit it in the account you manage online. (It could always be done in small batches, if you don't fully trust them.) The initial contributions wouldn't be tax-deductible (or maybe they would be for the friend you're initially sending the money to?), but at any rate the interest still wouldn't be taxed.
Maybe this too much of a hassle for any individual to bother sorting out, but if there's interest from enough other people, and someone's willing to set some arrangement like this up, would you want to use it?"
answer by Halstead
) · GW
One option I had thought about was - until there is an option for UK people, put the money in a CAF bank account and then get the gift aid, and wait until a suitable product becomes available. However, I think this is inferior to just putting the money in a Vanguard account - after 5 years 4% fees from CAF and no investment returns eats up all the gift aid benefits.
↑ comment by AmritSidhu-Brar ·
2020-06-15T10:11:21.155Z · EA(p) · GW(p)
Okay, I called CAF to ask about this, as I was interested too. Apparently the Charity Account's 4% fee is a one-off at the time of donation, rather than annually recurring. You can hold the money indefinitely after it's put into the account for no fee. The fee is 4% on the first £22.5k donated per year, after that it reduces to 1%. (They linked me to a PDF detailing this here.) So this seems like it could well be worth it, in cases where you have more than a few £000 to donate to registered charities, if it would be more efficient to be able to move across tax year boundaries?
They also offer something called a CAF Charitable Trust, which is a fuller-service Donor-Advised Fund (not in fact a charitable trust...). It has a minimum opening balance of £10k, and this one (a) does have annual fees, of 1.2% to a minimum of £120/year, then reducing for very high balances (over £100k); and (b) allows investment. Their investment options seem pretty good: their basic service lets you access a range of funds called the "FP CAF investment funds" – the link was broken to on their website, but I got the impression there was a reasonable range of them, and the person on the phone said she'd email me details (I'll edit when I have them). They also have a "Premier service" for balances over £25k, with a higher fee of 1.5%, which lets you invest in any UK-listed fund or ETF that fulfils some requirements (which in practice are apparently usually fine).
They also said that, with either the Charity Account or the Charitable Trust, you can make donations to any UK-registered charity, most overseas registered charities, and sometimes social enterprises (overseas charities and social enterprises have an approval process to go through, which they're willing to do for a large enough donation).
I think I may open one of these at some point in the next couple of years, will update if I do!Replies from: Halstead
↑ comment by Halstead ·
2020-06-20T16:00:46.187Z · EA(p) · GW(p)
Credit to you for getting in touch with them! It still looks like it's not worth it to use either CAF account.
The charity account - the tax benefits won't be worth the lost investment returns.
The CAF charitable trust - The annual fees will make it not worth it vs normal investing. Again, the tax benefits won't be large enough
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