Philanthropy is a core part of American culture, and for US citizens residing in the UK, charitable giving can align with both personal values and strategic financial objectives. Without careful planning, cross-border donations risk losing out on valuable tax relief in both jurisdictions. We believe, with the right structure in place Americans in the UK can give more effectively and maximise the impact of their generosity on both sides of the Atlantic.
Among the most flexible tools available to philanthropists today is the Donor Advised Fund (“DAF”) - a charitable investment account held under the umbrella of a public charity. DAFs allow donors to contribute cash or appreciated assets, claim immediate tax relief, and recommend grants to their chosen charities.
Assets held within the DAF can be invested in a tax-efficient environment, supporting long-term growth and increasing the potential impact of future grants. These investments can be managed by LGT Wealth Management US, in line with broader financial and philanthropic objectives.
For Americans living in the UK, dual qualified DAFs offer particular appeal. These structures - typically hosted by organisations like Charities Aid Foundation (“CAF”), NPT Transatlantic, or Prism the Gift Fund - are recognised as charitable entities in both the US and UK. As such, they typically enable donors to claim tax relief in both jurisdictions on the same donation.
Let’s consider a simplified example:
A US/UK dual taxpayer donates £1,000,000 to a dual qualified DAF.
In the UK, Gift Aid increases the donation to £1,250,000, and the donor can claim an additional £312,500 in tax relief if they’re a 45% taxpayer.1
In the US, assuming the donor itemises deductions, they may also claim a charitable deduction from their US federal income tax.
In effect, dual qualification reduces the net cost of giving and increases the funds available for charitable deployment - making a greater impact possible at lower personal cost.
A well-crafted philanthropic plan should begin with a clear understanding of goals. Is the focus on immediate impact, legacy, or alignment with a personal mission? Will gifts be made during a person’s lifetime or through an estate? Are the assets held in the US, UK, or offshore? Each of these factors will influence the best structure for giving.
It is also important to ensure compliance with tax rules on both sides of the Atlantic. For instance, US rules distinguish between public charities and private foundations,2 each subject to different limits on deductibility.
Specialist, personalised advice is essential, particularly for more complex cases involving appreciated assets, trusts, or international grant making.
Simplicity and flexibility: DAFs are generally easier and more cost-effective to administer than private foundations, with no mandatory distribution requirements and relatively low setup costs. Donors retain the ability to recommend how and where grants are distributed, with most UK- and US-registered charities eligible to receive funding.
Family engagement: many families use DAFs to involve younger generations in philanthropy, teaching financial stewardship and fostering shared values
Anonymity option: donors can choose whether to disclose their identity to recipient charities, offering privacy where desired.
Capital gains efficiency: donating appreciated securities may reduce capital gains tax liabilities while still securing full charitable deduction benefits.
Estate planning: naming a DAF as a beneficiary in your will may reduce your UK Inheritance Tax (IHT) liability
Philanthropy, when thoughtfully structured, offers Americans in the UK a unique opportunity to support causes they care about while enhancing the efficiency of their broader financial and estate plans. Whether giving during life or as part of a legacy, using the right structures can help unlock the full potential of charitable capital for chosen causes.
To learn more about philanthropic giving options, please contact with your Wealth Manager or the LGT Wealth Management US team here.
[1] Charities Aid Foundation, https://www.cafonline.org/personal-giving/resources/donor-advised-funds
LGT Wealth Management US Limited is a registered Company in England & Wales, registered number 06455240. Registered Office: 14 Cornhill, London EC3V 3NR. LGT Wealth Management US Limited is Authorised and Regulated by the UK Financial Conduct Authority and is a Registered Investment Adviser with the US Securities and Exchange Commission.
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