Putting a coherent strategy around charitable giving can be an important part of an individual’s Wealth Plan. If giving strategies are among actionable priorities, it is important to identify tax-efficient ways to achieve your charitable objectives.
There are often two primary reasons why people give to charities:
(1) To support a cause or organisation about
which they care
(2) To leave a legacy through their support.
Whilst charitable giving often forms part of an individual’s estate planning objectives, some also give during their lifetime by transferring a sum of money thus removing it from their estate.
There are many different methods by which an individual can give. One way is by maximising the potential tax benefit and thereby ultimately gifting more.
Ways To Give
Before exploring optimal strategies for US persons living in the UK, it would be good to review some of the different ways to give to charity.
(1) Give directly - This approach is the most
straightforward and simple. It involves donating money directly to a charitable organisation of your choice. Any tax benefit is received in the same year in which the donation is made.
(2) Use insurance as a vehicle for gift-giving – If you do not have large sums of money to give during your lifetime and you hold a life insurance policy that is not needed for other important purposes, you could consider naming a charitable organisation as your policy beneficiary. This could result in a larger gift than you otherwise would have been able to make and potentially creates a longer-term legacy. However, serious thought must be given to this method and you should seek guidance from a financial adviser before any steps are taken. Even though the policy may be redundant in terms of the purpose for which it was originally taken out, there may be valuable benefits attached of which you are not immediately aware.
(3) Volunteer time – Giving is not always about money. It can also be about getting involved by giving your time. Many organisations need volunteers to
help deliver on their charitable goals. This can be a way to establish a personal connection and give in ways that require little or no money changing hands.
(4) Establish a trust to give money - This is a longer-term approach towards charitable giving. It will allow you to receive tax benefits today on funds allocated specifically for charitable giving, but actual donations may be made at a future point in time. This may be a strategy for people who are asset rich but time poor and have not been able to decide to which causes they want to donate.
A Donor Advised Fund is one type of vehicle that facilitates the giving strategy. Donor Advised Funds have increased in popularity over the last few years due to their offering of administrative convenience, cost savings and tax benefits.
What Is A Donor Advised Fund?
A Donor Advised Fund, or DAF, is a charitable investment fund, administered by a public charity, that is formed for the sole purpose of supporting charitable organisations on behalf of an individual, a family or an organisation. It allows donors to make an irrevocable charitable contribution, receive a tax benefit immediately and then allocate charitable gifts from the fund at some point in the future. Gifts are made to a specified charity whenever they decide it is the appropriate time. While the gifts remain inside the fund, they are invested with an eye to grow the balance.
What Are The Benefits
Of A Donor Advised
Fund?
DAFs have a number of benefits. First, a DAF is a cost-effective way for donors to maximise the tax benefits of making charitable donations to causes about which they care. A DAF can be set up with a relatively small amount of money (as little as £1,000 or £5,000) so an individual can choose to donate a lump sum or make small contributions in regular intervals over time.
DAFs have relatively few administrative responsibilities. There is generally minimal paperwork that needs to be completed, and
quite often grants can be made directly online.
Additionally, DAFs are not subject to the minimum payout requirement each year. Private foundations, for example, must distribute at least 5% of assets annually. The fact that DAFs are not subject to this requirement leads to more flexibility on timing
of distributions.
Another benefit of DAFs is that when donors
decide to make a donation from the funds held within their DAF, it is possible to choose whether their donation is made anonymously, or if their personal details are disclosed to the donee.
One of the benefits that a DAF offers is not only the ability to receive a tax benefit upon funding the DAF but the ability to invest the pool of money and choose an organisation to donate to at a point in the future. So, if an individual can benefit from funding a DAF today but has not had time to decide which cause they would like to receive their gift, a DAF provides a mechanism to make that feasible.
Under current US tax law and practice, when donating to a US qualified charity ((a 501(c) (3) organisation), an individual can receive a US income tax deduction if they itemise their deductions as opposed to claiming the standard deduction. Under the new tax reforms and the higher thresholds for itemising deductions that have come into effect this year, making charitable contributions in lumps can potentially provide a greater benefit than in previous years. So, for example, if a 37% taxpayer contributes the equivalent of £100,000 into a US qualified DAF, the donation will receive a tax deduction of up to £37,000.
Similarly, when donating to a UK charity, currently the donation will qualify for UK income tax relief. In addition, the donation should qualify for UK Gift Aid which will increase the value of your donation by 25%. So, for example, if a 45% rate individual taxpayer contributes £100,000 to a UK qualified DAF, the donation with Gift Aid will be £125,000 and your additional claim back from HMRC would be £31,250.
How Can A Dual-Qualified Donor Advised Fund Be Beneficial For Americans Living In The UK?
Many charitable organisations are considered to be qualified non-profit organisations in one jurisdiction or the other. As a result, giving directly to charities in either the US or the UK will often result in a tax benefit in only one country.
