1. Who is the Anglo-American Charity?
The Charity was created in 2003 by a group of American expatriates in London who were seeking to boost donations from UK based alumni of American schools and universities. We determined that the best way to encourage donations was to make it more tax efficient for the donors by establishing a dual qualified charity.
Unlike earlier dual qualified charities set up to support Brown University among others, this Charity can accept donations to a wide number of American and non-American charities, provided they support education, culture or religion.
2. Why is making a gift to the Anglo-American Charity better than giving directly to either a UK or US charity?
1. if you give to a UK charity directly and you are also a American tax payer, the gift does not qualify for a US tax deduction.
2. if you are a UK only tax payer and you give to a US charity directly, your gift does not qualify for the Gift Aid Reclaim. Furthermore, you cannot reclaim the basic rate of tax on the gift.
3. When should I make a gift?
To qualify for a US deduction, the gift must be received by the charity no later than December 31st of the year for which the deduction will be taken. It is advisable to make any 2017 gifts by mid-December.
A gift made on December 31st 2017 qualifies as a deduction for US purposes for the 2017 tax year and for the 2017/2018 UK tax year. Unlike the US tax year, the UK tax year runs from April 6th of the current year to April 5th of the following year.
4. How does the US deduction work?
The US allows tax payers to make an itemized deduction for charitable contributions. The deduction becomes smaller as your income increases.
5. What is Gift Aid?
The British Government encourages charitable giving by refunding a portion of the tax paid on the gift to the receiving charity.
The Government grosses up the gift and refunds the “basic rate” of tax or 20%, For example, X gives £1,000 to the Anglo-American Charity. To be able to make that gift, X needed to earn £1,250. The extra £250 can be claimed by the charity from Her Majesty’s Revenue and Customs.
To make it even more attractive, if X pays the “higher” or 40% rate of tax, he can claim a credit of £250 against his gift.
In order for us to reclaim the Gift Aid, the donor needs to complete, sign and date the Gift Aid Declaration. It is most practical to fill out one form which remains in force on all gifts made to the charity until revoked by the donor.
6. How do I know my gift will reach the intended recipient?
In order to comply with U.S. and U.K. law, the board of directors retains discretion over the grant making process to ensure that any suggested grant falls within the purview of charitable activities in both countries. Any US or UK educational institution should fall within the charity’s guidelines.
7. How is the Anglo-American Charity compensated?
The Charity deducts up to 4% of the total value of the gift from the Gift Aid Reclaim. For example, X has given £1,000. With Gift Aid, the donation is “worth” £1,250. We will deduct £50 from the reclaim as our administrative fee. Gifts over $15,000 are charged a fee of 2%.
The minimum donation is £1,000.00.
8. What if I am only a US tax payer and I would like to make a gift to a UK registered charity?
We can accept gifts from US only tax payers through our parent, The Anglo-American Charitable Foundation, Donations can be made in US Dollars or Sterling. Please use the contact details for the Anglo-American Charity Limited for questions on this type of gift.
9. What happens to any surplus revenue for the Charity?
If the Charity has a surplus in any given year, the excess is given to Plan UK, a charity assisting disadvantaged children in the developing world along with a small number of other registered charities. Recently we made a gift to Wellbeing of Women, a UK charity which has focused on women’s health issues for the past fifty years.
Hypothetical Example (39.6% US tax bracket) Donation to US charity directly of $10,000
|US Charity receives||$10,000|
|US tax deduction||Nil to $4,950*|
|UK tax deduction||Nil|
Donation to US charity via The Anglo-American Charity Ltd. of $10,000
|US charity receives||$12,000**|
|US tax deduction||Nil to $4,950*|
|UK tax deduction
(higher rate taxpayers only)
|$2,500 at 40%$3,125 at 45%|
|To Donor||$2,500 to $4,950|
*Although deductible for US tax purposes, there may be little or no net tax benefit due to the interaction with tax credits and equalisation policies.
**The extra benefit occurs as a result of UK Gift Aid rules that allow The Anglo-American Charity to reclaim a portion of UK tax paid by the donor from earned income from HMRC, upon receipt of a completed Gift Aid form from the donor. This benefit, after a deduction of a small administration charge (no more than 4%) will be passed along to charity.
You should consult with your tax advisor to confirm the net benefit which you will obtain for US and UK tax purposes.