Member Article

Charity leaders want re-think on tax relief cap

Proposed cap on tax reliefs charities could exacerbate a ‘perfect storm’ of increased demand and reduced funding and support.

Research from PwC, Charity Finance Group and the Institute of Fundraising, shows that 93% of fundraisers say raising money has been harder in the past year, even before the proposed cap.

The fifth Managing in a Downturn report, ’Managing in the new normal - a perfect storm? also found that charities have experienced a net reduction across all income streams, with the majority hit by Government spending cuts.

Caron Bradshaw, CEO, of Charity Finance Group said: “If further evidence were needed, that the Government are ‘foot shooting’ with policies which undermine the long term future of many charities, this is it.

“In the light of these results the relief cap is a frightening prospect, which will bring minimal benefit to the exchequer but blow a further hole in the sectors’ finances.

“Tentative promises of consultation are not enough. The damage has already started and George Osborne must rethink.

Peter Lewis, CEO of the Institute of Fundraising, also commented: “The cap is yet another blow to fundraisers, who are already struggling to maintain much-needed income.”

“A massive 93% of fundraisers responding to our survey say the fundraising climate has got tougher in the past year, and 94% expect it to get even tougher in the next 12 months.

“Fundraising was seen as a key way to fight out of economic difficulties by the majority of our respondents – 66% told us they plan to increase their current fundraising activity in the next year, whilst 65% plan to expand into new areas.

“It looks like competition for donors’ cash is going to get even tougher, and the relief cap will simply tighten another major source of funds.”

A campaign against the changes, Give it Back George, has already attracted more than 1,500 supporters, including hundreds of charities as well as individual donors.

John Low, Chief Executive of the Charities Aid Foundation, said: “We knew the tax changes would be bad, but this confirms our worst fears.

“The Treasury talks as if Britain’s most generous charitable donors are simply tax avoiders.

“The Government’s handling of this has been shambolic. Far from clarifying matters, it has created further confusion among charities and donors. That’s no way to fulfil its vision of a Big Society.

“We need to be encouraging philanthropists to support charities, not treating them as if they are shirking their public duty.”

Despite continued economic uncertainty and reduced income, the survey results indicate the sector is remaining resilient and flexible, as charities adopt innovative solutions.

PwC director, Ian Oakley Smith, said: “What absolutely emerged from the responses was that the sector was in the middle of a major-reshaping.

“The energy and capabilities of charities are being pushed to the limit as they look to survive in what we label ‘the new normal’ – prevailing uncertainty over the economy, future of funding and over the future of charities themselves.

“And of course now it would be fair to say uncertainty around what hand Government might deal next.”

Elsewhere in the report, 69% of service delivery charities experienced an increase in demand in the past year, with 70% also predicting an increase in demand in the next 12 months.

One in five charities reported they were considering a merger in order to tackle economic difficulties, up from 12% in the previous survey.

The recent Charities Aid Foundation survey of coalition backbench MPs found that two-thirds think tax relief on charitable donations should be exempt from the proposed cap.

To this, Sir Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations, said: “These findings signal loud and clear that now is the time for the Prime Minister to listen to the calls from his own party.

“The fact that the majority of coalition backbenchers oppose the proposed cap lends further weight to the thousands of organisations and individuals who have already spoken out via the “Give it Back George” campaign.

“The Government needs to reverse the decision as quickly as possible, as the widespread alarm and uncertainty is already impacting on vital donations.”

This was posted in Bdaily's Members' News section by Tom Keighley .