As Americans living in the UK are generally subject to income tax in both the UK and the US, there are advantages to ensuring that you receive a tax benefit in both jurisdictions for the dollars that you donate.
A dual qualified DAF allows individuals who are taxpayers in both the US and UK to receive tax benefits available in both countries. As such a dual qualified structure will ultimately allow the individual to allocate more money to their favoured charitable causes. Once the money has been donated to the dual qualified structure, it can then be directed towards charitable organisations and causes around the world without the need for the organisation itself to be dual qualified.
Identifying An
Appropriate Donor
Advised Fund Provider
Awareness of DAFs and their rising popularity seems likely to continue as more people reach retirement and look for ways in which to give away some of their wealth in a tax efficient manner.
There are a number of charitable organisations that will facilitate dual-qualified DAFs. A few of the organisations are listed below:
Charities Aid Foundation (CAF)
SharedImpact
Prism the Gift Fund
National Philanthropic Trust (NPT-UK)
When deciding which organisation to establish a DAF with, it can be important to identify one that ultimately aligns with your own interests and values. Each charity has their own cost structure, investment options, minimum contribution requirements and account balances and varying ability to transfer the account to another institution. As the organisation will be trustee over the donated assets, the donor should make sure that the organisation will help facilitate their giving in the manner with which they agree.
While charitable giving is not all about receiving a tax benefit, we know that we are often limited in the amount we can give and would like to be able to give more if we had the ability to do so. Giving in a way that maximises the benefit to both the charity and the donor will help ensure that more assets ultimately reach the causes about which we personally care. Utilising a dual qualified DAF is one way to help facilitate this strategy and should be considered when assessing your charitable giving objectives.
Andrea Solana is Head of Advanced Planning at MASECO Private Wealth
where she helps to provide financial planning and wealth structuring
advisory services to US expatriates in the UK and British nationals in
the US. Before joining MASECO, Andrea spent the first part of her career
with a well-known Washington DC based international tax and global
wealth management firm where she gained considerable experience advising
high net worth individuals with multi-jurisdictional financial
interests to design and implement strategies for tax-efficient and
risk-managed asset growth. She has written numerous white papers
regarding fundamental financial planning and investment strategies for
US connected individuals and has previously been a speaker on financial
planning topics at numerous places including both The World Bank and
International Monetary Fund (IMF).
Andrea graduated from University of Virginia’s McIntire School of
Commerce with a degree in Finance and Management and completed her MBA
at Imperial College London.
Visit www.masecoprivatewealth.com for further information.
Risk Warnings And
Important Information
MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is registered in England and Wales (Companies
House No. OC337650) and has its registered office at Burleigh House, 357 Strand, London WC2R 0HS.
MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is an SEC Registered Investment Advisor in the United States of America.
This article does not take into account the specific goals or requirements of individuals and is not intended to be, nor should be construed as, investment or tax advice. Information contained in this article is based on MASECO’s understanding of current tax law and legislation, however, MASECO Private Wealth is not a tax specialist. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy. We strongly recommend that every client seeks their own tax advice prior to acting on any of the strategies described in this document.
For classical music lovers it doesn’t get much better than the BBC Promenade Concerts, affectionately known as the Proms. A British national treasure since Victorian times, this world’s greatest festival of classical music roars into London’s Royal Albert Hall mid July, setting off 90 concerts and two months of non- stop musical feasting.
The original Proms’ promise, to create a joyous celebration of music and reach the widest possible audience, means there are plenty of affordable options, including half- price for under 18s and 1300 ‘promming’ (standing) tickets for every Prom at £6.
Each Prom Season gets bigger and more imaginative. This year welcomes a gobsmacking choice of orchestras, choirs and premier musicians from around the globe. There are 90 artist debuts and 42 world premieres, intimate late night Proms, lunchtime Proms, Prom ‘Extras’ and loads of free concerts and events for families.
As well as the usual generous helpings of Beethoven, Bach and Mozart, amongst this year’s delights are a Tango Prom, Havana meets Kingston Prom, Folk Music Prom and a jazzy evening with multi-instrumentalist sensation Jacob Collier. Reach-outs to other venues include Proms at Lincoln’s Drill Hall and Gilbert and Sullivan staged in the beautifully restored Victorian Theatre at Alexandra Palace in north London.
The Proms love anniversaries and 2018 is no exception. This year’s Proms feature works by 24 women composers to honour the 100th anniversary of Women’s Right to Vote. Debussy and Lili Boulanger will be honoured on the centenary of their deaths.
The Proms offer a massive grand salute to American composer, conductor and musical personality, Leonard Bernstein, who would have been 100 this year, including celebratory performances of West Side Story and On the Town. As a child growing up in 1960s America, this writer vividly recalls the joy of watching Bernstein’s groundbreaking Young People’s Concerts on national television. Several Proms will introduce new audiences to music as a tribute to Bernstein, the inspirational educationalist.
