Another day, another controversy over the impact of Government fiscal policy on large scale charitable donations, as the Charities Aid Foundation criticises the new tax relief cap.

To my mind the most remarkable comment came from the ‘spokesman for the Government’ who said that “in many cases money was being given away to ‘bogus’ charities “. This is by any standards a remarkable assertion, and the first time that I have heard such concerns aired by a Government source. Previously concerns have centred on the manipulation of share values to maximise tax relief on share gifts to charity, which the Government recently introduced anti-avoidance legislation to counter.

The assertion is so remarkable because the relief is limited to donations to UK charities, which are regulated by the Charity Commission, a body set up under the auspices of the Government. Apart from being grossly understaffed and overworked, my experience of that body is wholly positive, as those staff it does have are professional, helpful and clearly devoted to the successful operation of the Commission. So what does it say about them, and by implication about Government control of the charitable sector, if ‘in many cases’ tax relief is being claimed on gifts to ‘bogus charities’?

I have to say that, in the face of intense competition, I think this is the most breathtakingly stupid, inaccurate and insulting (both to the intelligence and to the Charity Commision) Government statement I have ever heard, so it is perhaps not surprising that no-one seems to have been prepared to take responsibility for it. If we suspend disbelief for a second and assume it to be in some way accurate, surely the way forward would be to attack the bogus charities concerned and remove their charitable status? After all, if the statement has any factual basis, the Government must know which these charities are?

John Low, CEO of the Charities Aid Foundation, hits several nails fairly and squarely on the head with the following quote:

“Philanthropists who make large donations give away far, far more than they could ever claim in tax relief. That money goes to fund projects for the public good, such as medical research and help for the most vulnerable in society,” he said.

“Imposing a blanket cap on tax relief will cost charities millions of pounds by making it more difficult for philanthropists to make major donations and undermine the idea of the Big Society which the Government is trying to promote.”

There is a line in the Rush song “A Farewell to Kings” which goes:

“Eyes cast down on the path of least resistance”.

What a perfect summary that is of government policy in this area. If they truly believe that there are many bogus charities in the UK, then root them out. Do not punish the innocent along with the guilty by cutting off their sources of significant income. As John Low rightly says, in order to obtain the current maximum 50% tax relief it is necessary to give away 100% of a charitable donation; tax relief might halve the effective cost of the donation, but that is still a significant effective cost for the donor. 

Mr Low also echoes comments I have made previously in this blog concerning the alleged “Big Society” so apparently beloved of the Prime Minister. I don’t think that I am distorting his message too dramatically if I paraphrase it thus:

This country is in an awful financial mess, and as a result government expenditure has to be cut significantly to avoid the public sector deficit spiralling out of control. Whilst every effort will be made to avoid causing hardship to the less well off, there will inevitably be an element of this involved in the process. It is for the better off in society to respond to this state of affairs by extending their charitable work and donations so that the charitable sector can act as the safety net for those disadvantaged by cuts in government social and welfare expenditure.

Now to be frank I don’t care about tax relief on my charitable donations; as a Christian I believe it is my responsiblity to tithe my income by way of charitable donations (as well as raising money for charity by other means – I even wore a Manchester United shirt for Sport Relief!) and I would do so regardless of any tax relief available. And I suspect that the same is true of many philanthropists who operate on a much more munificent scale than I do in terms of charitable giving.

But that is really not the point. Everything Governments do sends a signal to the country, and as governments are now obsessed with presentation they know this only too well. So if they present charitable giving as something not to be encouraged by the tax system, as something in fact which is ‘in many cases’ a deeply suspect cover for tax avoidance using ‘bogus charities’, what is that saying to those less committed to making charitable donations on a moral basis, those who need some inducement from the tax system to encourage them to set out on the very rewarding path to systematic charitable giving?

Either it is saying something directly counter to what the Government wants to be saying, which is difficult to believe in view of the aforementioned obsession with presentation, or the whole Big Society concept is a smokescreen to conceal a policy of ‘devil take the hindmost’ and of seeking to pass the moral responsibility to those who have a better developed sense of morality.

As I suspect I have said before somewhere, on this issue the Government appears to be either incompetent or mendacious; which would they prefer us to believe?


I occasionally need to remind readers (and myself) that the posts on this blog reflect my personal opinions (possibly of doubtful validity but earnestly held) and not those of Simpson Burgess Nash as an organisation or of other individuals within this organisation.

Mark Simpson

12 April 2012