Can the 10% pledge give legacies a lift-off?
November 2011
Recent report says banks could do more to boost legacy giving
It is well known that philanthropy in America exceeds that of most other countries and in 2005, charitable giving amounted to 1.7% of GDP whereas in the UK we managed 0.7%. According to Philanthropy Review, Americans earning more than the equivalent of £200,000 gave 45 times as much to charity as their UK counterparts.
Ever since the “Big Society” entered our political vocabulary there have been elements of encouragement to adopt a more American-style giving attitude but this has been almost hindered by the bleak outlook of government spending cuts in very many areas.
A recent report in The Times noted the Cabinet Office had published the Giving White Paper and is planning a Giving Summit sometime in the next few weeks. Political insiders feel that George Osborne is enthusiastic and in fact did announce a number of measures to boost giving in the last Budget. One of the most prominent was a lower rate of inheritance tax where at least 10% of the assets have been pledged to charity which The Chancellor said in his budget speech would generate £300m more for charities.
As a result of the focus on philanthropy, a campaign to persuade people to ‘sign up’ for the 10% pledge has been launched. Entitled ‘Legacy 10’, and run by the financial PR company, Finsbury, the campaign is aimed at a broad audience, which includes asset-rich middle classes. The backers of Legacy 10 are targeted with getting 10% of the population to meet the pledge.
Other measures proposed by philanthropy campaigners included ‘living legacies’ where donors are allowed to make a gift to a charity while retaining some of the investment income from the assists during their lifetime. Polling evidence indicated that donations would be increased in all the tax benefit from giving cash to charities could be claimed by the donor, as is the case in America. Under the UK Gift Aid scheme it is the charities that claim the tax relief. Reportedly, some charities are worried that taking up such as system could lead to donors ‘pocketing’ the tax relief, thereby reducing their income.
Other opportunities for giving
Lawyers and financial advisors could encourage their affluent clients into a ‘giving culture’ and with only 4% of UK workers giving through the payroll – compared to 35% in the US – and more companies could offer payroll-giving schemes.
One recognised and effective way to boost giving is charitable bank accounts which offer a simple way of making tax-efficient donations. Apparently there are almost 150,000 such accounts here in the UK, although mostly are run by specialists such as the Charities Aid Foundation. Progress in getting high street banks to offer charitable accounts has been rather slow. Tom Hughes-Hallett, a former banker and chief executive of Marie Curie Cancer Care said in The Times report, "After 47 years as a Barclays customer I switched to C.Hoare & Co solely because it offers charity bank accounts. The large banks have got to make it easier for their customers to give".
UK banks have to do a good deal of remedial work to improve their tarnished image, despite the views of the protest camp at St Paul’s Cathedral, and they could start by providing the means to boost charitable giving and offer charity accounts.
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