Our charities are set for a £3.7bn hit, they need our help more than ever - Conal Gregory
The Government has recognised the special place that charities have and has given a £750m bailout after the collapse in voluntary income and yet a surge in demand for help.
The National Council for Voluntary Organisations says the charity sector will lose £3.7bn income over 12 weeks from late March and would normally raise around £12.5bn during that time.
Chancellor Rishi Sunak has arranged that £370m will be sent to small local charities that support the most vulnerable during this pandemic. A further £360m is to be released to larger charity organisations that provide essential services, such as the hospice movement.
A third route of £20m is to go to St John’s Ambulance, Citizens’ Advice and charities which assist vulnerable children, victims of domestic abuse and disabled people.
The Treasury is also to match the donations given to last week’s BBC appeal.
There have been some impressive individual contributions. Jeff Bezos, the Amazon founder and the world’s richest person with a net wealth of US$138bn, has pledged $100m to Feeding America which supplies food banks. The Bill and Melinda Gates Foundation has announced it will provide $100m towards a vaccine with testing and treatments for Covid-19.
The Dell computers founder, Michael Dell, worth $25bn, has committed $100m whilst Mark Zuckerberg of Facebook has given $30m for treatments.
All those contributing to a charity can make their donations go far further by making them as tax-efficient as possible. Gifts can be made in three ways:
monetary donations (pecuniary gifts)
objects or assets (specific gifts)
percentage of an estate (residuary gifts).
Gift Aid is popular and well-known. Anyone who pays income tax can increase their donation by signing a simple Gift Aid declaration. The charity can then reclaim the basic rate of tax that the donor has already paid on that money, meaning that one pound from the individual becomes £1.25 to the charity.
Higher rate taxpayers can claim the difference between the higher and basic rates. For those paying 40 per cent tax, for every one pound donated, a claim for 25p can be made in tax relief.
To reduce the burden of completing forms, consider opening a Charities Aid Foundation (CAF) account. Then only one Gift Aid declaration has to be completed and CAF will make the necessary other arrangements.
A charity account makes it easier to track donations, plan giving and more easily split money across designated causes. It is also possible to use this method to contribute anonymously and thereby avoid being harassed by unwanted repeat requests.
Use the Fundraising Preference Service to stop charity contacts, three through its website and up to 20 by telephone (0300 3033 517).
When giving articles – from books and CDs to clothing and ornaments – to a charity shop, ensure a Gift Aid declaration is completed so that the charity can fully reclaim.
Donating land, property or shares to charity means that no capital gains tax is paid and income tax relief can be claimed on the value of the gift.
When an object or asset is donated, the charity can sell it to raise funds. The Marie Curie charity, which was founded in 1948 to provide care and support to those with terminal illnesses and their families, was gifted a special upright piano. It had belonged to the American-born jazz singer, Adelaide Hall. The piano realised over £7,190 at auction.
Shares can be transferred across to a charity or can be sold for less than their market value with the gain being donated. Any shares are allowed as long as the issuing company is listed on a recognised stock exchange.
Donating from your pay is still not common. The Give As You Earn scheme, also known as payroll giving, means that individuals can give directly to their nominated charity or charities from their salary prior to tax being deducted.
This is a very tax-efficient way to donate as tax relief is at the individual’s highest rate. For every one pound that a basic rate taxpayer donates, it will only cost 80p personally.
If a regular £30 is donated, it will cost £24 to the 20 per cent taxpayer, £18 to the 40 per cent rated person and just £11.40 to those paying 45 per cent income tax.
CAF operates such a scheme which is used by around 2,500 companies and helps to raise some £70m through 200,000 employees.
Pension gifting is little publicised. Where the company or personal pension provider runs a PAYE arrangement, it is easy to donate from the retirement gross sum before deducting tax.
Regular giving across the different routes is undertaken by 65 per cent, according to CAF. In total, £10.1bn is raised.
Planning forward, a gift through a will is increasingly popular. Research by the Remember a Charity campaign shows that 40 per cent of those aged over 40 were happy to make such provision, up from 35 per cent a decade ago. Two out of three guide dogs are sponsored through legacy gifts.
Such a provision has a tax advantage as the donation will not count towards the taxable value of an estate. It is also possible to reduce the rate for IHT from 40 to 36 per cent by leaving over 10 per cent of a net estate to charity.
To encourage a specific legacy, often a charity will provide a complimentary will-writing service.
The range – over 160,000 registered – and size of charities is immense. The most popular causes are animal welfare, children and medical research but often donors like to select a smaller and perhaps more local organisation. Some can be overlooked, like a local museum, which rely substantially on donations.
The excessive size of staff salaries at certain charities (£434,000 to the chief executive of Marie Stopes International) and reported misconduct (Oxfam staff) have encouraged giving to less publicised charities.
Donating rewards or points through expenditure on five credit MasterCards is also possible: HSBC Premier World Elite and the Reward and Black of both NatWest and RBS.
Fundraising is the UK’s favourite way to raise money for good causes. Among the most popular collective ways are through a raffle, quiz, baking sale and a coffee and tea event. Yorkshire has seen all these, combined with running and walking challenges, charity auctions and fancy dress days.
Take care how proceeds are collected and passed through to the charity. Too many volunteers are panglossian over choosing an intermediary.
JustGiving, part of a US software company, charged five per cent until March last year but then switched to inviting a “voluntary contribution” up to 15 per cent unless the donor specifically opts out. Look also at Charity Checkout, Golden Giving, Local Giving and Virgin Money Giving.