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Foundations body rejects Giving Paper minimum payout idea 2

Fundraising | Tania Mason | 4 Jan 2011

The Association of Charitable Foundations plans to oppose the suggestion contained in the Giving Green Paper that foundations should make a minimum annual payout in order to boost the sums flowing to charities.

The paper states: “Some suggest that foundations should make a minimum payout annually, as is the case in some other countries, as this could result in extra income for charities.  Others suggest that a requirement would not help charities in the long term and could generate unintended consequences.

“We would like to explore this issue further and welcome views on foundation giving.”

ACF chief executive David Emerson (pictured) told Civil Society that the ACF would be opposing a mandatory minimum payment.

He said the idea was based on the US situation whereby foundations are required to give away 5 per cent of their assets each year.  Recently some sector figures have been vocal in their support for such a move here, arguing that it would generate millions more for the sector each year.

But Emerson said such a requirement was only necessary in the States because there is no charity regulator there. In the UK, the sector is properly regulated by the Charity Commission, which does not hesitate to investigate trusts that it deems to be sitting for too long on large sums of money.

“Getting foundations to pay out more right now just brings forward the spending of money that may be needed for future needs,” Emerson said. “It sounds like a seductive argument but we think there certainly would be unintended consequences.”

Dawn Austwick, chief executive of the Esmee Fairbairn Foundation, was equally unimpressed with the proposal: "In approaching the issues raised in the Green Paper it will be important to recognise the right of foundations to set their own spend levels in line with their individual charitable objectives," she said.

"This allows foundations to react to changes in their own circumstances or those in the charitable sector and ensures that the charities they serve are able to access a spectrum of funding options."

Emerson also lamented the green paper’s lack of focus on effective giving. “We think the issue of effective giving is very much tied up with this.  There’s no point getting more money in to the sector if it is just splashed around.”

Charities Aid Foundation response

Charities Aid Foundation was also rather lukewarm about the Green Paper. Chief executive John Low described it as welcome because it seeks to kickstart some new initiatives, but was critical of the absence of proposals to make it easier for donors to avail themselves of tax breaks.

The green paper makes just one reference to the subject: “We could also make giving more convenient, for example, by making it easier to claim the existing tax benefits.”

Low said: “Many countries use Britain as an aspirational role model when developing their charity sectors but there are still lessons our government can learn from the likes of the US where tax relief is no more generous than ours but much simpler to understand; resulting in a higher take-up level.”

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Who's Who: David Emerson