Philanthropy and charity: How to make a real difference with charitable donations

Bill Gates is perhaps the most well-known philanthropist in the world. Since setting up the Gates Foundation in 1994, the charity has donated more than $60.1 billion. 

The Gates Foundation works to tackle critical problems on a global scale. Their mission is to help people lead healthy, productive lives. They use their significant funds to improve people’s health and give people an opportunity to help lift themselves out of hunger and extreme poverty. 

You don’t need to be a billionaire to do good 

While the wealth you have available for philanthropy may not change the lives of millions of people around the world, you can still make a valuable difference to causes close to your heart. 

Many of our wealthy clients ask us to help them devise a gift-giving strategy so that they can divert some of their wealth to causes they care about most.  

We can help make giving easier 

Philanthropic goals are worthwhile and admirable but running a charity can be complex and time-consuming. One way you can reduce the admin hassle is by using a charitable foundation.  

Charitable foundations allow you, your family, or business to create a strategic approach to your philanthropy and make a real impact on society. As well as benefiting your chosen cause, charitable foundations provide various personal advantages. 

As a Certified B Corp, our approach to financial planning and wealth management focuses on wellbeing and living with purpose. So, if you wish to do good with your wealth, we can help ensure that charitable giving forms part of your overall financial plan. 

Stay in control of your wealth and build charitable giving into your financial plan  

Instead of making random donations to causes throughout the year, you can define a specific amount you can comfortably afford to donate to charity on an annual basis. This strategic approach to philanthropic giving will give you more certainty over your finances and reassurance that the right amount of your wealth is being diverted where you wish. 

While you may already support certain charities on an annual or monthly basis, a more strategic approach allows you to explore other causes that you’d like to support. Some argue that you can make more impact by focusing donations on one cause, rather than sharing smaller amounts to a wide range of organisations.  

However you prefer to share your wealth, a well-considered charitable strategy gives you purpose and helps you focus on the causes you really care about. 

Remove the administrative burden  

Establishing a charitable trust removes the administrative burden that inevitably comes with setting up your own charity or personal foundation. 

By working with experts experienced in the charity sector, you can be confident that your wealth is working to its maximum potential for the causes you care about, now and for generations to come. 

Let us help you create a purpose-built trust and ensure assets are directed quickly and effectively to your chosen beneficiaries.  

Don’t stop at cash 

When you set up a charitable trust, you can consider more than just capital. With the right approach, you can hold an unusually wide range of assets, including: 

  • Cash 
  • Shares and securities listed or dealt on the UK Stock Exchange, AIM, or a recognised foreign stock exchange 
  • Units in an authorised unit trust 
  • Shares in a UK open-ended investment company (OEIC) 
  • Holdings in certain foreign collective investment schemes 
  • A qualifying interest in land, for example, the whole of your beneficial interest in freehold or leasehold land in the UK 
  • Property 
  • Art. 

Give and get back through tax relief 

Apart from improved wellbeing from knowing you’re contributing to change and making a difference, charitable giving also comes with tax benefits. 

The amount of tax savings you’ll receive depends on the size of your charitable contributions and your annual income. By establishing a trust, you can maximise various tax advantages that come from providing financial support to charities. 

Income Tax and Capital Gains Tax 

When you set up a formal charitable trust, you can reclaim 25% tax from HMRC. To benefit from this relief, you must sign a Gift Aid declaration and have paid enough UK tax to cover the reclaimed amount. If you’re a higher- or additional-rate taxpayer, you can claim further tax relief through your self-assessment tax return. 

You can also get tax benefits on gifts of shares, land, buildings, and personal property. 

Inheritance Tax 

Gifts to charity are exempt from Inheritance Tax (IHT). This is true whether you gift to charity during your lifetime or in your will. Since 6 April 2012, if you leave 10% of your estate’s taxable wealth to charity, your estate will be eligible for a reduced rate of IHT. 

Get tax relief sooner 

When filing your self-assessment tax return, usually you only report things from the previous tax year. For Gift Aid, you can claim tax relief on donations you make in the current tax year.  

This can be useful if you want to claim your tax relief sooner or if you won’t pay higher-rate tax in the current year but did the previous year. 

Maximise tax-saving opportunities 

From 1994 through 2020, Bill and Melinda donated more than $36.8 billion to their foundation. Those donations resulted in tax savings of approximately $4.048 billion.  

While the tax saving seems small in relation to the enormous sum donated, if you’ve already maximised tax-saving opportunities in your financial planning strategy, a charitable foundation may be a good next step. 

Get in touch 

If you’re interested in finding out more about diverting some of your capital to philanthropic causes and wish to maximise the available tax benefits of doing good with your wealth, get in touch. Email hello@firstwealth.co.uk or call 020 7467 2700. 


This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

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