Fund the voluntary sector more strategically, umbrella bodies tell the Chancellor

A pre-Budget submission from nine voluntary sector representative bodies warns that the future of charities is under threat from funding and demand pressures

The Chancellor's red box
The Chancellor's red box

A more strategic approach to voluntary sector funding, 100 per cent mandatory business rate relief and more resources for the Charity Commission are among proposals submitted to the Treasury by nine charity sector representative bodies before next month’s Budget.

The letter, which is addressed to Philip Hammond, the Chancellor of the Exchequer, and signed by bodies including the Charity Finance Group, the Institute of Fundraising and the local infrastructure body Navca, says the future of charities is under threat from funding and demand pressures and increasing political uncertainty, especially from Brexit.

Among the proposals in the letter is a call for a more strategic approach to voluntary sector funding that is "distributed on an impartial basis according to the sector’s strategic needs".

This follows several Budgets and Autumn Statements in which a selection of military and emergency services charities have received approximately £550m from the fines levied on banks after the Libor rate-rigging scandal.

The letter also calls for the mandatory charitable non-domestic business rate relief to be increased from 80 per cent to 100 per cent, which the letter says would prevent a situation where businesses pay lower rates than many charities.

A reduction in how much charities pay in insurance premium tax – a tax on insurance premiums – from 12 per cent to 6 per cent, and a reduction in irrevocable VAT are also included as suggestions in the letter.

It also calls for more funding for the Charity Commission, which has seen its budget roughly halved in real terms since 2007/08 and frozen at £20m a year until 2020, the letter says.

"This will enable the commission to fully carry out its investigations and compliance work without compromising important guidance and support functions for charities and trustees in meeting charity law requirements," it says.

"At a time when charity trustees are arguably under more pressure and scrutiny, it is vital that the Charity Commission can provide the support services needed to make sure that the hundreds of thousands of trustees are able to meet their regulatory obligations and build effective, well-run organisations in which the public can confidently place their trust and support."

The letter also proposes increasing payback of national insurance contributions for charities, which it says will address the additional cost of the national living wage and provide support relative to that currently enjoyed by the private sector.

Other signatories of the letter are the Association of Charitable Foundations, Voice4Change England, Social Enterprise UK, the Small Charities Coalition, Children England and Locality

The letter says: "Charities, particularly small charities with an income under £1m, are under threat. Yet they are key to building a shared society and delivering services that achieve the long-term value our economy demands.

"At this time of considerable financial pressure, it is essential that any tax and spending decisions work for this sector which delivers so much – at the very least, charities should have access to the support directed at businesses."

The Budget will take place on 8 March.

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