The simplest form of giving vehicle is the donation. Broadly defined as voluntary gifts to charitable organisations for public benefit and without the expectation of personal gains, they can take the form of money, goods, services, time, or assets (such as land or shares), and are generally given with few or no conditions on how the gift is used. There are many ways in which donations are collected. Whether through direct appeals from the charity or through intermediaries that provide a platform for fundraisers, donations can be any amount, in any currency, for any length of time (one-off to ongoing on a monthly or yearly basis). It is up to the donor to decide how much and the frequency of the donations.

The terms ‘trust’ and ‘foundation’ are used interchangeably in the UK, but they have very slight legal differences. A charitable trust is a legally binding arrangement where one or more individuals (the trustees) hold assets for exclusively charitable purposes that provide a public benefit. A foundation is a separate legal entity, often incorporated, that owns and manages assets for a specific purpose. No, we aren’t entirely sure exactly what these slight differences mean either! A trust/foundation is a way to dedicate assets irrevocably to good causes, separate from personal or business interests. Unlike private trusts, charitable trusts/foundations are regulated by the Charity Commission and must demonstrate that their activity falls within the defined charitable purpose. Whilst foundations and trusts can be a fantastic way of redistributing wealth in line with the founder’s wishes, they can be resource-intensive: they usually require staff, and must adhere to certain charity-related codes of conduct, including annual reporting. There are restrictions in place to ensure they have certain structures to oversee the work that they do, including boards of trustees, and increasingly, advisory panels with lived experience of the issues they address, who can help shape and guide their giving strategies.

This is a growing area of philanthropic giving that differs from DAFs in that grantmaking is made in a collective manner. Providing an effective and flexible way of enabling donors to create targeted and strategic grants, pooled funds can give large sums to causes by bringing individual donations together under one grant. The funds can either be fully independent or fiscally hosted by a larger organisation. There has been a trend towards the development of ‘pooled funds’ (otherwise known as funder collaboratives or intermediaries) such as Farming the Future, where donors (foundations and individuals) pledge money into one fund focused on a specific theme or community. Whilst collective giving fosters an environment of shared learning, and generally, experts are on hand to help choose the projects that receive support, they can have their limitations, including inadequate resourcing for setup and maintenance, conflict between different funders with regards to the focus of the fund, and a reluctance amongst funders to cede control.

Like many businesses, non-profit organisations can experience challenges with cash flow when facing unforeseen financing gaps – for example, when contract payments are delayed. This can be addressed through the provision of short-term lending or ‘bridging’ loans, which can enable the ongoing provision of vital services as and when they are required, rather than waiting for funding to be in place first. This is the approach taken by humanitarian charities such as UNICEF, as well as through initiatives such as the Open Road Alliance, which work to overcome complications of other forms of lending with bridging loans, such as a tendency for lenders to hide and hike lending rates and fees. In the UK, bridging loans have been used very successfully in recent years to help conservation organisations buy land and protect nature.

Whilst the two terms grant and donation are sometimes used interchangeably, grants tend to be specific amounts of money given to a charity for pre-determined purposes, with expectations outlined in the grant agreement, which specifies budgets, timelines, and expected outcomes. Generally speaking, grants have a formal application and approval process, and certain parameters must be met when using the grant. For this reason, grants are typically administered through established entities such as foundations or other charitable organisations. Grantmaking can also be undertaken outside of more formal structures, and individuals can provide grants for specific activities, charities, or causes. The latter is increasingly seen in the climate action space, where funders recognise the value of flexible, trust-based support to individual change-makers.

DAFs offer many of the benefits of charitable trusts/foundations, without the expense, hassle, and responsibilities that come with them (e.g., administration, reporting, and fiduciary responsibilities). DAFs can be funded with a variety of assets (e.g., shares, cash, non-cash assets), which are then ring-fenced for charitable giving. They are designed for immediate tax efficiency, reducing the administrative management of grantmaking for you as the donor. The funds are managed by a separate entity, typically an umbrella charitable organisation, and as such, the donor cedes financial control of the assets in the fund but can request that the funds be invested, gifted, or granted at any time, to whatever charity the donor chooses. The money can sit in the account as long as the donor likes, but any withdrawals must be for charitable purposes. Until the money is distributed to a charity, it is invested in wealth management products like ETFs or stocks. Generally, DAFs will have a minimum opening balance or require additional contributions on an annual basis. For example, the Charity Aid Foundation (CAF) offers DAFs for donors giving £25,000 or more per year. There is more information on DAFs on the Philanthropy Impact website, together with a list of DAF providers in the UK.

Give As You Earn or Payroll Giving allows you to donate to charities directly from your payroll. Donations are deducted from your pay cheque directly from your employer, which makes the donation tax-efficient for you because it reduces your tax liability. The funds are placed in a separate account available to you to distribute when you want to allocate a donation. This vehicle is only available through your employer, and the employer is responsible for setting up and administering the programme. Specialist payroll giving agencies assist companies with this service. Employers sometimes treat this vehicle as an added benefit for their employees’ well-being, helping charitable causes that their employees support. It can be coupled with other support, such as match-giving or volunteer days.

Concessional loans enable borrowing at below-market interest rates and/or over longer periods of time. For example, women-led agri-businesses and farmers in the Global South can struggle to access affordable finance on account of gender norms, the lender’s risk appetite towards agriculture, and other factors. Concessional loans, when provided alongside grants and capacity building support, can therefore help women access the training and equipment they need, as well as develop a track record and credit rating to secure finance in the future. Examples include The Rallying Cry, One Acre Fund, and Root Capital.