Charitable Financial Planning

Affordability is a key consideration when making donations to charity. In our second article on charitable gifting we look at the various methods available to you by which to donate money.


Making a significant donation of capital during your lifetime should be balanced with your own need to access that capital. The danger is that being overly generous may derail your own lifetime financial plan. By using cashflow forecasts we are able to demonstrate to our clients what is an affordable amount to give away without impacting their long term financial security.

We used cashflow forecasting with a client who wanted to help a sailing charity. The charity supports disadvantaged children who have never had the chance to go out on the sea.  Cashflow projections showed they could clearly afford to gift more than they had originally thought and so, together with the Income Tax relief, they decided to donate sufficient monies to the charity to buy a complete yacht for them. A very successful outcome for both the client and the charity.

Family Charitable Trust

Setting up a family charitable trust can engage the whole family, including younger generations, in shared family philanthropy. It can help to instil family values for children of very wealthy families who, although they have plenty of financial capital, could use some help in developing a greater sense of purpose, human capital and social capital.

Your motivation might even be to avoid the next generation inheriting too much money.

Some family members can be appointed trustees. This could present the opportunity of passing on valuable skills such as learning to budget, managing funds responsibly and prudently, effective communication and tackling conflicting goals (intellectual capital).

It may be unrealistic to expect all family members to take on the responsibility as trustee as they may have neither the appetite nor the necessary skills. Instead, other opportunities for engagement might be volunteering or fund raising.

You will need to be clear about your goals from the outset: e.g. the measurable outcomes you want to achieve and the difference you want to make as a family. Allowing greater influence from the younger generation and their vision for the charity will successfully engage future generations for years to come. Each family member can select their chosen cause, grant or scholarship to enable them to support something they are passionate about.

It is important to decide at the outset what will happen when you as the settlor die, or should none of your family be involved with it at some time in the future. This will prevent the charity from the danger of ever just drifting on without a purpose. You could even limit the time by which all the money should be spent.

Donor Advised Funds

Donor advised funds require a less ‘hands on’ approach from you and your family but will allow you to gift money to a charity of your choice whilst advising the charitable institution managing that money on how you would like it to be spent. The relationship with a charity supported in this way is likely to be indirect and will be in proportion to the size of the gift.

Community Foundations, Charities Aid Foundation, Stewardship and Prism the Gift Fund are examples of organisations which can assist in a range of areas, from helping set up a charitable trust, to alleviating much of the day to day administration.

Community Trusts – Paradigm Norton Trust

‘People Matter’ is a core value of our firm and the Paradigm Norton Trust was set up in 2007 into which we pay a percentage of our profits each year to help make a positive impact in the world. Team members as well as our clients are encouraged to make suggestions on causes we support.

To date, we have donated well over £200,000 to over 170 charities. Our focus is on smaller, local charities where we can have maximum impact or charities working in developing countries. Supporting financial education is another area where we are keen to increase our impact. For more information on the charities we support and the impact we have made, our screening process and Governing Council can be found on our dedicated webpage

The Paradigm Norton Trust helped our client, Genevieve, who, following the death of her husband, was looking at solutions to reduce her income tax bill. What started out as a way to reduce tax became the beginning of another chapter in her life.

Having never donated money to charity before Genevieve was unsure of whom to donate to and to what value the gifts should be. The Paradigm Norton trust was able to provide some guidance. By explaining what charities the trust supported and how we interacted with them allowed Genevieve the chance to meet the owners of Za Foundation. The Za Foundation’s primary aim is to support, educate and inspire orphan and vulnerable children (OVC) and young people that have been infected/affected by HIV, in the Nkomazi region of South Africa. After meeting the charity and believing strongly in what they were trying to achieve Genevieve became good friends with the charity owners and is now heavily involved through donations and volunteering. This new avenue has been a huge help to Genevieve, giving her life added purpose, and helping her on the journey to dealing with the loss of her husband.

Social Enterprises

Social Enterprises reinvest their profits into local businesses or the local community to tackle social problems, support communities and help the environment. Investing in Social Enterprises encourages the development of a sustainable business model as opposed to a reliance upon grants. An added benefit is that, if all goes to plan, the money you originally invested will be returned to you for recycling into another such venture!

One of our clients is passionate about supporting his local community of Bristol. Although he is very active within his own charity, he was pleased to hear that he could also support local businesses through a Social Investment Tax Relief (SITR) fund. It is a way to provide funding to social enterprises in Bristol and support the education of young people to become the next generation of chefs as well as helping creative people develop their potential, and deliver services to Bristol’s homeless and foster communities through sport.

If you would like to speak to a qualified financial planner about this, or any other matter, please give us a call today on 020 7269 7960. We would love to hear from you.

This article has been published for educational purposes only and should not be considered investment advice or an offer of any product for sale. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Tax planning and cashflow forecasting is not regulated by the Financial Conduct Authority. Tax legislation is subject to change.

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