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Allow your investments to help you give back.

We are very privileged in the UK to be home to many people who have created significant wealth in their lifetime. Our position as one of the richest countries in the world and a free market capitalist economy has allowed wealth to be both grown and given away, sometimes in its entirety, to charitable causes.

Louis Coke


The Charities Aid Foundation ‘UK Giving Report’ estimated that some £9.7bn was given in 2016, an extraordinary amount and a sum that has allowed many thousands of charities to operate both in the UK and abroad.

But giving to charity doesn’t necessarily mean writing a cheque. In this article we look at four ways to support charities you feel passionately about other than just an outright cash gift.

  1. Gifting investments
    1. Many investors are not aware that you can often transfer assets to a charity of your choice, not just cash. These assets can include shares and units in collective funds, i.e. investments contained within your portfolio. Rather than selling investments, paying capital gains tax and then giving the charity a cash sum, this can often be a more efficient way to offer your support. As you are not selling investments, there is not a chargeable event for capital gains tax purposes. Bear in mind also that if charities sell investments, they do not pay capital gains tax.
  2. Giving your time (and allowing your investments to pay you an income)
    1. One of the many benefits of building up an investment portfolio is that it can provide you with an income. If you can live on this income, your time is free to spend on charitable activities. You could help out ‘on the ground’ or apply your skills at a strategic level without needing to draw a salary.
  3. Giving in your will
    1. Some choose to leave their wealth to charity when they pass away, which can mean significant sums for their chosen cause. You are also able to specify precisely how the money is used. For example, many people choose to give capital to charities on the condition that they can spend the income that the investment generates, but that they cannot spend the capital. If managed well, this is a fantastic long-term income resource for charities.
  4. Giving your dividends (and claiming gift aid)
    1. Sometimes giving away large sums of capital can be daunting and can give clients the feeling that they are losing control of the funds (which of course, they are). An alternative for this could be to make charitable gifts from regular income. This gives the charity a regular flow of cash, and allows you as the donor to keep control of the asset (be it an investment or cash).

An important consideration when thinking about charitable giving is tax, or rather, tax efficiency. The UK operates a scheme called ‘Gift Aid’ which allows charities to claim back 25p for every £1 you give. This is subject to certain conditions, but broadly speaking as long as you do not give more than four times the amount of tax (income and capital gains) you have paid in that tax year, the charity can claim gift aid.

What’s more, if you are a higher rate tax payer, you can claim back the difference between the rate of income tax you pay and the basic rate on your donation.

The important thing to remember here is to surround yourself with advisers that understand your charitable giving aims, and can help you find the most efficient way of achieving them. We look after the investment affairs of many clients who choose to donate, either regularly or on an ad-hoc basis, to charities.  The method you choose will be determined both by your investment preference and what will work best for your chosen charitable cause.

If you would like to discuss how your investments and charitable giving can work together, please contact us.

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Our focus on clients has endured since the foundation of Charles Stanley in 1792 and has helped make us one of the UK's leading wealth management firms. Your interests give shape to everything we do.

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