Structuring your giving

Please note: The article does not constitute advice or any form of recommendation. Barclays Private Bank does not offer tax advice, and professional advice should always be sought.

Barclays Private Bank also does not endorse any of the companies or individuals referenced in this article.

As you consider how to approach your giving, it can be useful to explore the full range of resources you can offer and what you are willing to commit. 

This can help you organise your donations and allocate your time in a way that is most likely to achieve maximum impact.

Here, we explore some important considerations that may help you choose an appropriate structure for your giving.

Clarifying your resources 

Before you can decide on a method for organising your donations, the first step is often to ask yourself the following questions:

• What proportion of your time do you want to devote to philanthropy?
• Do you expect to take a hands-on approach or would you prefer someone to manage your giving for you?
• What assets, skills, and personal or professional connections are you willing to deploy? 
• Will you give alone or do you wish to involve others? 
• Have you decided what sum of money you wish to allocate and over what time frame?
• Do you intend to provide a lump sum for philanthropy now, and/or will you top it up over time?
• Do you plan to have a formal governance structure that can support decision-making? 
• Do you wish to be discreet or are you comfortable with public visibility?

The 4Ts formula

One approach when deciding on the resources you can allocate to your philanthropy is to use what is commonly referred to as the 4Ts formula. 

It is worthwhile doing a full review of the following:

Time: The time that you and your family will commit to your philanthropy

Treasure: Assets (money or investments) that you can deploy 

Talent: The skills and experience you bring to the table

Ties: The personal and professional connections and networks that you can leverage.

What structure do you need?

You have several options as you consider how to structure your giving. What is right for you and your family will depend on your specific wishes and circumstances. 

As John Canady, CEO of National Philanthropic Trust UK, says: “Several factors may impact how you structure your giving. This includes how agile you want your giving to be. Will you solely be a grant-maker or do you wish to run an operational foundation? And over what time frame do you want to give?

“You could also consider using various types of non-cash assets to fund your philanthropy and whether you would like to involve family members.”

Giving directly to causes you support

If you seek simplicity, you may decide to donate directly to your chosen cause. This enables a close relationship with a charity and a high level of flexibility. 

Even some experienced donors giving large sums away prefer direct giving or use this method to complement other types of giving. For example, you may decide to use your foundation for strategic giving and give directly to causes that do not align with your foundation’s mission, such as emergency appeals or fundraising requests from friends. 

Foundations and donor-advised funds

Many donors prefer to have a structure into which they can allocate and organise their giving. Formal vehicles can help to cement family legacies and encourage new generations to give. These may also confer tax advantages – although you should discuss your specific circumstances with your tax adviser.

Two of the most-used vehicles are charitable foundations and donor-advised funds (DAFs). 

A foundation is a non-profit entity/charitable trust that provides grants (donations) to organisations or individuals. This may be a private, family or corporate foundation, which a donor establishes directly for the administration of their giving.

A DAF is an umbrella charity in which donors can set up an account to manage their giving. Governance and administration are undertaken by the DAF provider and overseen by a professional team. 

This model can allow a donor to have an effective vehicle from which to make donations (grants), while the obligation of meeting legal, governance and accounting requirements is handled by the DAF provider.

The table below broadly illustrates the key characteristics of both giving vehicles: 

Source: Barclays Private Bank, February 2024

It is worth noting that DAFs are not available in all jurisdictions, but versions of a charitable foundation exist in many places. Professional wealth and tax advisers can help you to understand your options, relative to your unique circumstances.

Philanthropy and tax

There is an ongoing conversation about the relationship between tax and philanthropy. In many countries, governments offer incentives to encourage philanthropic giving.

Some people believe that money raised through progressive taxation is the fairest method of ensuring that resources are distributed where needed by a democratically accountable government.

Others argue that individual wealth holders have the right to pursue their vision for social change through philanthropic giving. In doing so, they can bring unique ideas, resources and collaborations that complement and enhance public spending.

The two positions may not be entirely at odds with each other. However, in the context of greater scrutiny of philanthropy and a growing wealth divide, it is worth taking time to consider your position.

You can learn more about these perspectives in our chapter Accountability, equity and inclusion in philanthropy.

A word on governance 

Good governance and its principles are key to strategic and well-organised philanthropy. In fact, this is a legal requirement if you are giving through a charitable foundation. If using a donor-advised fund, the DAF provider is legally responsible for the governance of all DAF accounts under their charitable umbrella.

In addition, strong governance can also help ensure that the pillars are in place for credible leadership, public accountability and the achievement of more ambitious goals. 

This is a broad topic and whilst we touch on the key principles throughout this Guide, they are not exhaustively explained. 

If you would like to find out more about governance and board leadership, see the UK’s Charity Governance Code². Taken from the code, the framework below provides a globally relevant example of good practice, whether for foundations based in the UK or elsewhere. 

You could also look up the Association of Charitable Foundations and the National Council for Voluntary Organisations (NCVO) for additional guidance.

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