An advisory group has recommended that the government simplify gift aid and legacy giving, modernise wealth advice on philanthropy and activate corporate purpose and giving in order to unlock more money for the charity sector.
The final report from the Social Impact Investment Advisory Group (SIIAG), published this week, includes several recommendations on how the government can better collaborate with civil society to grow the impact economy and unlock an estimated £106bn in assets.
As part of these recommendations, it notes that although gift aid provides £1.6bn annually to the charity sector, around £560m goes unclaimed due to “complexity and lack of awareness”.
It says current rules on charitable lump sum death benefits are too restrictive, making it hard for people to use their pension pots for legacy giving.
The report recommends that the government modernise the current system by legislating to allow for charitable lump sums to be made as authorised payments from pension pots during a lifetime.
It calls on the government to streamline and automate the gift aid claims process in order to reduce the administrative burden on charities, which the report claims would “unlock a substantial stream of unclaimed capital”.
The report also says that although £1.2tn is currently held by high-net-worth individuals advised by wealth managers, only 8% of the UK’s richest people receive philanthropy advice, which it says undermines giving.
It recommends that the government unlocks a “middle market” in philanthropy by facilitating its own match funding programmes and integrating impact goals into the financial advice framework, with the assistance of the Financial Conduct Authority.
Additionally, the report suggests that the government should support model governance tools and incentivise corporate giving by larger businesses through more transparent reporting and reintroducing mandatory reporting of corporate giving in annual reports.
According to the report, if more businesses gave just 1% of their pre-tax profits to charity, charities could receive £9.6bn.
Office for the impact economy
The group also recommended the creation of an “office for the impact economy”, similar to a proposal put forward last year by Labour MP Stephen Timms before the general election.
It also called for the Civil Society and Impact Economy Summit, held this year, to be an annual event co-hosted by the government.
Charities Aid Foundation’s chief executive, Neil Heslop, who has been an adviser on the group, said: “Now is a critical time to supercharge giving by implementing these recommendations to help charities support the people and places that need it most.
“An office for the impact economy at the heart of government, alongside equipping wealth advisers with philanthropy knowledge, modernising gift aid and supporting community investment from British businesses, would represent a new approach to a truly cross-sector partnership.
“Philanthropy can also act as a first funder for ground-breaking initiatives and encourage innovation. Genuine and long-term partnership between the impact economy and government can multiply impact throughout the country.”
In response to the report, chief secretary to the treasury James Murray and culture secretary Lisa Nandy said it “sets out a compelling vision for how we can work in partnership to deliver inclusive growth and unlock new sources of capital to invest in improving the lives of people across the UK”.
“We will carefully consider the report’s recommendations and look forward to working with colleagues across government to take this work forward,” they said.
