As part of the wealth planning process, you'll be helping your client decide how much they want to and are able to give. On this page we have a series of tools which can assist you in providing expert advice to your clients on the type of donation that would be most effective for their giving.
Framework for philanthropy
The Philanthropy Wheel© is a tool to help clients understand more about their personal style of giving and their investment preferences.
"People have to articulate the passion, style and impact they wish to have before they start giving. Before understanding the realities of the world, the client also has to know themselves."
From 'Grantmaker to Leader: Emerging Strategies for 21st Century Foundations' by Frank Ellsworth and Joe Lumarda
Asked, "What do you want to give to? What do you feel passionate about? What do you love about your community?", a client may not know immediately how to respond. How can you as an adviser identify what's going to help most?
Fund types
Community foundations establish funds for people who already have charitable trusts as well as those who are new to philanthropy and wish to set up a fund with their community foundation. Typically when a donor has a problem giving money away they can set up a Donor Advised Fund with the community foundation.
Community foundations are pioneers of the Donor Advised Fund (DAF), which provides many of the same benefits to a donor as a private family charitable trust (including all tax reliefs) but donors are also able to use the Community Foundation’s grant-making, due diligence, monitoring and reporting processes.
As well as Donor Advised Funds there are Themed Funds, Directed Funds, Administrative Endowment Funds and Unrestricted Funds.
See fees below.
Gift type
The first step is for your client to meet with their local community foundation to discuss what your client wants to achieve. The foundation will guide them through a variety of options, depending on whether they have a lump sum immediately available or plan to build an endowed fund over a longer period.
Once their fund is up and running, your client can choose how much involvement they want. But hands-on or hands-off, you can rely on community foundations' in-depth knowledge to ensure the gift goes to organisations and projects whose work has been thoroughly assessed for its value to the community.
A detailed explanation of the different ways to build a fund: Cash, Gift Aid, shares, property and trust transfers.
DAFs and Trusts compared
You will need to help your client to determine the right giving vehicle – their own charitable trust, a fund at a community foundation, or some other structure.
Learn more about the pros and cons of a trust as compared to a Donor Advised Fund with a community foundation, which is the most popular fund option. [Links to section 2.8.3.4]
Should your client decide on having their own charitable trust, community foundations are able to help with the practicalities of grant distribution and reporting. This can be done on a consulting basis or by establishing a flow-through donor fund with the community foundation.
Funds are also established for clients with existing charitable trusts who struggle to give the money away, or for clients who need a structure for their giving.
Fees
Community foundations are charities and therefore any gift by an individual is eligible for gift aid. Contributions towards costs in supporting individuals and companies can often be supported by the community foundation retaining between 4% and 12% of gift aid for their services. Costs are competitive and typically much lower than the setting up of a private charitable trust. The variation in cost depends on the requirements of the donor. Community foundations offer more than basic transactional support and provide a variety of philanthropy support services: consultation, fund design, out-reach, grant-making expertise, monitoring, due diligence and reporting services.
Some donors with existing charitable trusts use community foundations for their grant-making services but gifts from trusts are not eligible for gift aid.
How to build a fund
Community foundations work with the donor and their professional adviser to decide on what kind of donation best suits them. While community foundations are not qualified tax advisers, they give relevant information on the types of tax benefits of giving and encourage donors to check with their own financial advisers.
How to sample projects in your local community
To look at some of the great issues and themes that your clients might be interested in supporting go to localgiving.com