Beyond Cash: How Your Clients Can Contribute a Variety of Assets to a Donor-Advised Fund

When it comes to charitable giving, cash donations have remained the most popular. However, a growing number of philanthropists are discovering the power of donating non-cash assets, which offers the potential to increase their charitable impact while providing additional benefits in return.

Not all charities are able to accept non-cash gifts directly, explaining in part why this option hasn’t yet been widely adopted. But the use of donor-advised funds – such as those provided by NPT UK – offers donors the flexibility to contribute a diverse array of assets, from stocks and shares to property and other valuable items.

Gifting non-cash assets empowers donors to maximise the impact of their charitable giving.

As an advisor, here are three key questions you should be able to answer when it comes to donating alternative assets.

What types of assets can be contributed to a DAF?

Donor-advised funds typically accept a wide range of assets. Beyond cash, these include publicly traded securities such as shares, bonds, funds, restricted and controlled stock, privately held stock, alternative investments, property, art, cryptocurrency, and bequests.

What tax relief will my client receive?

A DAF sponsor is a registered charity, and your client will therefore receive the same tax reliefs as they would any other charitable gift. A gift of shares provides an additional tax benefit to the donor. If gifted to a DAF, the donor doesn’t pay any capital gains tax on shares that have increased in value, and they can claim income tax relief on the total fair market value of the contribution on their self-assessment tax return.

What happens to the assets my client contributes to a DAF?

Gifting stock and alternative assets via a DAF is a straightforward process. The DAF provider will take care of all the administration and paperwork. If necessary, assets can be liquidated, and your client may recommend that the funds are invested to generate income and capital growth for philanthropic purposes. For DAF balances above £500,000, NPT UK offers the option for your client to recommend the assets be invested with the manager of their choice. For DAF balances under £500,000, your client may choose from NPT UK’s approved investment options.

As strategic philanthropy continues to evolve, so too the options to make a charitable impact. Exploring new ways to give, such as donating non-cash assets through a DAF, could help unlock your client’s giving potential.

To find out how NPT UK can help you find what works best for your clients, contact us.

About the Author

John Canady, CEO of National Philanthropic Trust UK, has 25 years of experience working across the business, nonprofit and government sectors. He specializes in creating and managing philanthropic funds for donors and family offices around the world who wish to base their philanthropy from the UK.