The table below summarises the key differences between having a trust or establishing a DAF. The main differences between the two fund vehicles are cost and administration. Even if you have your own charitable trust you may find that you want to give locally and the community foundation can help you achieve this. So some donors have both a charitable trust and a fund with a community foundation.
Tim Thornton-Jones, Partner with Lawrence Graham with over 30 years experience with private clients, offers the following advice:
"As a general rule of thumb, I advise my clients that a charitable trust needs to be endowed with at least £750,000 in order to generate sufficient income to be viable. Even when a client knows precisely what they wish to do, the preparation to the Charity Commissioners for registration can, typically, cost £10,000. An annual audit is likely to cost £5,000 and just the day to day administration can add another £5,000 per annum."
| Community foundation (CF) | Charitable trust | |
|---|---|---|
| Start-up | ||
| Procedure | Simple agreement | |
| Costs | 0-3% entry fee | |
| Time frame | Immediate | |
| Minimum contribution |
10k for named revenue fund 25k for named endowed fund |
No minimum requirement |
| Tax status | Covered under the CF's charity status | Covered by registration with the Charity Commission |
| Reporting | CF takes care of reporting to the Charity Commission through Annual Report and Accounts | The donor/trustee must maintain all financial records, prepare accounts and submit to the Charity Commission |
| Donor control | Trustees of the CF take on legal and fiscal responsibility for the donor's fund, while the donor recommends grants to organisations vetted by the CF | Donor appoints board of trustees to control all aspects of grantmaking and investments |
| Philanthropy advice | CF provides full service advice to donor | Donor/trustees responsible for own giving strategy |
| Grantmaking service: expertise, administration, follow-up | Professional staff available to help identify and assess grantees; provide input on community needs; and ensure follow-up with recipients. Reports back to donor | Donor responsible for own grantmaking process, administration and oversight |
| Privacy | CF can maintain donor anonymity | Charitable trust must keep public records |
| Profile | CF can help donor as much or as little as required | Responsible for own profile |
| Geography | CFs mainly operate in their primary geographic area of benefit, but can partner with other UK CFs on delivery of national or regional initiatives. Some international grants can be made in specific circumstances | Donor/board of trustees determine their geographic reach |
| Reach | CF connects donors to a variety of groups and issues in the community. CF connects like-minded donors | Must find own networks and information resources |