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So keen is the government on charitable giving that it recently took the unusual step of announcing that the head of Arts Council England, Dame Liz Forgan, would leave after just one term in the job. This was nothing to do with her performance at the quango, which exists to sluice public money at cultural ventures. The government wanted someone with more experience of drumming up private support for the arts.

The move may have put Ms Forgan’s nose out of joint, but it was at least consistent with the mantra – assiduously repeated by the culture secretary, Jeremy Hunt – of urging philanthropists to shoulder the task of topping up the dwindling income Britain’s lovies receive from the state.

Since taking up his job, Mr Hunt has been a veritable evangelist for such giving, averring that “people and companies that have been successful have a responsibility to give something back”. This apparently extends beyond just contributing to the capital and running costs of cultural institutions. In his more expansive moments, Mr Hunt has even urged philanthropists to make over large endowments so that the likes of the Tate and British Museum can live off them in future.

Mr Hunt’s fragile plant has now been heavily trampled by George Osborne. It is hard to understand the chancellor’s motivation in proposing a mean-spirited cap on the tax relief from charitable donations – especially when he serves a government that has made the creation of the “Big Society” its goal.

While the Treasury has claimed that some wealthy people use charities to avoid tax, no numbers have been supplied to back this contention up. It is hard to believe that the incidence is huge or that fiddles could not be stamped on in some other way. Meanwhile the measure threatens to add both complexity and cost to the charitable world – not least if the new arrangement requires every gift-aided donation to be tracked. This hardly seems sensible at a time when many charities are facing a slump in big donations.

If Mr Osborne is truly “shocked” by the amount of fraudulent philanthropy going on, then he must be easily shockable. The amount of giving in the UK is not vast to begin with. Britons gave just £11bn to charities last year, according to the giving survey conducted by the National Council for Voluntary Organisations and the Charities Aid Foundation.

Nearly half of this came from just 7 per cent of donors – precisely the people that Mr Osborne’s cap is designed to catch. This “bedrock philanthropy” is moreover disproportionately important in sustaining organisations, allowing them to plan for the future and focus on making a difference rather than hand-to-mouth fundraising. It is also crucial in unlocking the smaller donations. After all, it is human nature to want to back a winner where the bulk of the money has already been raised rather than to contribute the first pound.

To return to Mr Hunt’s evangelising, the timing of Mr Osborne’s crackdown could not be worse. The arts world – along with charities – not only faces a big squeeze in the funding it receives from the state, but must also deal with a slump in business sponsorship. It does not seem smart to blow a big raspberry at the very people on whom one must depend to relieve the pressure. In the words of one philanthropist who last year gave away almost all of his income: “The government is kicking a gift horse in the teeth.”

The risk to the big cultural institutions that depend on large-scale giving is clear. But a decline in philanthropy would ripple through to smaller ones too.

Just a few weeks ago, the minister for civil society, Nick Hurd, announced that the government would host a “Giving Summit” next month. The purpose of this jamboree is to pick over a white paper on philanthropy Mr Hurd’s department published last year. This worthy document advocated a “focus on widening the base of people who give and on making giving easier”.

If this summit is to be much more than a wake, Mr Osborne should think again. There are signs that the Treasury is trying to soften the measure by such palliatives as allowing donors to roll over unutilised allowances from one year to the next. It might be more productive if Mr Osborne went further. There must surely be better ways of ending the scourge of philanthropic fraud.


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