As ever, the season culminates in that beloved ritual known as the Last Night of the Proms. Last Night festivities, complete with traditional fancy dress, party poppers, balloons and flag-waving sing-a-longs to ‘Rule, Britannia!’ and ‘Land of Hope and Glory,’ are always sold out. That’s where Proms in the Park come in, created in 1996 so that the overwhelming numbers of Last Night fans won’t miss out on the fun. In addition to the Royal Albert Hall finale, audiences can choose from four open air spectacles nationwide. Park Proms in Belfast, Glasgow, Swansea and London’s Hyde Park bring the four UK nations together in song and spirit with the help of tirelessly enthusiastic compere Michael Ball and live big screen linkups.
Hyde Park’s stellar headliners will be Gladys Knight, Josh Groban, Matt Goss and Joseph Calleja. For the grand finale, Prom audiences join celebrities, choirs and fireworks as Prommers across the land sing, wave Union Jacks, pop poppers and let go of all that British reserve for another year.
Never mind if you can’t make it to the Last Night in person— you can join the party via giant video screens around the country or sing along by telly, tablet, smartphone, laptop or radio, thanks to the BBC.
Further information:
BBC Henry Wood Promenade Concerts, 13 July-8 September 2018
Summertime Britain is a food lovers’ paradise, with dozens of festivals, fairs and other tasty offerings where food and cooking take centre stage.
That’s certainly true at the Port Eliot Festival in Cornwall. Enjoying a magnificent setting on the grounds, woodlands and riverside of an historic house and former medieval monastery, Port Eliot has grown a reputation for words, music, fashion, flowers and extremely good food.
Over its four packed days and nights, festival goers can savour a delicious blend of chefs, cooks, bakers, brewers and growers as they share skills, kitchen secrets and top quality eats. Caught by the River and other stages welcome writers, musicians, conversationalists and comedians, Sipsmith Gin Palace hosts jazz parties, martini masterclasses and plenty of opportunities for G&T by the river, and the Fashion Foundation takes fashion to imaginative new heights.
Wellbeing and wildlife have a big part to play at Port Eliot. There are activities like astronomy walks, wild cookery, fire building, flamenco dancing, herbal first aid and wild swimming. You can stop by Larks Haven for wellness workshops, disco yoga, hot tubs and mindful masculinity sessions. We recommend signing up early for the wilderness survival masterclass with award-winning actress Teri Hatcher (aka Susan from Desperate Housewives). This year sees the debut of Wildlings Wood, a magical forest glade where children can dance, sing, frolic and forage all day long.
As nowhere is considered off limits, the Festival also wends its way into Port Eliot House itself for tours, talks and films.
If, like the Hungry Caterpillar, you are still hungry, there’s plenty more on this summer’s culinary menu. You might even say there’s a festival for every food fetish. You can gorge on local oysters, crabs and whelks washed down with champagne at Pommery Dorset Seafood Festival or turn up the heat at the Northeast Chilli Festival. Experience all things sausage at Lincoln’s Sausage Festival or hone the art of keeping vampires away at Isle of Wight’s Garlic Food Festival. And Corfe Castle Food and Drink Festival looks perfect for lovers of romantic castle ruins and spectacular country views.
The joys of open air cinema date back to 1932 New Jersey, when salesman and film fan Richard Hollingshead nailed a bedsheet between two trees in his yard and a Kodak projector to the hood of his car. He opened the world’s first commercial movie Drive-In the following year, proudly advertising “the whole family is welcome regardless of how noisy the children are.” By the 1950s there were over 4000 Drive-Ins across the USA. Famed for iconic roller-skating waitresses bringing cheeseburgers, shakes and fries right to your car window and boasting a reputation as teenage ‘passion pits’, Drive-Ins enjoyed many boom years. Then, with the coming of home videos and more profitable options like turning Drive-In lots into high rise property blocks, they faded almost to extinction.
Low and behold, outdoor movies are today enjoying a global comeback and nowhere more than in the UK, where screenings have become increasingly inventive. Who needs walls when you can bring cushions, blankets, picnics and homemade popcorn to an alfresco screen near you? This season’s quirkier venues include cathedrals, cemeteries, botanic gardens and a sunken amphitheatre.
Since 2010, The Nomad has been popping screens up in Brompton Cemetery, Hyde Park Lido, St Paul’s Cathedral Gardens and other intriguing locations, along with enticing add-ons like hot food, goody bags, blankets and magic carpets. It has a unique tag as “the pop-up cinema that gives back”, as it’s run primarily by volunteers and donates 100% of profits to charity.
