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.

By Amy Patrick

Back in April I was lucky enough to participate in a site visit to the Collateral Repair Project (CRP) in Amman, Jordan, with 22 other American  ladies from the Federation of American Women’s Clubs Overseas (FAWCO). The FAWCO Foundation’s current two-year Target Project, called Hope Beyond Displacement, is providing funds directly to CRP, a grass roots effort to bring much-needed assistance to refugees - those commonly referred to as ‘collateral damage.’ Our mission was to see the programmes we are funding and bear witness to the stories of the refugees served. Two other American ladies from FAWCO Region 1 – currently living in Edinburgh and Dublin – met me at Heathrow (after the long drive down from my home near Birmingham) to board the flight to Amman. We weren’t fully prepared for what we would see and hear.

According to UNHCR, Jordan hosts the second-largest refugee population in the world and about 80% of the refugees live outside of UN-funded camps. They are called ‘urban refugees’ and this population in Amman consists mainly of those who have fled Syria, Iraq, Yemen, Somalia, and Sudan. With few exceptions, refugees are not legally allowed to work in Jordan. For these people, CRP extends lifelines such as food vouchers, English classes, children’s programmes, skills training, trauma relief and women’s empowerment.

Amanda Lane, Executive Director of CRP and American expat, told me about the refugee population in Jordan and how CRP has been able to build community services to help them in Amman:

“Less than 1% of the people that apply... get resettled. It’s interesting because when I go to Europe, people are like, ‘Yes, we have some refugees here.’ Actually, you really don’t. In Jordan, one in every ten people is a refugee and Lebanon one in every four. Yes, the reality is the vast majority of refugees are here in these primary host countries...It’s actually much more cost-effective to help people here because the vast majority of them are going to be staying here”.

“What has changed in the past five years is that we’ve really been consistently growing. Whereas we were feeding about 15 families right now, in the past month we fed over 400 families. We have a lot more self-care and wellness programming that fits into helping people to heal from trauma. We have a computer lab and lots of computer classes. We also have an after-school club for kids that takes place every day”.

Amanda lives in Amman with her Jordanian husband, Samer, and their two children. Her story began the same way as many Americans living in Britain: she met a man from another country, fell in love, got married, had kids, and in her words, ‘got sidetracked.’

“We were living in Seattle for about six years, and then we decided to come back [to Jordan]. It was actually me who pulled us back more than my husband because I really wanted my kids to feel like they could relate to half of their heritage, or to be able to relate to being Arab, and to be able to learn Arabic as well”.

I asked Amanda about the challenges of Lunch at CRP - Collateral Repair Project being an American living in Jordan and raising children abroad. I explained that I know many expat women in Britain who feel that they are trying to raise children between two different countries. She said:

“I don’t feel I’m raising them between countries much anymore. I think they’re comfortable wherever. I don’t feel like it’s a challenge. We certainly live, like many expat families, in a weird middle place. It’s really weird to me because I grew up in southern Ohio and never left, until I was out of college, really”.

Expats Jason and Judy Wilson knew Amanda and her husband and jumped at the chance to move to Amman to work for CRP. Jason is now the Director of Data and Marketing at CRP and Judy is the Director of Grants and Communications. Jason explained how they got back to Jordan, a country they had fallen in love with during previous travels:

“Amanda was in town, she came to Seattle for a [CRP] fund-raising trip and she met up with us just to say ‘hi’ and have some coffee, and that’s when she asked, ‘Do you want to come help with this?’ We had said if we had ever had the opportunity to live in Amman, we should do it and then, this opportunity to come and use our talents to help these people appeared... I’ve never worked harder, been paid less or been happier in my entire life!”. Jason left his job as a data analyst to help modernise processes at CRP. He explained:

“Our challenge is we’re trying to do a lot, we’re trying to keep track of everything that we’re doing, and understand it, build out a measurement and evaluation practice, build out a better way to track people who are receiving our food vouchers, and our programmes. A couple of years ago, this was literally all being done on paper. What I’ve been trying to do is put together a technology stack using software that is available. I’m still working on a way to develop a pipeline of interns or volunteers who have the hard skills that we really need for this”.

The site visit to CRP was the first of its kind to support FAWCO’s Target Project programme. FAWCO’s funding is specifically used for the SuperGirls after school programme, women’s vocational training, the Women’s Empowerment 101 programme, and a men’s gender-based violence prevention course. We learned so much more about why grassroots programmes are vital by being on the ground in Jordan than we ever would by watching news reports or documentaries. We knew there would be heartbreaking stories shared, but there was no preparation to keep the tears from flowing as we were told of one impossible, horrific personal experience after another. We had no idea that so many of the refugees had stopped living their lives completely, i.e. not working, not sending their children to school, etc., or that they feel just as hopeless now as they did when they made the decision to flee dangerous conflict zones.

During our visit, one of the beneficiaries, Sara*, had asked to share her story with us. After explaining that she and her family had left the ‘hell’ of one of the largest refugee camps in the world, without any national identity papers for herself or her family, she became too upset to finish her story. Jason Wilson, Director of Data and Marketing at CRP, later filled in the gaps during our interview:

[Sara’s father] is from Syria and he was involved very early on when the [Arab Spring] protests began. He’s a lawyer and he advocated for the young men who had been charged. As a result of his defense of these young men, his family was targeted by the regime. They were attacked.

