How Donor-Advised Funds provide flexible solutions
Following the introductory interview with Prism the Gift Fund’s Founder, CEO, Anna Josse, last
week, Anna gives CityAM a closer look at how Donor Advised Funds provide flexible solutions for
private clients and their philanthropic goals.
Philanthropy is inherently personal; there are as many reasons for giving as there are people who
give. At Prism the Gift Fund (Prism), we believe that not only would many people like to give more,
but others would be happy to start if they weren’t intimidated by the complexities of charitable
Donor Advised Funds (DAFs) as effective giving vehicles
DAFs are growing in the USA and the UK. In the US there is about $175bn of assets under
management in DAFs and in the UK about £1.7bn. We have a way to go but they are the fastest-growing philanthropy vehicle in the UK for good reason.
Charitable giving, especially at a significant level, through one’s own foundation is not as simple as it
once was. One needs highly knowledgeable trustees, they need to be trained on issues such as
safeguarding, policies that need to be created and adhered to and the due diligence, governance and
compliance on gifts to charities in the UK and overseas requires expertise. And if one does have the
ability and the time to create a charity, then opening a bank account can sometimes take up to a
year, so in total it can be a two-year slog to open one’s own charitable entity. DAFs are an
alternative. A donor can open an account at Prism and call their DAF anything they wish – eg. The
Joe Bloggs Foundation. The DAF appears like a foundation to the public and charitable recipients or
conversely, they can choose to remain anonymous. With Prism, donors can set up a DAF within 48
hours. The donor has a relationship manager with whom they liaise and suggest what charities, not-for-profits or social enterprises globally, they may wish to gift to. For those donors giving large gifts,
they are able to suggest where they would like a balance of assets managed.
Donations can be made to their DAF using cash, shares, property, art, and even cryptocurrencies. These
assets come with different attractive tax incentives but unfortunately, many donors are unaware of them and they are underutilised. The simplest of these tax initiatives is Gift Aid and in fact, approximately £500m-£750m in Gift Aid is unclaimed every year. Charities are missing out on this 25% uplift from the Government and some higher-rate taxpayers do not seem to be claiming tax back on their gross donations. To simplify things, Prism provides one document at the end of the tax year for each donor to give to their accountant stating the total amount of their giving and the possible tax to reclaim. Donors also receive a detailed account statement each quarter to see all activity on their DAF account, including investment valuations. To cater to our market, we also offer Prism Offshore and Prism US. In addition, we can accept and hold donations in GBP, USD and Euros.
The Collective Fund
The Collective Fund service at Prism, offers a charitable structure to individuals and groups
fundraising for specific issues, such as racial and climate justice, enabling them to quickly raise and
distribute funds to their charitable causes. Prism takes care of all the financial administration, and
charity governance, carrying out due diligence and ensuring the programmes are compliant with UK
charity law. This enables the founders of Collective Funds to fundraise tax-efficiently (and make use of government schemes such as Gift Aid) whilst really being able to focus their time and energy on
the cause and making a real difference in lives.
The Collective Fund model can also benefit a corporate looking to develop its CSR, creating a
company ‘foundation’, a white labelled structure at Prism. As a group, they still decide on the
charitable projects they wish to support but use Prism’s expertise to navigate the compliance and
governance of the distribution of funds. Prism helps educate donors and private client intermediaries on all the benefits of these different methods of giving as well as encouraging philanthropy and the structures of giving. We’ve found that when donors understand how to give most effectively, they tend to give more.
Prism’s ethos is one of efficiency and offers a swift and personal service to donors. The growth of Prism in the last few years is a testament to both its need and its effectiveness.
Anna’s initial interview with CityAM can be found here:
For more information on Prism, or to explore whether a DAF could be a solution for your giving,
please contact Amy Jakar at firstname.lastname@example.org