Fundraising News: Code advises checks on donors' tax obligations

Fundraisers should think about the motivations behind large donations to satisfy themselves that wealthy donors are complying with their tax commitments, according to the chair of the steering group that has drawn up the first fundraising code of practice governing major donors.

The draft code was launched on Monday at the Institute of Fundraising's National Convention and is out for consultation until 30 September.

Mide Akerewusi, head of high-value fundraising at Scope and chair of the steering group, said the increase in large donations from wealthy individuals had made such a code necessary.

Major donor giving is a fundraising discipline that has only recently been recognised, Akerewusi said, because more people have accumulated greater personal wealth. He described major donors as "individuals able to make a major impact on your organisation".

The draft code aims to cover issues such as a definition of major donor fundraising, legal issues, data protection, legacies, tax issues, diversity and how to develop and expand donor relationships.

It will also look at major donor programmes, including membership or friend fundraising schemes.

Akerewusi said the section that examines the difference between tax avoidance, which is legal, and tax evasion, which is a criminal offence, is of particular importance. "Fundraisers don't always consider the motivations behind a gift, but they should," he said. "Many major donors are successful business people.

"The draft code looks at whether the donor, the fundraiser or the charity are under any obligation to make disclosure of the gift to the tax authorities."

Akerewusi pointed out that tax evasion is an issue fundraisers seldom think about, "yet there could be serious implications if they don't".

He added that very little information was available on how much of the UK's total charitable income is derived from major donors, because such donations tend to be lumped in with other fundraising methods, such as direct mail. However, the general aim is to get it up to about 5 per cent of the sector's total income, similar to the percentage raised from trusts.

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