FUNDRAISING NEWS: Tax relief changes cost charities nearly £80m

Charities have lost out on a total of £78 million since changes to tax relief on corporate giving were introduced in April 2000, according to the Charities Aid Foundation (CAF).

Before the changes, companies made their gifts to charities after tax, leaving the organisations that benefited responsible for reclaiming tax from the Inland Revenue.

Now companies make gifts to charity on gross income and are themselves responsible for claiming tax relief, which averages at 30 per cent. In order for the benefits to charities to remain the same, companies need to pass this tax relief on to voluntary organisations. The indications are, however, that not all are so doing.

"The Government clearly intended these changes to increase tax-effective giving by making the whole process easier and cheaper, but things have obviously backfired," said CAF's director of research Cathy Pharoah.

She is calling for company finance directors to liase with community affairs departments in raising charitable donations to compensate for the change.

CAF calculated the loss using figures contained in the Major Companies Guide, published by the Directory of Social Change.

The graph shows that after adjustments for inflation, levels of company giving grew steadily between 1992/93 and 1998/99, when charities were responsible for claiming back tax. However, the total cash gift figure for 2000/01 of £286 million returned corporate giving to the levels of 1996.

This fall in income is partly explained by the economic downturn, which CAF estimates to be worth £12.2 million, but also because some companies are failing to pass on the tax relief on their charitable gifts. CAF estimates this shortfall to be £65.8 million.

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