Members' Zone
Donor advised funds and trusts compared
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.
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 sufficent 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.'
Procedure Must apply to Charity Commission and register. Costs Time frame Minimum 10k for named revenue fund 25k for named endowed fund
Community foundation (CF)
Charitable trust
Start-up
Simple agreement
Must appoint a board of trustees.
0-3% entry fee
Possible legal fees for registration
Immediate
May take a few weeks or months
contributionNo 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
<< Tools for giving
For more information about how CFN and its members can partner with you to serve your clients, please contact Clare Brooks, Director of Philanthropy or phone +44 20 7713 9326.
Commmunity Foundation Network Registered office: 12 Angel Gate, 320-326 City Road, London, EC1V 2PT Company registration number 2651777, registered in England and Wales. Registered charity number 1004630
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