A growing number of IFAs are developing their own version of the multi-million dollar US 'planned gi...
A growing number of IFAs are developing their own version of the multi-million dollar US 'planned giving' market which allows high net worth investors to save for the future but give some of it to charity.
Companies such as The Ward Consultancy and Holden Meehan are creating new forms of socially responsible tax-efficient savings vehicles - with the help of the Giving Campaign - which allow investors to save for the long-term and use changes to charity tax relief to donate money to good causes.
Only a few days ago, Ward Consultancy launched its first planned giving product called CharitaxPlus, which allows a company or individual to give to the charities of their choice by forming their own, personalised charitable trust fund.
The trust fund itself, set up in the name of the donor's choosing, can be completed in a matter of hours with immediate Inland Revenue clearance and donations can be made in cash, shares or other assets as agreed, to take full advantage of the income tax, capital gains tax and Inheritance tax reliefs available.
Such developments are now being considered by intermediary firms, says Graham Hooper, marketing director at Holden Meehan, on the back of research by Henley Management College which shows there is demand from moderately affluent and socially-conscious people for these products.
"The planned giving market is a virtually untapped arena in the UK, and yet, in the US it is a multi-billion dollar market. This 'call' for planned giving product development offers the financial industry an ideal opportunity to get involved in a whole new investment market while embracing our corporate social responsibilities. The growing popularity of ethical investment funds shows that savers are looking for more than just financial return, and planned giving will help us to tap into and expand this trend."
Figures quoted by HMC also suggests the US planned giving market accounts for approximately 40% of all charitable donations or around $80bn in 2001.
According to the evidence gained from six focus groups earlier this year, there appear to be two target audiences for planned giving vehicles, based on existing US models:
Donor Advised Funds, which could be linked to like or health insurance for older/wealthier clients, and
Isa-style pooled savings which would be attractive to the young, mass affluent market.
Such products are normally designed for medium to long-term investment and payment of charitable 'gifts' is usually deferred, perhaps until the death of the donor, for example.
Creation by IFAs of a UK planned giving market has been prompted by The Giving Campaign workshops and HMC research which suggests charitable products can also be good for brand awareness and business development.
Recent changes to the UK tax system now provide individuals with a number of tax benefits if they give money to charity, making any growth of a planned giving sector much easier too.
For more information on creating your own 'planning giving' products contact the Giving Campaign on 020 7930 3154 or click thru the right-hand link to go to the website.
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