Grants to small charities could be hit by cap on tax relief, says Stewardship

Michael O'Neill, chief executive of the Christian charity, says many smaller-value donations could cease if the measure is introduced

Michael O’Neill
Michael O’Neill

Small charities would be affected by the proposed cap on tax relief for major donors, according to research by the Christian donor organisation Stewardship.

The organisation was responding to comments made by Nick Hurd, the Minister for Civil Society, who said in a press conference before last week’s Giving Summit that the cap would have little effect on most charities.

The cap, proposed in the Budget, will limit the amount of tax relief individuals can claim in a year to £50,000 or a quarter of their income, whichever is higher, from April 2013.

Stewardship, which holds "donor-advised" funds in order to allow major donors to give in a tax-effective way, said that in the past tax year it had received 294 donations of more than £50,000 that could potentially be affected by the cap, making up 14 per cent of Stewardship’s £53m voluntary income.

The average grant from these funds made to individual charities was £2,195 and the median grant was £150, it said. Stewardship said that the majority of these donations go to small charities.

Michael O’Neill, chief executive of Stewardship, said many of its donors said they would be forced to reduce their total giving and that, if they did so, smaller grants would be reduced first.

"Although our donors requested a handful of six or seven-figure grants be made, 99.5 per cent of the gifts to charities and charitable causes were small," he said. "Many of these smaller-value donations could simply cease if the cap on tax relief was introduced."

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