Tom Levitt: Incentives for volunteering aren't as simple as they look

Offering volunteers a discount on their council tax has been discussed; but this raises practical and ethical problems, writes the former MP and author

Tom Levitt
Tom Levitt

There has been talk of how we can best incentivise more people to volunteer. In Britain we already have some of the highest levels of volunteering in the world; but efforts to increase its level from this high base will inevitably suffer from the law of diminishing returns.

Assuming that there is nevertheless a case for trying them out, what incentives might work?

Within local government, it has been proposed that volunteers might receive a discount on their council tax if they freely give their time to help others. This raises practical and ethical problems. How would the threshold for reward be policed? Would the reward be proportional to the effort? At what stage does rewarded work cease to be volunteering? What is the bureaucratic cost? And would all types of volunteering be rated equally?

We pay council tax so that local authorities can do good on our behalf – caring for the elderly; looking after the environment; celebrating our culture. Taxpayers would have to be convinced that the value of any volunteering incentive, including its bureaucratic cost, would not be greater than that which the council might otherwise be generating with the money. As there is no simple and universal measure of social impact, this is unlikely.

The same argument applies to income tax or corporate taxes. In 2013 the government held a consultation on how to incentivise corporate social responsibility, which was due to report last December. In spring 2014, the responses to the consultation were published – my thoughts among them – but of conclusions on the government’s preferred options there is still no sign. This is presumably because any tax-based incentive for positive corporate engagement would entail an upfront cost to the Treasury, which Chancellor George Osborne is unwilling to tolerate.

Another option is offering sticks rather than carrots. This is the chosen path of the Indian government, which has introduced a 2 per cent levy on the pre-tax profits of larger locally-based companies. The companies need not pay the levy if they can demonstrate that they already apportion 2 per cent to the public good; for example through training apprentices, employee volunteering or donating to charity.

This is not as straightforward as it looks. Although penalties for failing to have a good explanation for missing the target are significant, there are easy ways to comply – by donating to the company’s own foundation or reclassifying existing activity as public benefit. And corporate headquarters, near which such acts of benefit tend to be made, are generally not located where community needs are greatest.

Independent schemes for incentivising volunteering also exist. Blue dot is a virtual currency which can be used to buy music downloads, concert tickets and other goods attractive to a younger market. Both employers promoting volunteering and charities themselves can purchase blue dots (at less than face value) to reward volunteers, while supportive vendors make goods available at a reduced overall price. And at some universities, such as Lancaster, up to 4 per cent of your degree marks can be earned by designing, implementing and reporting on a community-based voluntary project.

If skills-based volunteering is to grow among employee volunteers it must be backed by a hard-nosed business case. Altruism and philanthropy may be strong motivators, but in the absence of a coherent, convincing case for giving tax incentives to some employers to do what others are already contributing to society for free, there must be a bottom line justification for engaging employees with the community.

Fortunately, there is. Employers who commit to meaningful and systematic volunteering strategies find that employee engagement is boosted, with positive outcomes for the recruitment and retention of staff, workplace harmony and even productivity. Sickness leave is reduced and, when handled properly, both teamwork and the acquisition of hard and soft skills are enhanced and the engine of innovation is fuelled. Enhanced corporate reputation and access to new markets can result.

The taxpayer already contributes the lion’s share of resources for ‘doing good’. More, in terms of personal fiscal incentives for positive behaviour, is not necessary (leaving aside the arguments for better public investment in local voluntary sector infrastructure) – but making the case for both public and employee engagement is essential.

Business in particular, large and small, can be a source of significantly more employee time for volunteering, skills transfer, capacity building and non-human resources. Fortunately, such behaviour provides its own incentive – at no cost to the taxpayer.

Tom Levitt is a former Labour MP and author of Welcome to GoodCo
This article was originally published on the Third Sector blog

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