Letter: Keep charities out of commerce

Sir: In his piece on charity tax concessions (13 November) Adrian Randall made several excellent suggestions to the Chancellor for his Budget, but one extremely dangerous one. This was that charities should be allowed to make up to pounds 25,000 a year from trade of a non-charitable kind without paying Corporation Tax.

On the face of it that looks fair enough, encouraging charities to be entrepreneurial, and leaving them with the fruits of their efforts for devotion to their charitable purposes.

However, such a change would cause open warfare between small traders and the charity sector. There is already resentment enough about the rating and tax concessions charity shops enjoy in the high streets of Britain if they are mainly selling donated goods. If the charity sector seeks to extend these privileges to any trading activity the pressure to reverse the existing concessions could build up very fast.

But there is a more profound reason to oppose Mr Randall's proposal. It would allow charities to speculate with charitable funds so as to make profits via trading wholly unrelated to their charitable purposes.

Not only would this expose the general assets of the charity to the major risks inherent in such trade, but it would be liable to distract charities from their primary purpose. When, inevitably, charities were crippled by failed trading ventures, public confidence in them would start to evaporate.

The present arrangement whereby a charity can set up a separate trading company, with which it must deal at arm's length, minimises these dangers.


London EC1