The government’s proposal to require trusts and foundations to make a minimum annual payout is unnecessary and could stifle philanthropy, a Cabinet Office representative was told last night.

The debate at a panel discussion on the government’s Giving Green Paper in London got if not heated, at least humid, following a declaration of support by Michael Green (pictured), author of the book Philanthrocapitalism, for the idea of a regulated minimum payout by grantmakers.

Green told an audience of sector leaders the fact that one of the large foundations has paid out as little as 0.9 per cent of it value is “ludicrous” and the system carries a risk that some trusts might enjoy a tax subsidy of greater value than that of their grantmaking.

He suggested that instead of a tax subsidy, trusts and foundations should be offered a match fund for grantmaking worth the same amount as the fiscal subsidy.

“It’s worthwhile having a debate about the fiscal subsidy,” he said – and a debate he had.

Simon Weil, a partner at Bircham Dyson Bell, immediately took issue with Green’s remarks. He said the law already makes clear that foundations can only accumulate when justified, and when not they get “dragged over the coals”.

“The chances are that you’ll put off potential creators of foundations by creating that level of obligation,” he warned.

Lord Robin Janvrin, a crossbench peer, suggested that rather than demand foundations and trusts pay out, there could be a “league table” of these organisations based along the lines of their payouts.

The issue of minimum payout has sparked a significant reaction more broadly, according to the Cabinet Office’s Sophia Oliver. Oliver, the deputy director of giving at the Office’s strategy unit, told the room that the Green Paper had prompted “a lot of feedback on the issue of minimum payout” already.

Oliver lauded the innovative approach of the Green Paper, but said that given the breadth of topics covered, it was necessarily limited. “Realistically there is only so much we can do with this paper,” she said.

With the March 9 deadline for submissions to the consultation fast approaching, Oliver encouraged respondents to be specific and pointed in their input: “ In your responses it is worth prioritising where you want most action most quickly,” she said.

“The white paper will not be the end of this process.”