2017 Budget: Invest in fundraising to support communities across the country

Budget 2017

Mike Smith | 7 March 2017

For those who thought that the Chancellor might use the Budget tomorrow to significantly increase levels of public expenditure, one phrase – ensuring there is ‘enough gas in the tank’ – will have ended any expectations of a spending splurge!

While big investment projects appear to be off the cards, the Chancellor should consider modest, but significant additional measures to support charity fundraising and giving to good causes. To do so both makes fiscal sense and will support communities across the country.   

For too many charities the financial outlook is concerning.  Income from government and local authority sources to charities has fallen, but demand for services is rising. The impact is particularly acute for smaller and medium sized charities. While diversifying away from statutory funding is an important way many charities are trying to cope, 77% of local charities do not feel that they currently have the skills necessary to run a successful fundraising campaign. And yet, as our joint Charity Today report highlighted last month, charities play an absolutely central role to our country and communities, spending £1500 every second of every day on good causes. This is often spent on causes that save the Exchequer and public services money – from care and support for older people, to youth clubs. If charities weren’t able to do what they do, it would likely be government and taxpayers picking up the tabs.

All of this adds up to the conclusion that the government should look now to invest in support to enhance the capacity of the charity sector. In particular, investing in the ability of the charities to independently raise and manage resources for the long-term. Supporting charity fundraising and giving is one of the most important ways to achieve this – for every £1 invested in fundraising, on average £4 is received for good causes. 

At the IoF, this is exactly what we asked for in a letter to the Chancellor last week: Firstly, through direct support for fundraising training, skills and ongoing support; secondly, through encouraging giving through tax changes, in particular in legacy giving; and finally by reducing the tax burden on charities to ensure donations go as far as possible in supporting the charity.

None of these measures are a dramatic change of direction, but all of them would make a real difference for fundraising, charities and giving. For example, we have recommended an expansion of the current funding for fundraising training for smaller charities. The £100,000 per year already committed by the DCMS for this work is incredibly welcome, but the benefits could be significantly greater if this programme were to be ramped up. With fewer than one in four local charities currently reporting they have the skills to run a successful fundraising campaign and over 80% saying they need help with digital fundraising, increasing spending on this programme feels like an obvious step.  

Similarly, we are calling for a modest change in the cost of writing a will when leaving a gift to charity, which could unlock a large amount of funding for charities through legacy giving. With colleagues at the Remember a Charity campaign, we want to see everyone writing a will asked whether they would like to leave a gift to charity. Small tax changes to help prompt this could have a transformative effect at a tiny cost to the Exchequer. If legacy giving became an integral part of the discussion when writing a will this could generate up to an additional £800 million a year for good causes. If you are looking for low cost ways the government could support the charity sector and increase charitable giving – this should be a no-brainer.

Finally, there are wider changes to taxation. Among the proposals we recommend on taxation, we have asked the Chancellor to look again at the way Corporate Gift Aid works. Corporate giving to charities has fallen significantly with figures at £1 billion for 2013/14, compared to £1.5 billion in 2007/8. What is more, with the rate of Corporation Tax being reduced from 20% to 17% by 2020, the value of Corporate Gift Aid is also set to reduce. At a time when funding for the sector has fallen from other sources too, we need to ensure that the right measures are in place to maximise support from businesses for good causes. 

As the Chancellor sits down to put the finishing touches to the Budget proposals tonight, balancing the books will be towards the front of his mind. As part of this, he would be wise to look at some moderate, but significant, measures to support charity fundraising and giving to good causes.

To do so would both be a financially sensible investment for the years to come, and be the right thing to do for a sector that is so important to communities and individuals in every part of our country.  

Read the IoF's Budget 2017 briefing note

Mike Smith, Head of External Affairs, Institute of Fundraising

 

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