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

Share
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

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

Recruitment Genius: Account Manager

£20000 - £35000 per annum: Recruitment Genius: This full service social media ...

Recruitment Genius: Data Analyst - Online Marketing

£24000 - £35000 per annum: Recruitment Genius: We are 'Changemakers in retail'...

Austen Lloyd: Senior Residential Conveyancer

Very Competitive: Austen Lloyd: Senior Conveyancer - South West We are see...

Austen Lloyd: Residential / Commercial Property Solicitor

Excellent Salary: Austen Lloyd: DORSET MARKET TOWN - SENIOR PROPERTY SOLICITOR...

Day In a Page

Read Next
 

Tony Abbott: A man most Australian women would like to pat on the back...iron in hand

Caroline Garnar
Australian rapper Iggy Azalea performs in California  

Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting

Yomi Adegoke
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there