Philanthropists say Budget change will slash charitable donations – survey 30 March 2012

30 March 2012

Eight out of 10 major philanthropists say plans to cap tax relief on major donations will reduce the amount of money given to charity, according to a survey by the Charities Aid Foundation (CAF).

83% of donors questioned said they felt that the change, announced in the Budget, would reduce philanthropic donations.

A number of charities – such as CAF and the National Council for Voluntary Organisations (NCVO) and ACEVO – have expressed alarm at the Chancellor’s announcement in last week’s Budget that tax relief on major donations will be capped at £50,000 or 25% of annual income from April next year.

They have called for urgent talks with the Treasury, amid fears the change will strangle major donations and cost charities millions of pounds a year.

More than a quarter of donors surveyed by CAF, which works with hundreds of the biggest donors in the UK and overseas, said the plans would lead to a significant fall in their own donations to charity.

Nearly half of the donors saying that tax changes could force them to cut donations said their donations could fall by more than 40%.

Nearly 200 philanthropists, who have all donated an average of over £50,000 a year over the past three years to charity, responded to the survey, carried out over the weekend.

Major donations are worth huge sums to charity. The top 100 donors gave a total of £1.67 billion to charity, according to the last Sunday Times Giving List 2011.

CAF Chief Executive John Low said: “The tax changes in the Budget have created alarm and concern among both charities and philanthropists.

“Our survey shows that the Chancellor’s proposed tax changes could have dire consequences for charities, which need the support of major donors more than ever.

“Wealthy donors are using tax relief to help them make donations to good causes, which in some cases run to millions of pounds. But this does not just affect the hyper-rich. In some cases people receiving legacies or lump sum investments make major donations and rely on tax relief to help them back good causes.

“At a time when charities are under increasing pressure, due to funding cuts and greater need in society, the Government should be encouraging major donors to dig deep in their pockets, not changing the tax rules to put them off making donations.”

He added: “This move seems to have been ill conceived and at odds with the Government’s concept of a Big Society.”

In response to the tax change, CAF, the NCVO, and a range of other charities, last week launched a campaign: Give it Back George - Drop the Charity Tax!, through which they hope to persuade the Government to amend its proposals.

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