"Philanthropy is inherently personal; there are as many reasons for giving as there are people who give. We've found that not only would many people like to give more, but that others would be happy to start if they weren't intimidated by the complexities of charitable giving." We spoke to Anna Josse, Founder, CEO of Prism the Gift Fund to get the low down on effective giving vehicles, Donor Advised Funds.
What is a Donor Advised Fund?
Donor Advised Funds (DAFs) are growing in the USA and the UK. In the US there is about $160bn of assets under management in DAFs, compared to about £1.7bn in the UK. A DAF is an alternative to setting up one's own grant-making foundation. A donor can call their DAF anything they wish – such as The Joe Bloggs Foundation – and their account appears like a foundation to charitable recipients. The donor can have all the joy of giving, whilst the compliance and governance infrastructure are provided by a DAF.
How has philanthropic giving changed in recent times?
Recent global crises have led to more charitable giving through DAFs due to their flexibility, security and ease. For example, the advent of Covid-19 compelled those who could give to give more, and give faster. Donors were looking for ways to donate more than cash, and through DAFs, found ways to donate shares, property and even cryptocurrency. More recently, civil unrest and war overseas have motivated philanthropists to consider broader and wider giving. To do so safely and securely is vital and requires extensive due diligence and reporting.
For example, throughout 2021 donors were looking to send aid to charities in Afghanistan. We were approached for advice and help from our donors and their professional advisers as to how their clients could donate to causes efficiently and without risk. Whilst DAFs offer a flexible service with the opportunity to onward distribute funds globally, no bank in the UK would send funds directly into Afghanistan. To overcome this challenge, Prism signposted clients to UK-based or established international charities with existing projects and protocols on the ground in Afghanistan, so that support would be re-directed to this conflict area safely.
What challenges are involved in navigating the fundraising and charity sector?
There are many challenges involved in charitable giving as the rules and regulations around giving are increasingly difficult to navigate. The due diligence, governance and compliance is essential and onerous, requiring charitable expertise. This year, many people in the UK have wanted to help those suffering as a result of the war in Ukraine. Coinciding with the efforts of large UK charities were grassroots groups and small organisations looking for ways to help. With the best of intentions, many of these groups faced challenges when fundraising and planning operational activity without knowledge of the charity sector or appropriate giving structures. The Charity Commission issued an alert encouraging the public to ensure they were donating to a reliable fund and taking the time to carry out their due diligence research. For time-poor donors looking to make a difference, giving via a DAF ensures that the levels of compliance necessary in these circumstances are carried out expertly and efficiently.
What other trends are you seeing in this sector?
As well as donating personal wealth, we're seeing a rise in the number of individuals and groups looking for ways to optimise their networks to make a difference in times of crises. In early 2022, we were approached by groups who wanted to start fundraising immediately and start distributing funds to Ukraine. Many of these groups were unaware of the vast complexities involved in raising funds in the UK and sending money overseas. We echoed the Commission's guidelines in that 'initiating their own informal fundraising appeals that are not linked to established registered charities should be aware of the ongoing responsibilities associated with overseeing and managing funds...'. Further, we try and encourage new groups looking to raise funds to connect with others doing similar work within that cause area, or to utilise the expertise provided by Donor Advised Funds.
What are the most important considerations to bear in mind when choosing an appropriate giving structure such as a charity or Donor Advised Fund?
When creating or contributing to any charitable project, especially those overseas, it's hugely important to consider and be aware of charitable laws in the UK and beneficial to have experience on navigating the regulatory landscape. Donor Advised Funds exist to make philanthropic giving more efficient and safer for HNW individual donors, but also to encourage and improve giving. Individuals who donate via DAFs can be assured that their donation is being managed with the highest standards of due diligence and they can spend more time and energy focusing on what causes need their help.
With thanks to Anna Josse, Founder and CEO of Prism Gift Fund
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