1: Government support for giving

Millions of people across the UK, of all levels of means, continue to give generously to support charities and civil society organisations on the frontline of the COVID-19 response, whilst also supporting many other organisations doing vital ongoing work at an extraordinarily difficult time.

Voluntary giving is the lifeblood of many charities across the country, so the fact that many forms of fundraising have been made impossible in the short term has had a huge negative impact on their incomes.

The scale of the resulting shortfall means that the direct cash grants promised by the Chancellor are clearly welcome and necessary if many charities are to survive in the short term.

However, at the same time the Government can also consider targeted policies to support and nurture peoples’ ability to give; as this will be another crucial element of ensuring that the charity sector can weather the storm in the medium and longer term.

Key Ideas

Make Gift Aid Universal until the end of 2021

Gift Aid is the most important charitable tax relief in the UK, but its value is far from maximised. HMRC’s own estimates put the amount of potential Gift Aid that goes unclaimed each year at £600m. Given this, we suggest removing existing declaration requirements so that Gift Aid can be claimed automatically on any donation to charity. (NB: In the United States, a group of leading non-profits has made a similar call for charitable deductions to be made universal until the end of 2021).

Whilst this may not meet the financial needs of charities as immediately as direct grant funding, it would provide a valuable extra tool for fundraisers to encourage donations at this difficult time, and could help to bolster the value of donations during the process of rebuilding within the sector that will inevitably follow the coronavirus pandemic.

It would also allow government to get support to all different types of charities. We are aware that there are complexities here, and concerns about severing the link between an individual’s declaration and Gift Aid being claimed on their behalf, but we believe that the currentsituation justifies putting these to one side on at least a short to medium term basis. Hence we suggest a temporary measure to make Gift Aid universal until the end of 2021.

Whilst this would be an additional cost to the Treasury, it would be implementing an existing and well understood tax relief to its maximum potential. It could also encourage extra giving and would require no new delivery mechanism.

girl at a window rainbow
CAF's research has revealed charities are facing a greater need for their services than ever, while their income is dropping

Set up a COVID-19 big philanthropy pledge

There have already been many examples of wealthy individuals making large public donations to support the response of civil society to the COVID-19 crisis, and the hope is that these will encourage others to follow suit.

This could be made more intentional by establishing a “COVID-19 philanthropy pledge” that brings together existing donors, sets out a clear commitment that other potential donors could sign up to and direct them towards straight-forward opportunities for getting donations out quickly to where they are needed. Government is probably not well-placed to lead on such an initiative, but could play a valuable role in convening and supporting it.

One-off “supporting civil society” credit

Offer a one-off “supporting civil society” credit for individuals that can be donated to a civil society organisation (CSO) of their choice. This is linked to the growing calls for some form of universal income as a response to the scale of the economic challenges the current crisis poses: the idea being that every citizen would be given a modest sum in a form that meant it had to be donated to a recognised civil society organisation.

This would be separate to any changes to Gift Aid designed to enhance the value of individual donations. The benefit of a “supporting civil society” credit of this kind is that it would be a powerful (and equitable) way for the Government to support a process of civil society rebuilding whilst still giving people a connection with causes and a sense of agency.

Further ideas

Expand matching donations

Government has announced it will match donations to the National Emergencies Trust as part of the BBC’s The Big Night In fundraiser – pledging a minimum of £20 million.

The concept of matching is valuable because it stimulates and recognises the generosity of the British people. This needs to recognise fact that many struggle at the moment, but those who are in a position to give can be provided with an opportunity to make their giving go further.

Government should expand on this idea and could look for further major events and partnerships with the sector that provide opportunities for match-funding, also drawing in business, individual philanthropists and private funders.

charity funrun

This summer 2020, fundraising events from the London Marathon to local fun runs are cancelled, losing charities millions of pounds of vital income. 

Introduce “living legacies”

This is an umbrella term for various charitable giving vehicles available elsewhere around the world (most notably the Charitable Remainder Trust in the US), which allow people to give a capital gift while still alive from which they continue to receive income for a set period of time (or until death, if that comes sooner). This enables many ‘mass affluent’ donors to give a legacy-style gift whilst still alive, safe in the knowledge that they still have the financial security of an income.

The ability to “bring forward” future legacy gifts in this way could be beneficial for many charities during the current crisis and the process of subsequent rebuilding. There is evidence from at least one will-writing service that there has been a huge spike in the numbers of people including charitable gifts in their wills in recent weeks, so a product of this kind may tap into a significant unmet need. Furthermore, unlike a traditional legacy gift, which can be changed up until the point of death and can be challenged after, living legacy gifts can be designed with firmer legal guarantees so that even if the recipient charities do not receive the capital immediately, they can put it on their balance sheet and borrow against it if need be.

Living legacies have been proposed in the UK a number of times, but have stalled due to lack of political will and a sufficient evidence base that they are needed. Once again, given the changes in the political landscape in recent weeks and the huge imperative that comes from the funding crisis facing the charity sector, this should be revisited.

Gift Aid for crowdfunding appeals

  • Add Gift Aid to crowdfunding appeals aimed at supporting the NHS during the COVID-19 crisis. Many people have, understandably, been inspired to give or to raise money to support the NHS during this crisis, as they are on the front-line of the response. Whilst some of this generosity may be aimed at existing charities, and therefore eligible for Gift Aid, a lot of it is also going through informal appeals and crowdfunding platforms and therefore missing out on additional potential government support.
  • Extending Gift Aid to cover crowdfunding appeals during the crisis -with appropriate safeguards to ensure money is going to valid causes -could help to boost support for the NHS at a challenging time.

Recognition scheme

  • Recognition schemes (awards) for companies that become role model pledgers – this could link to the existing Inclusive Economy Partnership.  

Endowment rebuilding

  • Government-led endowment rebuilding campaign for civil society and support for mergers for charities that have viable options to merge with others (operational and funding).

Payroll giving incentives

  • Incentives for industry to roll out payroll giving (e.g. an industry-wide pledge and Government match funding for companies that match their employees giving).   
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