Luna Cinema has a habit of hitting locations other screens can’t reach, like Windsor Racecourse, Bath’s Royal Crescent and Bolton Abbey. Luna Beach Cinema is hanging out on Brighton Beach. Opt for its VIP Beach Hut package for your very own beachside hut, luxury seating, complimentary mini-bar and butler service for the day. New this year is Luna Kids Cinema, the first outdoor cinema designed for children, with tempting sips and nibbles available from the Luna Kids Bar.
This summer, BP Big Screens will beam opera and ballet live and free to screens at Brighton Marina, Portsmouth’s Guildhall Square, Bristol’s Millennium Square, London’s Trafalgar Square and other spaces across the UK. Rooftop Cinema operates from three lofty London locations, promising comfy deckchairs, a wide range of daily shows and incomparable rooftop views.
Last but not least, Film4 brings two weeks of giant projections to the historic courtyard at Somerset House. Choose from surround-screen immersive showings of Labyrinth, Blue Velvet, Call Me By Your Name plus Behind The Screen, a series of talks, panel discussions and special events.
WOMAD stands for World of Music, Arts and Dance and is simply the biggest international music festival on the planet. Happening the last weekend in July, Womad brings together performing artists from dozens of countries and thousands of world music fans to its splendid open air site deep in the Wiltshire countryside.
This year’s adventurous lineup includes the Original Gypsies of Camargue (formerly the Gypsy Kings), North African master gnawa musician Hamid El Kasri and the uplifting Celtic-meets- world crossover beats of Jiggy. There’s swinging bluesy sounds from Malian duo Amadou and Mariam and an athletic double dose of Latin American dance moves from Danza Región and Cámara de Danza Comunidad.
We’re looking forward to the bubbly crop of American musicians likely to shake things up this Womad. Like brilliantly energetic Evie Ladin and Keith Terry with their unique take on old time song, dance, banjo and body instrumentation, and ‘electronic dance music without the electronics’ from high energy New York brass band buskers Too Many Zooz. There’s also punky bluegrass from Texas quintet Whiskey Shivers, intriguingly described as playing “banjos, fiddles and washboards in bare feet at breakneck speeds while singing lonesome harmonies about love and video games.”
But WOMAD is much more than a chance to revel in a rousing feast of music. It’s also a place for dancing or drumming the nights away, acapella singing workshops in a Bedouin tent, checking out human books from the Human Library and having a blast at Molly’s Bar.
Festival favourite, Taste the World Cookery Stage, will be back. Here, performing artists prepare choice dishes from their home country whilst chatting about their lives, music and culture with charming host, Roger deWolf. It’s all served up with a side order of spontaneous music and the audience gets to taste the completed dish.
WOMAD’s a big place but you’re never far from the Global Market, where you can eat and drink your way around the globe as well as browse the tempting range of crafts, clothing, music paraphernalia and worthy causes on display. With free entry for kids, a dedicated Kids Zone with hundreds of activities from dawn to dusk, the annual Children’s Parade and a relaxed vibe, WOMAD is also an outstanding choice for families.
In need of a break from the hullabaloo? Nip into the World of Wellbeing, a cool, calming space among the trees of the Arboretum where you can sample laughter yoga, song baths, didgeridoo healing, sound meditation and some excellent tea and cakes. And if you’re tired of chemical toilets and ground sheet camping, treat yourself to the La Di Da Loos, luxury camping in tipis, podpads and yurts, or splash out on a weekend Spa Ticket. This gives you unlimited access to pamper pavilions of Persian rugs and saffron light, gardens and gazebos, hammocks, hot tubs and barrel sauna, the exclusive Chakra Bar and a range of therapeutic treatments.
Further information:
WOMAD, Charlton Park,
26-29 July 2018, womad.org
Image: Wonderful WOMAD shines, whatever the weather. Photo by Judith Schrut.
For classical music lovers it doesn’t get much better than the BBC Promenade Concerts, affectionately known as the Proms. A British national treasure since Victorian times, this world’s greatest festival of classical music roars into London’s Royal Albert Hall mid July, setting off 90 concerts and two months of non- stop musical feasting.
Summertime Britain is a food lovers’ paradise, with dozens of festivals, fairs and other tasty offerings where food and cooking take centre stage.
Low and behold, outdoor movies are today enjoying a global comeback and nowhere more than in the UK, where screenings have become increasingly inventive. Who needs walls when you can bring cushions, blankets, picnics and homemade popcorn to an alfresco screen near you? This season’s quirkier venues include cathedrals, cemeteries, botanic gardens and a sunken amphitheatre.
This year’s adventurous lineup includes the Original Gypsies of Camargue (formerly the Gypsy Kings), North African master gnawa musician Hamid El Kasri and the uplifting Celtic-meets- world crossover beats of Jiggy. There’s swinging bluesy sounds from Malian duo Amadou and Mariam and an athletic double dose of Latin American dance moves from Danza Región and Cámara de Danza Comunidad.
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