DAFs have grown in prominence as philanthropy conduits in the UK and in the much larger market of the US.

The philanthropy structure known as a donor-advised fund in the UK continues to expand, with grants from DAFs rising 21 per cent on a year ago, according to a new report from the National Philanthropic Trust UK. 

Contributions to DAFs rose for a tenth year in a row, reaching a total of £868.5 million ($1.099 billion), surging 37 per cent on a year ago. Grants from DAFs reached £554.7 million.

DAFs in the UK are not yet on a scale of those in the US, the largest market for such structures. The UK system dates back to the 1970s, while the US DAF market was launched in the 1930s. In the US, contributions to DAFs stood at $72.67 billion in 2021 (HighGround Advisors). 

The development of such entities shows how the philanthropy world, and associated structures, has changed. This news service recently spoke to senior philanthropy advisory figures in the US and UK here.

“DAFs are an effective way for donors to manage their giving and are also used as an alternative to setting up a charitable trust or foundation. Every year we are seeing more interest in DAFs from donors, their advisors, and the charitable sector more broadly,” John Canady, CEO of National Philanthropic Trust UK, said. 

The 2023 DAF report examined data from 11 charities registered at the Charity Commission of England and Wales that sponsor donor-advised funds. 

“Donors often consider contributions to a DAF as a charitable endowment that enables long-term and sustained giving, as well as responsive philanthropy,” Canady continued. “We saw a rising demand for DAFs from Middle Eastern philanthropists, as they can also be used for Shariah-compliant investments for their philanthropic capital.”

Charitable assets in DAFs total £2.5 billion, a 12 per cent rise on the previous year. 

Benefits of a DAF include Gift Aid for UK taxpayers, additional claims for higher rate taxpayers and income tax relief for gifts of shares. People can use offshore trusts and other fiduciary structures to make contributions to a DAF.