£1.3bn now held in UK donor-advised funds

04 Dec 2018 News

Some £1.3bn pledged to charities is resting in donor-advised funds in the UK, according to a new report.

First established in the 1970s, donor-advised funds (DAFs) are philanthropic vehicles established as holding charities that allow donors to make a contribution, receive an immediate tax deduction and then recommend grants from the fund to charities over time.

However, these recommendations are not legally binding and the trustees of the holding charity can exercise discretion over whether a proposed grant is actually approved.

A report from NPT-UK, which used data from the accounts of nine of these holding charities, says that the amount held in these funds rose to a record £1.3bn in 2017, a 24 per cent increase on the year before.

This was driven by £481.1m being paid into these funds by donors in 2017, a 36 per cent increase on the year before.

Meanwhile, the amount given in grants to charities from these funds grew by 15 per cent year-on-year to £319.2m in 2017.

Despite this growth, the report warns that the UK’s impending exit from the European Union could affect future performance of the funds.

It says: “The economic uncertainty of Brexit remains a risk for the coming year. At the time of publication, it is unclear how leaving the EU will impact charitable giving in the UK.

“However, contributions to and grants from donor-advised funds have continued to grow in the two years since the vote for Brexit.”

UBS funds grows

Meanwhile, the latest issue of Charity Finance magazine reported that the UBS UK Donor Advised Foundation, which specialises in setting up DAFs for clients of Swiss Bank UBS, reported a 63 per cent increase in income to £51.9m in 2017.

In 2017, the Foundation opened 37 new donor accounts, up from 16 in 2016, and approved 560 grants in excess of £24.6m to 339 UK registered and exempt charities.

Looking ahead, the Foundation aims to “continue to facilitate the philanthropy of donors in an operationally efficient manner”, and to develop its “engagement in innovative offerings, such as programme-related investment, in order to offer donors a state-of-the-art philanthropy service.”

The full article can be read in the 250th issue of Charity Finance and online here.

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