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1 Ropemaker StreetLondon EC2Y 9HTUnited Kingdomnpt-uk.org1 Ropemaker StreetLondon EC2Y 9HTUNITED KINGDOMwww.npt-uk.org
Donor-Advised FundREPORT
This report was prepared by NationalPhilanthropic Trust UK in collaboration withScorpio Partnership, an Aon Hewitt Company.National Philanthropic Trust UK gratefullyacknowledges all of the organisations that sharedtheir donor-advised fund related statistics andinformation. NPT (UK) Limited, 2017. All rights reserved.1 National Philanthropic Trust. All rights reserved.
DEAR COLLEAGUENational Philanthropic Trust UK is pleased to publish our second annual UK Donor-Advised FundReport. Donor-advised funds are philanthropic vehicles held within a charitable organisationthat allow donors to make an irrevocable charitable contribution, receive immediate tax reliefand then recommend charitable grants from the fund over time.Our report examines the UK donor-advised fund market using 2016 data compiled fromdomestic charities that offer donor-advised funds. The charities that manage donor-advised fundaccounts vary in size and scope, but they share a common goal of promoting charitable givingand making grants to a wide range of charitable organisations.For the fourth year in a row, there were record benchmarks in every data point: grants,contributions, and charitable assets. Grants from donor-advised fund accounts to other charities are nearly 280 million,reaching a record high. Contributions to donor-advised fund accounts total more than 3.6% of total individualgiving in the UK. Charitable assets in donor-advised fund account total over 1 billion for the first time –an increase of 8% over the prior year.One thing is clear from these numbers and those on the following pages – donor-advised fundsare a major factor in the philanthropic sector. Every pound in donor-advised fund accounts isdestined for charitable organisations. These record highs are good news for charities and theirbeneficiaries.NPT-UK is pleased to make this report available to our partners in giving and the public.John CanadyCEO National Philanthropic Trust. All rights reserved. 2
A GLOSSARY OF TERMSCHARITABLE ASSETSThe amount charitable sponsors hold and managein donor-advised fund accounts. Some charitablesponsors manage other types of funds as well. Thisreport is limited to assets in donor-advised fundaccounts.CHARITABLE ORGANISATIONA charity. In the context of this report, acharitable organisation can be either a charitablesponsor of donor-advised funds or the recipientof a donor-advised fund grant. A UK charitableorganisation is registered at the Charity Commissionand a foreign charitable organisation is eligible toreceive grants from the UK according to HMRC andCharity Commission regulations. Donations to acharitable organisation are eligible for tax-relief. Acharitable organisation serves broad public purposesin educational, religious, scientific and artistic fields,among others, as well as the relief of poverty andother public benefit activities.CHARITABLE SPONSORA charitable organisation that managesdonor-advised fund accounts. Charitable sponsorsprovide services to ensure that potential grantrecipients are qualified charitable organisationsand administer donor-advised fund accounts toensure compliance with all regulations. Alsocalled sponsoring charity or fund sponsor.3 National Philanthropic Trust. All rights reserved.CONTRIBUTIONAmount a donor donates to a donor-advised fundaccount when establishing the fund or addingmoney to it.DONOR-ADVISED FUNDA philanthropic giving vehicle administered by acharitable sponsor. A donor-advised fund allowsdonors to establish and fund the account by makingirrevocable, tax-relieved contributions to thecharitable sponsor. Assets in the account are investedbased on the donor’s recommendation. Donors thenrecommend grants from those funds to any otherqualified charitable organisations.GRANTA transfer of assets from a donor-advised fundaccount to a qualified charitable recipient.
