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Budget 2012: What civil society wants from Osborne

Finance | Niki May Young | 16 Mar 2012

Niki May Young rounds up the sector's letters to the Chancellor.

The sector appears well-prepared and united ahead of next week's national Budget announcement, with joint letters to the Chancellor calling for a notably conservative number of measures for the government to consider, to improve the situation for charitable and voluntary organisations. 

Last year's Budget was hailed as the "best Budget for charities for years", bringing in measures to simplify and improve gift aid, improvements to inheritance tax and pledges to help increase payroll giving.

Signatories on letters to the Chancellor from the past month remain positive, congratulating the Treasury for the measures taken so far, but asking for them to take things even further. Below we outline the key requests from the sector.

Second Transition Fund

The greatest ask by far is led by NCVO, with some 14 umbrella bodies also signing their names to call for a second Transition Fund. 

The adage that the charitable and voluntary sector has been "disproportionately affected by the speed and scale of cuts" is once more enforced in the bodies' call for further funding to allow the sector breathing space while longer-term strategies are established. 

But specifically, the organisations have called for a second bout of transition funding to be focused on groups working in disadvantaged areas with disadvantaged groups.

In addition to the joint letter, Navca chief executive Joe Irvin outlined his organisation's own more detailed reasoning for why such funding is necessary and how it should be distributed - through the Big Lottery Fund, which he says has a "good track record of distributing funds to deprived communities in an effective and responsive manner".

Explaining why the funding should be targeted in the manner requested, Irvin said: "Navca members are committed to supporting local voluntary action - helping communities use their skills to address their needs and achieve their aspirations. They operate in every part of England and they tell us that many voluntary and community organisations are facing increased demand for their services, whilst their funding is being reduced, hitting the most disadvantaged communities and vulnerable people in the areas with the highest levels of deprivation hardest.

"We believe introducing a transitional regeneration programme can be a low-cost way to quickly inject some much needed resources into organisations working in the most deprived communities.

"And because the work of voluntary organisations often involves intervening early to solve future problems, this can reduce the burden upon the Exchequer."

The letter headed by NCVO went further to explain what the Joseph Rowntree Foundation had recently argued - that disadvantaged areas with disadvantaged client groups are likely to have been hardest hit by the recession and public spending cuts, and that these groups "typically have relatively little fundraising skills or capacity" and that "investments here are likely to increase their resilience".

Funding to train fundraisers

This is also reflected in the Institute of Fundraising's call for funding to increase fundraising skills.

The Institute, a strategic partner of the Office for Civil Society, used its separate letter to the Chancellor to raise awareness of a need for investment in skilled fundraisers particularly for small charities.  Such investment, said Peter Lewis, CEO, "could be transformational for many organisations".

"For the first time many (charities) are having to look for new and different streams of income. Others are just keen to maximise the return they can get from existing income streams. We believe you should use the Budget to create an environment where these organisations can generate the extra funds they all need," he said.

Increasing giving

Measures to increase giving focus largely on efforts included in last year's Budget, specifically simplifying gift aid and increasing uptake of payroll giving. 

Gift aid

The Institute welcomed the simplification measures subsequent to the last Budget but also called for the scrapping of the requirement that an organisation must have been registered with HMRC for three years before claiming gift aid on small donations.

NCVO said that it would support an 'online donor declaration system' to reduce paper, workload and bureaucracy, and asked for the government to publicise its efforts to simplify guidance more. 

Payroll giving

The NCVO coalition compared UK to US giving through payroll, advising that while just 1 per cent of Brits gave through their pay packets, 33 per cent of Americans did, and calling for efforts to reach a 'gold standard' of 10 per cent in the UK.

The umbrellas and the IoF separately welcomed "a commitment to change" on the matter, calling for consultation with the sector, but offered no magic-wand solutions to improving the situation. 

In addition, CFG highlighted the issue of trading limits, particularly for those organisations which do not have trading as a primary purpose. The limits, it says, "force many organisations to create bureaucratic trading subsidiaries, which often bring few other advantages". The limits impact the ability of many to make use of trading models for raising funds, CFG said.

Growth of social investment

An apparent universal theme for all proponents was a call for growth in social investment. The NCVO included its recent report on social investment which outlined ways the sector and the government can work together to improve the existing CITR regime for investment into Community Development Finance Institutions and how equity or equity-like investment can be made directly into organisations for social benefit.

CFG too touched upon the need for greater social investment in its submission, which outlined a raft of measures to improve the financial situation for charities.

Pensions 

CFG wrote directly to the minister for pensions, Steve Webb and the minister for civil society, Nick Hurd, in February outlining the issues associated with Section 75 of the Pensions Act. The body specifically addressed the 'last man standing' rules within this section that could leave charities trapped in unaffordable pension schemes, in its submission to the Chancellor. 

Caron Bradshaw, chief executive of the organisation said: "As a significant contributor to the UK economy, the strength and sustainability of the sector is essential. If the government is to deliver in developing civil society as well as new public service delivery markets and social investment structures, then it is essential the operating environment is fit for purpose."

In addition to pensions, CFG highlighted the issue of irrecoverable VAT, and the costs associated with the requirement for returns to be submitted to HMRC in iXBRL format, which Bradshaw says can cost its members "anything between £150 and £8,500 in charitable funds, depending on the number of documents they need to convert and the complexity".

Commitment to overseas aid

International anti-poverty charity One is calling for supporters to make their own calls to the Chancellor, encouraging them to support its efforts to push the government to retain its pledge to commit 0.7 per cent of British income to international development by 2015.

Currently the UK offers 0.56 per cent of its budget to improving the lives of those overseas. But the United Nations Millenium Project which launched in 1970, and that the UK government signed up to, has set the 0.7 per cent target in a bid to eradicate extreme poverty within a generation.

Directory: Association of Chief Executives of Voluntary Organisations (ACEVO) | Charity Finance Group | Institute of Fundraising | National Council for Voluntary Organisations (NCVO)
Who's Who: Niki May Young | Peter Lewis | Joe Irvin | Caron Bradshaw