Policy

Cathy Pharoah responds to the Budget announcement

Mar 29, 2011 | Category: Policy

Following the Budget announcement, Cathy Pharoah, Professor of Charity Funding and Co-Director of the Research Centre for Charitable Giving and Philanthropy Research at Cass Business School comments.

“The Budget’s provisions for charities were welcome, sensible and elegant. They will not change the level of giving overnight, but they send important signals in the right direction. In allowing a tax break for small gifts up to a total of £5000 without the administrative hassle of accurate records on donors’ identity and tax status, government has redressed the long-standing inequality in Gift Aid which resulted in community giving amongst the least well-off missing out on tax relief. It underlines government’s commitment to the Big Society.

“The 10% discount on inheritance tax for those who leave 10% of their estates to charity is a very neat measure. Government is right to see wealth and estates as a rich source for new giving at a time when people may be reluctant to give away more of their current income. A 10% level has the potential to raise the level of charitable bequests which currently are worth about 6% of estate value. And the establishment of a norm has the added value of making it easier for financial advisers and families to discuss the delicate matter of charitable bequeathing.

“Making the most of the tax-break might encourage more estate planning. Where charitable bequests are residual, donors do not always know what their value will be; to make use of the 10% donors will have to be clearer about their intended donation.  The measure even has the potential to release some extra money in the short-term if donors revise their wills to take advantage of it, and help redress the 3.5% fall in legacy income to charities which resulted from the recession.”

Read the Guardian coverage, 'The New Philanthropists'


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