Making Bespoke Investments Using a DAF

There are several benefits to managing your charitable giving through a donor-advised fund (DAF), but one of the most commonly cited is their flexibility – from their speed and ease to set up, to the variety of assets that can be accepted as charitable contributions.

Another example of their flexibility is the range of investments they offer. Just as foundations increasingly invest their endowments ‘responsibly’, in line with certain ESG metrics, DAF assets can also be invested to promote positive impact.

You may be well-versed in supporting your clients with their asset allocations in investment accounts, but you can also help them ensure they have the correct investment allocation for their DAF account.

At NPT UK, we strive to make it simple as possible to align a donor’s investment strategy with their philanthropic goals and values. For example, we provide sustainable and impact investing options for your clients and can help navigate this burgeoning market, which was estimated to be between $715 billion and $2.1 trillion in 2020 by the Global Impact Investing Network and International Finance Corporation respectively.

By investing their DAF assets for impact, your clients can align their impact investment goals with their grantmaking goals to bring more resources to bear in addressing social and environmental challenges.

With all this in mind, here’s a shortlist of benefits in making a bespoke investment using an NPT UK DAF:

• For DAF balances over £500k, donors can recommend that their DAF assets be managed by the investment manager of their choice, as long as they are invested according to NPT UK’s investment policy guidelines. For lower value DAFs, your client may choose from NPT UK’s approved investment options.

• Donors can have their DAF assets managed alongside their other investments. This allows your clients the freedom of time to increase their other assets for financial return which could be used in future charitable donations.

• You may deepen your relationship with your clients. Being well-informed about the advantages and benefits of making bespoke investments using DAFs will expand your own base of knowledge and help you develop your relationship with your clients.

In our experience, many donors want to pursue their charitable causes using every tool available. Once your clients have put philanthropic capital aside in a DAF or other charitable vehicle, they can put those assets to work immediately, even before making a grant.

For more information, please contact us.

About the Author

Natalie Pinon is Director of Development at NPT UK. She has over 15 years of experience working with philanthropists and impact investors to manage their giving.