March 25, 2012 11:10 pm

Charities threaten to boycott donors’ summit over tax plans

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Leading charities are considering boycotting a high-profile philanthropy conference hosted by Downing Street this spring and a number of wealthy individuals have warned their own giving will fall as anger grows over Budget plans to cap tax relief on donations from high earners.

Sir Stephen Bubb, head of the Association of chief executives of voluntary organisations, warned of the risk to a planned Giving Summit at the Natural History Museum – a beneficiary of tax incentives now under threat – to be attended by David Cameron, the prime minister.

His comments came as a number of wealthy individuals warned that their own giving would fall under plans unveiled last week to cap tax relief on donations at the higher of £50,000 or 25 per cent of total income.

“If this is not sorted out then the Giving Summit is in danger,” Sir Stephen told the FT. “It is hard for charity leaders to sit quietly listening to plans to get people to give more when their fundraising strategies have been torpedoed. There is a simple solution: remove charity donations from the proposed new tax allowance cap. Do it before damage is done.”

John Spiers, a philanthropist who sold Best Invest, a financial services firm, in 2007, said: “I’m shocked by the proposals. I give the majority of my income away. If this goes through as planned, it will reduce my philanthropic activities very substantially. The relief was not of any benefit to me, but it means money going to good organisations that deliver a good return will instead go to the government.”

Michael Chowen, who made his money selling British Booksellers & Stationers and gives away significantly more than a quarter of his income each year, said: “This is going to make a big difference. My ability to be involved in new charitable initiatives would disappear. The government is going on about the Big Society, but funding is being reduced to national and local charities which are struggling.”

Stephen Edge, a tax expert at Slaughter and May, the law firm, said: “We had started to get people thinking about philanthropic giving. This would be a retrograde step. It comes across as tax avoidance, like equating charities with nannies or luxury holidays.”

While the vast majority of charitable donations from most individuals in the UK are for modest sums, charities have increasingly targeted much larger amounts from a small number of wealthy donors, often as a way to kick-start large appeals and seek matching funds. Even when wealthy donors do not give more than a quarter of their income annually, they may do periodically such as after the sale of a business.

“When I go to philanthropic meetings, fundraisers are focusing a lot on people who are selling their businesses for large capital gains,” said Mr Edge.

Peter Agar, director of development and alumni relations at Cambridge university, who expected an impact on donations, said: “The government really doesn’t seem to be joined up on this. Do the budget team talk to anyone else when putting together their proposals?”

The Institute of Fundraising cautioned that separate budget measures to squeeze pensioners would add further pressure on giving, as older people were typically more likely to make donations. Sir Stephen stressed that there was unlikely to be a direct substitution of donor funds by government, given his organisation’s estimate that cutbacks to charities would amount to £5bn over the life of the coalition.

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