Welcome
Welcome to the Charities Management experience – covering a whole range of subjects related to the successful running of charities. Charities Management is a discussion forum for the UK charity sector – please make use of the opportunity to participate by contacting us. See the Home page for our contact details.
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WELCOME TO THE SPRING 2012 ISSUE OF CHARITIES MANAGEMENT. On this screen you will see the Spring issue of the Charities Management comment and information website and a lesser version of Charities Management magazine. A full version of Charities Management magazine is emailed to paid subscribers. To receive the full magazine, please access the subscription details and form via the top right of this screen.
One of the roles of Charities Management is to provide an opportunity for charities to comment on issues which they believe are important for both them and the sector as a whole, and to talk about what they are doing in relation to these issues. In particular, we welcome input from charities which other charities can learn from. When you look through the material on the site and in the magazine you will see how charities contribute to the quality and depth of our discussion here.
There could be a massive decline in Gift Aid
Which Chancellor of the Exchequer said that he would encourage wealthy people in our society to give even more to charity? Which Chancellor of the Exchequer said: "Do the right thing for a charity and the Government will do the right thing by you"? The answer is George Osborne in his 2011 Budget statement and the same Chancellor who in his 2012 Budget statement announced restrictions on the application of Gift Aid for charity giving and, probably worse, created confusion and uncertainty regarding the extent of the tax relief available to those big earners who are philanthropically inclined.
Incentives for giving to charity were a very welcome theme of the Chancellor's speech in 2011 and in particular he announced that a lower rate of inheritance tax would apply where people leave a charitable legacy of 10% or more of their estate when they die. The consultation paper on that particular incentive said the Coalition Government is committed to encouraging charitable giving and building a more socially conscious society as part of its vision for the Big Society. The Coalition Government also highlighted they wanted to encourage giving by donors at all stages of life from the largest to those who give money through charity bucket donations.
One of the most effective incentives for charity giving is Gift Aid. Under the Gift Aid scheme, charities can reclaim basic rate tax (20%) from HMRC on a donation's gross equivalent which is the amount before basic rate tax was deducted. The effect is that £100 donated to a charity under the Gift Aid scheme is consequently worth £125 to the charity. For higher rate taxpayers Gift Aid has the quality of mercy – it is twice blessed, and in turn blesses those who give and those that receive. So the higher rate taxpayer is able to claim tax relief on the gross amount of the donation. The only limit on the amount of tax relief is the amount of income which is subject to higher rate tax.
In this year's Budget statement, the Chancellor announced restrictions on the unlimited use of income tax reliefs. He acknowledged that it was right that we have tax reliefs which promote investment, support charitable giving and reflect genuine business loss. But he emphasised that, from April 2013, anyone seeking to claim more than £50,000 of these reliefs in any one year will have a cap set at 25% of their income.
The Budget statements in 2011 and 2012 are completely contradictory and send out very mixed messages. But why should there be any cap on the tax relief offered to wealthy individuals who wish to make charitable donations? The Coalition Government has said that it will explore with philanthropists ways to ensure this new limit of uncapped relief will not impact significantly on charities which depend on large donations. The simple way to avoid such an impact is to leave uncapped the relief which applies to gifts to charity.
These large charitable donations by a relatively small number of philanthropic individuals regularly make the difference between success and failure for fundraising campaigns. Tax avoidance is regarded by the Chancellor as morally repugnant, but our message to the Chancellor is simple – incentives for giving to charity are a moral imperative.
Click on the above headline to see Douglas Connell’s comments on the Budget and its effect on Gift Aid receipts for charities. We will have updates as the Government enters into consultations with the charity sector.