Donor Advised Funds in the UK: A Practical Guide for Giving Domestically and Globally

Sarah Marchal Murray, Chief Philanthropy Officer, CAF America

Donor-advised funds, or DAFs, are increasingly popular among donors seeking flexible, structured, and international giving. In the UK, DAFs are fast-growing vehicles that offer some of the benefits of a charitable foundation without the same cost, administration, or regulatory burden.

A DAF is a charitable giving account held by a sponsoring charity. The donor makes an irrevocable gift into the fund, receives charitable tax treatment where eligible, and then recommends grants to charities over time. The provider retains legal control of the assets and conducts due diligence before making grants.

Why UK DAFs Matter Now

UK giving is under pressure. CAF’s UK Giving research reports that the British public donated £14 billion in 2025, down from £15 billion in the prior year, with one in five people saying they could not afford to give. At the same time, many donors want to plan gifts, involve family members, give internationally, and support causes over time.

For advisers and practitioners, this creates a clear opportunity: to use DAFs not just as accounts for charitable money, but as planning tools that help donors move from reactive gifts to intentional giving.

The UK Model: Gift, Grow, Grant

The DAF journey can be understood in three simple steps: gift, grow, and grant.

Gift: The donor contributes cash, shares, property or other eligible assets. Donations are irrevocable, meaning they cannot be taken back.
Grow: Assets can be invested while the donor develops a giving plan. Some donors may seek growth; others may prefer lower-risk or values-aligned options.
Grant: The donor recommends grants to charities in the UK or overseas. The DAF provider checks eligibility, manages compliance, and makes the grant if approved.

DAF Decision Table

Donor question	DAF planning response	Practical adviser prompt
Do I want to give now or over time?	Use the fund to separate the timing of the gift from the timing of grants.	“What causes/impact do you urgently want to support this year, and what should wait for learning more?”
Do I want simplicity or control?	A DAF reduces administration, but the provider retains final discretion.	“Are you comfortable making recommendations rather than legal directions?”
Do I want to give internationally?	Use a provider with strong charity verification and cross-border expertise.	“Which countries, causes and risk factors matter most?”

How UK DAFs Compare

The basic idea is similar across the UK, U.S., and Canada: donors make an irrevocable charitable gift, receive any available tax benefits, and recommend grants over time. In the UK, DAFs are often used as practical alternatives to a private charitable foundation. The UK also offers a generous charitable donation incentive known as Gift Aid. When a UK taxpayer makes an eligible cash donation (non-cash assets are not eligible) to a UK charity, including a DAF provider, they claim income tax relief, while the charity can reclaim an additional 25% from HMRC, increasing a £100 gift to £125.

Unlike some jurisdictions, UK DAFs operate under the registered charity status of their sponsoring organization and follow broader Charity Commission and HMRC guidance.

Tax relief and eligible asset types also differ significantly. In the UK, income tax relief is generally available for donations of cash, listed shares, or property based in the UK. Most other non-cash assets do not qualify for income tax relief; although they may still offer Capital Gains Tax.

For advisers working across borders, local tax rules, donor residence, asset type, and giving goals remain critical considerations.

A Practical Scenario

An anonymized example: a UK-based entrepreneur sells part of a business and wants to support educational charities in the UK, India, and South Africa. Rather than setting up a new charitable foundation, the donor contributes listed shares to a DAF. The fund can receive the assets, issue the gift receipts, liquidate the position, invest the remaining balance, and conduct due diligence before grants are made internationally.

The practical benefit is focus – the donor spends less time on administration and more time deciding what impact should look like: scholarships, teacher training, local nonprofit capacity building, or something else.

What Advisers Should Watch

DAFs work best when advisers address the trade-offs plainly.

Control: Donors advise; they do not direct. Explain this early.
Timing: A contribution may be completed before the donor knows every final grant recipient.
Family: A DAF can help bring younger family members into structured giving conversations.
International giving: Cross-border grants require due diligence related to charitable purpose, governance, sanctions, compliance, local regulations, and the intended use of funds.
Tax: Consider the different timing and eligible asset types to optimize giving. Gifts of shares are very tax effective, but they do not qualify the gift for UK Gift Aid, so consider this carefully.
Investment alignment: Donors increasingly ask whether charitable assets can be invested in ways that reflect their values.

Clear Takeaways

Use DAFs to help donors plan giving over time, not just process gifts.
Define technical terms. “Irrevocable” means the gift cannot be revoked or returned. “Discretion and control” means the provider has the authority to make the final grant decision.
Discuss international giving risks before the donor names specific organizations.
Encourage donors to write down a giving purpose, decision rules and review schedule.
For advisers, ask about family, geography, time horizon, assets, and appetite for administration before recommending a structure.

Final Thought

The best DAF conversations are not about accounts or mechanics – they are about what the donor is trying to make possible. In the UK, where charitable giving is both deeply personal and increasingly global, DAFs can offer a practical bridge between intention and impact.