John Studzinski: Hitting charitable giving is a poor way to get tough on the rich

By limiting charitable giving the Government is getting tough on the very recipients of that charity

Related Topics

Tax breaks can provide a major incentive when a philanthropist is considering making a substantial donation. But from April next year, once they have benefited from an initial £50,000 of tax relief, they will only receive further tax relief on 25 per cent of their income. The move stands to discourage many philanthropists from giving away more than £200,000 a year. The result will be a squeeze on charities' fundraising potential.

Ironically, in last year's Budget, Mr Osborne committed to reforming the gift aid tax relief scheme by reducing bureaucracy to encourage charitable giving. This was an unnerving moment for charities, and within days, several bodies representing them wrote to the Chancellor, stating: "There is a clear danger that this measure could have the unintended consequence of disincentivising the donation of large gifts to charity. Any reduction in giving could be devastating for the many vulnerable people who rely upon our services."

According to research by the Charities Aid Foundation and the National Council for Voluntary Organisations, in 2010-11 £11bn was given to charity in the UK by individuals. Meanwhile, a University of Kent report concluded that, in 2009-10, 174 charitable donations of £1m or more were made in the UK and 80 of these were made by individual donors, contributing 60 per cent of a total value of £1.3bn.

As someone very much involved in charitable activities – and as someone who grew up in the US, the land of the philanthropist's tax break – I am deeply disturbed by the Budget proposals. The UK has a long and laudable tradition of helping the poor and disenfranchised. With his vision of the Big Society, David Cameron is supposedly sustaining that tradition, emphasising outreach and giving; but now, with this apparent volte-face on tax relief, he has destabilised philanthropists and charities.

In the US, a society with much less of a governmental safety net for the disadvantaged, philanthropy has been consistently promoted for many years through tax incentives. Here, the Coalition has vacillated in this crucial area. Is it now aiming to make a political point by supposedly targeting (and milking) the richest people in society? If so, discouraging charitable giving is not the way to go about it.

I believe there are four main types of philanthropist. At the heart of the community is the Passionate Philanthropist, who gives on a consistent basis to a particular cause or causes and acts as a kind of ambassador of philanthropy. A tax-relievable sum representing 25 per cent of this person's income will still be substantial and well worth any charity's attention. The New Philanthropist is the successful entrepreneur wanting to make a mark on society by setting up a foundation or a charity, and who deserves to be encouraged. Then there is the Year-End Tax Planner, who might well have spent time in the US, and believes in doing some good while managing their personal taxes astutely. Finally, the Aspirational Donor likes to network and wants to be seen as a do-gooder.

The future of philanthropy will always lie with the Passionate and New Philanthropists; they have made a commitment to giving. But with the Exchequer giving unclear signals, I feel less certain that the other species of philanthropist will keep giving generously unless there are other reasons, beyond altruism, for giving.

The Government must remain aware of the need to sustain a working relationship with the many charities now providing services which, when Britain was run explicitly as a welfare state, were funded directly by the taxpayer. By limiting tax relief for philanthropists, the Government wants to look as if it is tough on the rich – perhaps to court future votes. But by limiting charitable giving it is getting tough on a much larger body of people: the very recipients of that charity. More than that, it is stunting philanthropic learning and failing to endorse individuals who, whatever their motivation, feel their money could benefit society.

Now is not the time for the Chancellor to be making crafty moves in this area. There is a need for clarity, for faith in the generosity of at least a proportion of the affluent population, and for an understanding of the real importance of philanthropy in our economy and our society.

John Studzinski is senior managing director of the Blackstone Group, works with many charities and is founder and chairman of the Genesis Foundation. A version of this article appears in the current issue of 'The Tablet'

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Retail Buyer / Ecommerce Buyer

£30000 - £35000 per annum: Recruitment Genius: Working closely with the market...

Recruitment Genius: Sales Executive - CAD Software Solutions Sales

£20000 - £50000 per annum: Recruitment Genius: A reputable company, famed for ...

Ashdown Group: Client Accountant Team Manager - Reading

Negotiable: Ashdown Group: The Ashdown Group has been engaged by a highly resp...

Recruitment Genius: Account Manager

Negotiable: Recruitment Genius: You will also work alongside their seasoned sa...

Day In a Page

Read Next
'Unbiased': Former M&S boss Sir Stuart Rose  

So, the people who always support the Tories... are supporting the Tories? Has the world gone mad?

Mark Steel
Crofter's cottages on Lewis. The island's low population density makes it a good candidate for a spaceport (Alamy)  

My Scottish awakening, helped by horizontal sleet

Simon Kelner
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public