Despite promises of a Big Society, the Third Sector has had a pretty rough ride over the last year. Now the latest news to hit the headlines; Chancellor George Osborne announcing a cap on income tax reliefs, affecting both small and large charities and the philanthropists who support them. In simple terms, this will mean that large donors will give less to charity as the cost of giving will increase. This will affect the resources available to charities in a time when the demand is high. According to a survey conducted by the Charities Aid Foundation, nearly nine out of ten top charity executives believe that this will hit major donors and 78% hope that the Chancellor will reverse his decision. Its effectively a tax on charities.
These plans have caused an outrage with the ‘Give it back, George’ campaign created in hope that the decision will be changed, exempting charitable donations from the plans to cap personal tax reliefs. More than 2,200 charities and individuals have signed the petition.
Chief Executive of National Council for Voluntary Organisations (NCVO) Sir Stuart Etherington believes that donating should be encouraged, particularly during this time of financial insecurity. He said “There have been disgraceful government attacks on charities and the motivations of people who give to them in recent days. The generous should be supported, not pilloried.”
The general public gives on average 11billion each year to charity and this does not include gifts from the very wealthy. NCVO estimates that nearly half the money donated to charities by individuals comes from just 7% of all donors. Many charities fear that this cap will deter philanthropists and higher-rate taxpayers from supporting their work.
Reading the papers this weekend, it seems pretty likely that the Government will have to find a way to climb down from this tax on charities. Coming on top of draconian cuts to funding of charity services, this attack on donations really questions the Government’s commitment to the Third Sector and a ‘Big Society’.