His young daughter [Sara’s younger sister] was alone in the home and they dropped a bomb on his house. His daughter was grievously injured, they ended up having to flee in the night. They went to a hospital. Many of the hospitals wouldn’t take them in, because the government was searching for their family. They finally found a hospital to help stabilise the daughter and then, in the middle of the night, someone from the hospital came and said, ‘They’re here. They’re looking for you. You need to go.’

His daughter was in a coma, he put her over his shoulder and they ended up crossing from Syria into Jordan, being pursued. When Amanda and CRP ended up finding them, they were living under a bridge in winter with no proper clothing and they had no options. Their daughter was still unconscious. CRP was able to find some medical help and support for them. The daughter lived and they really started to build their life here.

Sara’s parents and sister now live in the UK. Sara, her husband and two young children hope to be allowed to join them one day.

*Name has been changed.

Many of us who are members of FAWCO-affiliated American Women’s Clubs in the UK are happy to fundraise for local British charities, but we sometimes lose sight of the work FAWCO is doing in the name of American women all over the world. The programmes and assistance offered by CRP helps refugees to start living again by building a community on shared experiences that transcends race, religion or political leanings. The beneficiaries of these programmes were excited to share their progress with us and stressed how they have found dignity again by helping others at the centre. They want people in the UK and all over the world to know what has happened to them and what challenges they continue to face. They were incredibly welcoming, resilient women who were happy to cook their favourite dishes and share them with us. Every expat knows how comforting tastes of home can be!

Read more about the Collateral Repair Project at www.collateralrepairproject.org and about FAWCO’s Target Project Hope Beyond Displacement here. See even more about Amy’s visit to CRP at iceberglife.net/asia/jordan.

In his famous Berlin speech, President John F. Kennedy once remarked that although democracy was not perfect, “we (the West) have never had to put a wall up to keep our people in”. He was right. Although there had been trickles of defectors and spies for the Eastern bloc, or communist terrorists and assassins such as the Baader-Meinhof Gang, or such as Kennedy’s own assassin, Lee Harvey Oswald, there had never been mass abandonments of Western nations for communism.

With the rise of groups like al-Qaeda and the Islamic State (IS). President Kennedy’s remarks might be a little less assured today. Here in the UK, since 2014, hundreds of British citizens, and thousands from around the Western world have left the comfort of home to join the apocalyptic IS project in the Middle-East, a project which is now thankfully in decline.

The message and ideology of these groups has permeated society in a way which no other movement has. We have seen men, women, families, and worryingly, young children attracted to join this worldview. This has put teachers and classrooms, sometimes uncomfortably, right on the frontlines of the fight against terrorism.

Not many teachers would say that their chief motivation for going into teaching was to prevent terrorism or to help combat radicalisation, but since legislation passed in 2015, it is now legally speaking, part of the job. This means that teachers are often thrust into difficult and uncertain circumstances, with limited guidance or support to help them navigate such unfamiliar territory. This is where organisations like SINCE 9/11 come in.

Established on the 10th anniversary of the September 11th terrorist attacks which killed almost 3000 innocent people, SINCE 9/11 seeks to educate younger generations on 9/11 and terrorism in order to help prevent future atrocities, and to ensure that the victims are never forgotten. The charity’s glossy website belies its make-up and surroundings; just three members of staff working in a shared space in an inner London college. Surrounded by apps and start-ups, SINCE 9/11 is a small charity with national, and even global ambitions.

“Our ambition is to become the go-to organisation for the education sector when they need teaching support on 9/11 and terrorism.” Liam Duffy, the new Charity Director, wants to take SINCE 9/11 to new heights: “We have a young, energetic and passionate team here, we’re all Brits in our twenties who care deeply about the subject matter”.

SINCE 9/11’s staff are what Liam describes as “the 9/11 generation”. People who as children watched the towers collapse in real time, and came of age in the post 9/11 world; one where terrorism is the global issue.

“I was 11 years old when I watched the attack live on television. I didn’t fully understand what was happening but I knew that something truly awful was unfolding before my eyes. Of course it affected everyone, but it really stuck with me throughout my life. My professional and academic background is rooted in counter-terrorism and I’m now fortunate enough to be leading an organisation trying to bring hope from the horrific events of 9/11”.

SINCE 9/11 was originally founded to bring a piece of World Trade Center steel recovered from Ground Zero to London as a commemorative artwork, and after years in the wilderness, that steel is now hosted in London’s Olympic Park. Since then, the charity has grown to become an education programme, providing free resources and going into schools to deliver workshops directly to students. The aim is to build resilience among children and young people against the poisonous ideology being propagated by terrorist groups.

One of the organisation’s flagship projects involves working with a British survivor of the September 11th attacks. Janice Brooks, a self-desribed ‘East End girl’, had only moved to Manhattan two weeks prior to the history-defining events of that day. Working on the 84th floor of the South Tower, Janice somehow managed to escape before the building collapse, while many of her colleagues did not make it out.

Janice and SINCE 9/11 are visiting schools around London allowing young people to hear this remarkable story directly. Although difficult and emotive to talk about at times, Janice’s motivation remains steadfast: “September 2017 marked 16 years since the attacks, and I felt that the coverage was less visible than previous years. I just don’t want this horrific event which claimed the lives of so many of my friends and colleagues to be forgotten, especially as the majority of children in education were not even born when the attacks took place. Thousands of us around the world are still living with the effects and consequences of that day; if that message resonates with even one young person then this will all be worth it”.

SINCE 9/11 is a registered UK Charity whose mission is to build hope from the tragedy of the September 11th terror attacks. The free Education Programme was created in partnership with the prestigious Institute of Education at University College London. Visit www.since911.com for more information or to support. Read Janice Brooks’ account here.