A donor-advised fund that gives a dual-qualified solution for UK and US clients has spoken to this news service on its journey, how it works and its model.

A dual qualified donor-advised fund (DAF) that has generated more than $1 billion in charitable contributions from its clients since it was founded in 2000 now operates on both sides of the Atlantic, with registration in the UK and US.

Since launching over 20 years ago in the UK with law firm Withers, CAF American Donor Fund has offered philanthropy services for dual US and UK taxpayers. It first explored ways to establish dual-qualified giving to deal with a growing number of US and UK clients who were being taxed in both jurisdictions, but their charitable contributions weren’t acknowledged in the same way.

Contributions made to CAF American Donor Fund, a UK and a US charity, qualify for eligible tax relief in both jurisdictions (including the UK’s Gift Aid, which can effectively add 25 per cent to a donation).

This news service recently spoke to Joe Crome (pictured), head of CAF American Donor Fund about how it operates, fits into the philanthropic landscape, and its dual-registration status. CAF American Donor Fund is based in London and Kent and, since April last year, has an office in New York. It also works with colleagues at CAF America and CAF Canada. 

“We opened our NYC office last year to cover both sides of the Atlantic, so we’re looking to grow in recognition in the States. A lot of our referral partners and clients are well-versed in terms of DAFs, and many know us through our US office, CAF America, who support US corporates and individuals with overseas giving, based out of Washington DC. But we find that many advisors don’t know about this dual-qualified solution for their US/UK clients,” Crome said. “We’re now raising awareness across relevant private client firms in New York and beyond, so that advisors gain an extra tool in their belt to help with this particular cross-border client group, both in terms of tax efficiency but also philanthropic legacy.”

“We have over 400 clients who are all US/UK dual taxpayers. In the 2021-22 financial year, CAF American Donor Fund clients contributed £94.8 million ($117.7 million),” Crome told this publication, and preliminary figures show that the 2022-23 year has been even more successful. 

There have been several interesting donations in recent times, including the gift of a London apartment as a property gift, and several works of art. Gifting non-cash assets can be very tax efficient for donors and allows them to make a charitable impact with possessions and property that they own.

Because of the dual-taxpayer element, CAF American Donor Fund’s clients are individuals rather than corporate donors. Many are high net worth and ultra-HNW donors that use CAF American Donor Fund to support charities around the world.

CAF American Donor Fund is part of the Charities Aid Foundation (CAF). CAF is a near 100-year-old charity which connects organizations, institutions and individuals. The CAF group consists of Charities Aid Foundation (CAF) in the UK, including CAF Bank; CAF America; and CAF Canada.

The CAF Network is a global collaboration of trusted partners made up of fully independent organisations who share CAF’s mission to accelerate progress towards a fair and sustainable future for all. CAF currently has partners in Australia, Brazil, Bulgaria, India, South Africa and Turkey, in addition to CAF operations in the UK, US and Canada.

The rise of donor-advised funds
The DAF model has gained momentum and is increasingly popular, Crome said. In the UK, £626 million was donated into DAFs in 2021, and more than £2 billion is held in UK DAFs. In the US, the market for these structures is vastly higher - $72 billion was donated into DAFs in 2021, with over $234 billion within DAF accounts.

Joe also advised that donor-advised funds have become popular because they offer most of the benefits of philanthropic giving without the burdens of creating and maintaining a person’s own charitable foundation structure. DAF providers oversee the administration and regulatory due diligence so that donors can focus on giving. 

The future of philanthropy
“Philanthropy is increasingly a family endeavor and we work across generations on giving plans to ensure that the legacy of the family takes into account the personal priorities of its members,” Crome said. “Increasingly, younger family members are interested in environmental and climate-related causes, as well as human rights' issues, fighting human trafficking and other ethical movements.

“In the US, education tends to be an important charitable cause to our clients, such as supporting scholarship funds at universities and schools. Our clients also support a lot of health charities, including cancer research organisations in both the US and UK, and we also send funds to humanitarian causes in Africa, Asia and across Europe. 

“Clients are passionate about making sure their money makes a difference in the way that the charities can best make use of the funds, so we make a lot of unrestricted grants that enable charities to allocate donations to where they are most needed,” he continued. 

Any challenges?
Decision-making for donations can be difficult, Crome said.  

Crome added: “Sometimes philanthropy can seem quite overwhelming, and the fear of failure can also cause hesitation. How can I make a difference? What if I get it wrong? I don’t know where to start.

"The advice we give is to start – start giving, talk to charities, talk to other donors and peers to learn from each other, try some donations, see what feels right. It can be helpful to work with a philanthropy advisor – and CAF can help with this. CAF also provides bespoke philanthropy advice to help donors consider causes and charities that have the greatest impact," Crome added.