Charitable Giving

The range of options open to families and individuals planning charitable giving can be daunting, although with the right advice and appropriate structure, both donor and donee will benefit.

Matthew Briggs, partner specialising in personal tax, estate and succession planning, gives an overview of the considerations.

Whether it’s the desire to give back to society in the broadest sense, a passion for a particular cause, or the wish to leave a legacy for generations to come, motivations for charitable giving are both personal and deeply felt. In many families, charitable giving can also engage future generations in a shared sense of philanthropic purpose.

We often advise individuals and families interested in charitable giving, some of whom are just at the start of their philanthropic journey and are in need of some guidance, and others who are looking to expand their existing charitable enterprises to facilitate change at a greater pace.

We are frequently asked to advise on the best way to structure charitable giving and there are several possible approaches, including the use of trusts, companies and charitable incorporated organisations. Seeking professional advice at an early stage will ensure you put in place an appropriate structure that reflects your vision for the charity and its future, and that it is run in a way that complies with the governing document and the law. 

There are financial benefits to philanthropy, with donors being incentivised to ‘do good’ by generous tax reliefs, including Gift Aid. For some individuals or families, a ‘donor-advised fund’ (or ‘DAF’) will be the best approach. A DAF allows you to donate ‘your way’ and receive the tax benefits, whilst not having to deal with the administrative aspects of running a charity. 

When it comes to your Will, making charitable legacies can be a ‘win-win’, not only allowing you to support causes that are close to your heart, but also reducing the amount of inheritance tax that your estate pays. Put simply, if you give at least ten per cent of the ‘net value’ of your estate to charity, then the rate of inheritance tax for the rest of your estate falls from 40% to 36%. 

There are a number of options for those individuals who are thinking about leaving charitable gifts via their Will, and it is important to seek expert advice to ensure that the gift is structured to the best effect. Gifts that pass to qualifying charities on death are themselves exempt from inheritance tax and, subject to the necessary advice, donors may wish to bolster charities they have created during their lifetime with further funds from their estate.

For more information on how we can help, please contact Matthew Briggs at matthew.briggs@theburnsidepartnership.com.