Donor-advised funds

Donor advised funds are simple and easy to set-up and use, and there are a variety of schemes available which suit most donors’ needs.

You decide how much you want to give and pay it into your fund. You can also fund the account through payroll giving or by gifts of shares.

One of the benefits of operating a donor advised fund is that the host organisation deals with the administration and distribution of funds, and provides you with all the tax benefits. Donor advised funds are a tax-efficient way of giving to charity, as they can claim back the tax on Gift Aid donations and add it to the amount in your account.  If you are a higher-rate taxpayer, the periodic statements you will receive provide a useful record of your giving and will help you make your personal tax claim on your Self Assessment tax return.

For example, you could start a fund with your local foundations">community foundation. You can determine your level of involvement with funding decisions, while benefiting from the foundation’s local knowledge, grant-making expertise, monitoring and reporting processes.

Charity accounts, another type of donor-advised fund, are similar to bank accounts and are designed especially for charitable giving. There are many ways to give to your chosen charities through a charity account: generally donations can be made online, with charity cheque books, via debit cards or vouchers, or by telephone, post or standing order.

However, if you are giving relatively few donations of larger amounts, or if you use payroll giving and want to benefit a particular charity regularly, it may be less expensive (and not much more complicated) to give directly to your chosen causes. You would save the administration charges, and because no interest is paid on your charity account, there could be a sizeable cost if you maintain a significant balance in your account.

Other charity accounts and donor-advised funds include:

Charities Trust manages payroll giving schemes for companies and individuals. It sets up and administers match funding for payroll giving, where the employer matches the employee donations, and may opt to also pay the donor administration charge. Charities Trust provides advice and support on fundraising and Gift Aid. It also offers company and individual Freedom Accounts, which enable online, cheque or voucher donations.

Prism administers donations for foundations, trusts and individuals. Each donor has an individual Prism account, where regular or infrequent deposits and donations are managed. Transfer requests can be made by phone or email, or a regular giving plan can be created. Each donor has a charity voucher book that can be personalised or anonymous, as the donor requires.

Stewardship is a Christian financial support services charity. For individual donors it provides the Sovereign Account, a single account to manage charitable giving. Variations of the account exist for donors giving £10,000 or more as well as recipients such as churches wishing to out-source their Gift Aid process.

Community foundations manage funds donated by both individuals and organisations, create endowments and connect donors to local needs. They help donors to give in the most tax-effective way and deal with all the necessary administration on the donor's behalf.