Giving within your means

Scottish Community Foundation scheme permits small charities and individual donors to share costs while each keeping control of their favoured purposes

The Journal, June 2004, page 51

The Scottish Community Foundation (SCF) has developed a new charitable product, the Professional Advisers’ Charitable Network (PACN). It allows wealth advisers to introduce their clients to:

• a low cost, planned giving programme;
• an endowment vehicle, for any sum, which can support established charities and/or researched community projects in the donor’s areas of interest;
• an alternative to setting up a new, possibly uneconomic private trust;
• a replacement vehicle for trusts redundant in purposes or means which can retain the name and spirit of the original trust;
• a flexible vehicle, the giving purposes of which can be changed with ease;
• an exciting and involving lifetime alternative to legacy giving;
• a vehicle which maximises tax dispensations with impressive effectiveness at the outset and with each new donation.

People who are well placed to apply philanthropic capital will not often have the necessary funds to set up a private trust (some believe new trusts should not be started with less than £250,000; others would say even more), and might feel that any irrevocable capital gift is an excessive commitment to a single cause. By working with their professional adviser, individuals can “cut their cloth” by setting up an endowment fund with their own nominated fund manager, while retaining their advisory relationship with solicitor and tax adviser.

Social rugby’s new meaning

This endowment moreover can attract funds from others if the fund’s stated purposes appeal. An example is the fund set up to commemorate the great Scottish rugby player, Gordon “Broon frae Troon” Brown. The fund both assists families affected in a similar way to Gordon’s by cancer, and in the development of junior rugby in relatively undeveloped areas. The result is that over the three years since his death a fund, inaugurated as an idea only, with minimal assets, has been able to grow with small costs to £150,000 and will go on growing and distributing in perpetuity.

Further potential for PACN was realised when another famous rugby name, Kenny Scotland, approached SCF about the Dr Arthur Smith Memorial Trust, set up with a specified educational purpose after the tragically premature death of that former British Lion and Scottish captain. The trust was unable to meet its purposes owing to inadequate means and the trustees wished to subsume it into Gordon’s fund. The PACN could do more however, and allowed the £50,000 trust fund to retain its own identity under the Foundation umbrella. The trustees had the necessary powers to appoint to another charitable trust. Thereafter the investments comprising the trust fund were passed to the Scottish Community Foundation’s investment managers and were incorporated as an identifiable part of the managed portfolio. The new “Arthur Smith Fund” was established, to make grants for educational purposes in Kirkcudbrightshire – Arthur’s county of birth. In addition to providing the required structure, the Foundation’s unique ability to research and evaluate proposals and then to make grants, is fundamental to this new facilitation.

Facilitating planned giving

Thus SCF can act as a facilitator:

(1) For any trust, which is having difficulty in cost-effectively achieving its purpose. Obviously the trust deed will need to include suitable powers. If it is possible within an existing trust to wind it up and denude in favour of SCF, or to appoint or advance funds simply and cheaply to SCF, then a new fund within the Foundation allows the trustees to achieve a cost effective solution to their problem – and achieve their philanthropic ambitions, with the welcome removal of future administrative and fiduciary responsibilities.

(2) For those donors who aspire to establish an endowed fund but who might be discouraged primarily on the grounds of size and cost, to achieve the donor’s desired objectives now. This also offers previously unthought-of flexibility as objectives can be changed simply by issuing new guidelines to the Foundation.

(3) To provide an administered facility which allows generous but frequently busy and/or elderly people the comfort of knowing that their giving is under control, and that their chosen causes – specific or general – will be supported as they have expressed.

The outcome is planned charitable giving.

Endowment funds with the Foundation can be established in a number of ways dependent on the amount given, and the required degree of involvement. The Foundation levies an overhead recovery charge to meet all general legal, accounting and administration costs as well as the costs of finding, assessing and processing suitable applicants/recipients for donations.

Please contact John Frame at Scottish Community Foundation, 126 Canongate, Edinburgh EH8 8DD (tel 0131 524 0303), who will be happy to address your organisation or a regional meeting about the work of the Foundation and the application of Professional Advisers’ Charitable Network to your business.