The leaders of six of the sector’s representative bodies fired off a joint letter to the Chancellor yesterday requesting a meeting to discuss the impact on charities of the cap on tax reliefs announced in Wednesday’s Budget.
The letter, signed by the heads of NCVO, Acevo, Charity Tax Group, the Institute of Fundraising, Charity Finance Group and Charities Aid Foundation, warns of the “unintended consequence of disincentivising the donation of large gifts to charity”.
It said: “Charities rely heavily on major philanthropy of this kind, and any reduction in giving could be devastating for the many vulnerable people who rely upon our services. The measure also is clearly at odds with the government's commendable efforts to promote philanthropy, sending the wrong signal to major donors who have thus far been encouraged to give more.
“We know you will want to avoid such an outcome, and we are keen to work with you to do so.”
Gathering evidence of impact
Charity Tax Group is also beginning to gather data to provide evidence of the impact the proposal will have on charities and future charities. Chair John Hemming (pictured) told civilsociety.co.uk this morning that he wants to establish how many charities have been set up in the last few years where this initiative would have restricted the amount put into the fund.
“That’s the sort of statistical information we need to gather in order to demonstrate the impact that this proposal will have,” he said. “We’ll ask the Charity Commission, our members who are professional advisers that help set up charities; we’ll tap into any resource we can get hold of to establish how this might have restricted past philanthropic action.”
Members 'livid' at cap idea
He added that at a joint meeting last night of members of the European Association for Philanthropy and Giving and CTG, everybody was “livid” about the proposed cap. “It was the only thing anybody wanted to talk about with regard to the Budget,” he said.
“From CTG’s point of view, capping the situation where an individual shelters his income in a tax-subsidised investment is one thing, but it’s a totally different situation where the individual has unreservedly chosen to give his money for public benefit. One’s a private investment and one is a public benefit. It’s crazy.
“And after last year’s Budget was so seriously about encouraging philanthropy, now it’s been cut off at the knees. It’s contrary to all the messages individuals had been receiving. The idea of encouraging entrepreneurs or philanthropists to set up endowed funds has now been shot down.”
Hemming said he did not think the government had properly thought through the implications of the idea. “This is unfortunate, because all previous announcements have been subject to very good consultation processes, both private and public, where the practicalities of a proposal have been discussed before a decision has been made.
“But this just came out of the blue and people immediately said ‘this won’t work, how does this work?’ Will the charity be able to claim back the full amount? How is a charity even meant to know that a donation is restricted?”
