Many high-net-worth individuals (HNWIs) find it hard to give as much for good causes as they might like to, but if you can put your money to philanthropic or charitable use, your wealth can be a precise and impactful tool to shape the future and leave a meaningful legacy.
As financial advisers, we increasingly see clients thinking not just about how much they leave behind but what kind of difference it makes.
Philanthropy plays a central role in legacy planning. Done thoughtfully, it can provide a significant boost to communities and institutions while also delivering legitimate tax efficiencies that benefit the individual and their estate.
Giving while living – and after
There are two main ways to incorporate charitable giving into legacy planning: lifetime donations and posthumous gifts via a Will or trust.
Lifetime means you get to witness the vital impact of your contributions, rather than giving posthumously. With UK fundraising “in freefall”, experiencing a pronounced decline in donors in the last year, charitable organisations in 2025 would welcome anything you can gift with open arms. What’s more, donations to registered UK charities are eligible for tax relief through Gift Aid.
This boosts the value of your gift by 25% at no extra cost to you. Higher-rate and additional-rate taxpayers can also reclaim the difference between their rate and the basic rate through their self-assessment return.
Gifting through your Will also offers advantages. If you leave 10% or more of your net estate to charity, the inheritance tax (IHT) rate on the remainder can be reduced from 40% to 36%. This is more than a gesture; it can significantly slash the total tax paid while increasing the final value that goes to meaningful causes.
Plan with purpose: Using charitable trusts and foundations
You may wish to establish a charitable trust or family foundation yourself. Depending, of course, on your overarching aims, these vehicles allow for structured, ongoing philanthropy that can involve family members across generations; embedding values and purpose into the long-term family legacy.
Setting up a charitable trust also offers a surprising amount of flexibility. It allows you to specify how and where funds should be used, whether through grants, scholarships or partnerships with existing charities. Importantly, assets transferred into a charitable trust may be exempt from IHT and capital gains tax, provided that certain conditions are met.
It is worth noting that, as of 2022, total charitable donations in the UK exceeded £12.7 billion, reflecting a growing trend among wealthy individuals to blend purpose with planning.
How can I use donor-advised funds (DAFs)?
If you’re seeking a simpler alternative to a private foundation, donor-advised funds can be a smart (and increasingly popular) option. A DAF is a giving account administered by a registered charity. You contribute assets, receive immediate tax relief and advise on how the funds are distributed over time. Many HNWIs prefer DAFs because they offer control without the administrative burden of running a separate entity.
Giving assets, not just income
Philanthropy need not be limited to cash alone. Assets such as shares, property or business interests can be donated directly to charities; this often delivers far greater tax efficiency than a cash donation. For example, gifting qualifying shares to a UK-registered charity may avoid both capital gains tax and income tax while still qualifying for full tax relief on the market value.
This kind of strategic giving not only supports long-term funding for the charity but also helps manage large asset holdings in a tax-efficient manner.
A legacy that reflects your values
At Matthew Douglas, we’d encourage you to think about philanthropy, not as a financial afterthought, but as a central part of legacy planning. A well-structured giving strategy can express your values, inspire the next generation and leave a mark far beyond the financial.
Our team works with clients to understand their personal goals, align them with the right tax structures and ensure every donation, large or small, has purpose, clarity and impact.
Let’s start a conversation
If you are considering how philanthropy might form part of your long-term financial or estate plan, we would be delighted to explore the options with you. Get in touch today to explore how legacy planning is not only about preserving wealth; it is about choosing the future you want to help build.