MARKET OVERVIEWDonor-advised funds grew substantially in 2016. Total charitable assets available for grantmaking areover 1 billion. The steady rise is a result of both an increase in contributions to donor-advised fundaccounts and gains from investment returns. Grants from donor-advised fund accounts also rose.CONTRIBUTIONS AT ALL-TIME HIGHContributions (Millions)Contributions to donor-advised fund accountsin 2016 totalled 353.6 million. This numbersurpasses the 2015 value of 288.7 million,an increase of 22 per cent. 353.6 300 200 206.0 198.7 288.7 245.2 1002012GRANTS TOTAL 276 MILLION 276.7 million, the largest total over thepast 5 years. This is a 14 per cent growth201420152016Grants (Millions)Grants from donor-advised fund accountsto charitable organisations reached2013 242.4 225 175 173.7 276.7 203.7 155.5 125rate compared to a total for 2015 grantsof 242.4 million.2012CHARITABLE ASSETSUK donor-advised fund accounts totalledover 1 billion in 2016, an all-time high.201420152016Grants (Millions)SURPASS 1 BILLIONCharitable assets under management in all2013 900 700 726.1 829.2 889.1 987.9 1,062.9 50020122013201420152016 National Philanthropic Trust. All rights reserved. 4
PROJECTIONS AND OBSERVATIONSWHAT LIES AHEAD?Looking forward, donor-advised funds will likely continue to grow and positively impact the philanthropic marketgiven the following trends: Increasing Awareness Amongst Advisors Traditionally, donors who wanted to set asidemoney for charitable giving established afoundation or charitable trust. Today, donoradvised funds are an easy and flexible alternative.Although low awareness of donor-advised fundsremains a challenge, more lawyers, tax advisors,and wealth managers are recognising the benefitsof donor-advised funds and proactively suggestingthem to their clients. Many charities that sponsor donor-advisedfunds are willing to accept non-cash assets, suchas shares and securities, property, alternativeinvestments, crypocurrencies, and other typesof assets. Typically, the charitable sponsor willliquidate such assets relatively quickly and turnthem into philanthropic money for grantmakingpurposes. We expect that donors will continueto evaluate the non-cash assets in their personalportfolios and increasingly contribute them totheir donor-advised funds.Grantmaking with ConfidenceDonors are increasingly using donor-advisedfunds for global grantmaking. Due diligence andcompliance for grants to charities outside of theUK can be cumbersome. Using a donor-advisedfund means that the regulatory and grantmakingcompliance is handled by the charitable sponsoradministering the donor-advised fund. Donors arealso becoming more innovative by using donoradvised funds for collaborative or collective givingto increase the impact of their grantmaking.Contributing Non-Cash Assets Flexible Investment OptionsDonors may recommend that the assets in thedonor-advised fund be invested to grow tax-freeto support their future grantmaking. In addition torecommending traditional financial investments,donors are also recommending social or impactinvestments that achieve both a financial andsocial return.SUMMARY Desire for Privacy and DiscretionDonors may recommend that grants be madefrom their donor-advised funds anonymously.This protects donors from unwanted charitablesolicitations and allows donors to give withoutunwanted attention.5 National Philanthropic Trust. All rights reserved.2016 marks the fourth year in a row of growth in allthe key metrics for donor-advised funds – total grantpayments from them, total contributions to themand total charitable assets in them. In spite of theeconomic uncertainty surrounding Brexit, donors whouse donor-advised funds continue to allocate capitalto philanthropy and support charitable causes and thepublic good.
ME THODOLOGYORGANISATIONSSTANDARD FISCAL DATA BY FILING YEARThis report examined nine charities registered atthe Charity Commission of England and Wales thatsponsor donor-advised funds.Since organisations have varied financial year-enddates, data was recorded in the filing year. Forexample, whether an organisation’s fiscal year ends on31 March 2016 or 31 December 2016, the data will berecorded as 2016.PRIMARY DATA SOURCEThe primary source for each charitable sponsor’sassets, contributions, and grants is the organisation’sAnnual Report filed with the Charity Commission ofEngland and Wales.SECONDARY SOURCESCONTINUOUS DATA UPDATES reviewed—from seven to nine organisations. Filings at Companies House The organisation websites Survey responses from Charitable Sponsors CAF UK Giving 2017, Charities Aid FoundationNPT-UK also updated all key data points(charitable assets under management, grants,The following served as secondary sources for theabove data and cited statistics: NPT-UK expanded the number of charitiesand contributions) back to FY2011. NPT-UK maintains a historical data file datingfrom FY2011.Projections are based on National Philanthropic TrustUK’s experience and anecdotal evidence over the pastyear, in addition to observed economic and politicalconditions. National Philanthropic Trust. All rights reserved. 6
and then recommend charitable grants from the fund over time. Our report examines the UK donor-advised fund market using 2016 data compiled from . domestic charities that offer donor-advised funds. The charities that manage donor-advised fund accounts vary in size and scope, but they share a common goal of promoting charitable giving
