Author Topic: [UK] Has anyone used a Donor Advised Fund with a small startup amount?  (Read 8444 times)

shelivesthedream

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See here: https://www.cafonline.org/my-personal-giving/long-term-giving/donor-advised-funds

There are several local charitable causes I would like to support long term, and I am wondering if a DAF would be a good idea. I don't *think* the tax implications are really going to affect us right now, as I am thinking of starting off with just quite a small chunk of money: 1000-5000. And to invest it and then donate the dividends anonymously and direct our regular charitable giving to pay into the DAF, increasing the capital in there.

What I really want to know is:
1. Can I even set one up for such a tiny amount? It seems like legally this is no problem but organisations that manage them have wildly varying minimum amounts and I have not found one that will deal with such a small starting amount.
2. Will this provide any advantages to allow us to turbocharge our giving by even 1% if we are not earning vast amounts of money, paying vast amounts of tax, and depositing vast amounts of money into it?
3. What kind of management fees are we talking? Will overheads suck all the money away  making the charities worse off than if we'd just donated direct?
4. I am confused about if I can donate to any registered charity or if each platform has different "approved charities".

PhilB

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Re: [UK] Has anyone used a Donor Advised Fund with a small startup amount?
« Reply #1 on: February 13, 2024, 03:10:33 AM »
Hi SLTD.  As I understand it, DAF's wouldn't give you any benefits compared to just gift aiding money to your charities.  They are always going to charge fees, as there is an admin burden for the provider, so I can't believe they would be cost effective at the level you are talking about.

What you could do though, if you aren't already using your ISA allowance, is to DIY it by putting your charitable contributions into a normal S&S ISA that you just call your charity fund, and gifting from the dividend income.  You would get your gift aid when you made the distribution, rather than when you paid in the capital in a DAF, and it wouldn't be protected from IHT (the main reason people use DAFs) but otherwise it would achieve the same end result.

This would also have the advantage that, if you fell on hard times, you would be able to access the funds in the ISA yourselves if needed - with the downside that they would count as assets if applying for means-tested benefits.  And when you become a best-selling author, you can set up your 'real' DAF then and transfer the DIY assets to it :)

shelivesthedream

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Re: [UK] Has anyone used a Donor Advised Fund with a small startup amount?
« Reply #2 on: February 14, 2024, 08:53:11 AM »
Thanks. We're having a complicated conversation about planning giving over our lifetime now we're more financially stable.  I'll add those thoughts to the mix and see what happens!