Give while you live!
26 October 2010 | By Cause4 staff
Last month the plan to introduce “Lifetime Legacies” was discussed at a round-table meeting hosted by the European Association for Philanthropy and Giving (EAPG) formally known as Charitable Remainder Trusts (CRTs). Under proposals being developed donors will be able to support charities whilst being entitled to benefit from tax-breaks during their lifetime. They also mean that donors will be able to derive satisfaction from their giving and involve themselves in the causes that they support – rather than bequeath this privilege vicariously to their executors.
The establishment of such a mechanism allows for greater tax exemption and asset management flexibility for the donor. Chief Executive of the Institute for Philanthropy, Dr Salvatore LaSpada, believes that the benefits go both ways. “The charity receives a clear, irrevocable commitment from the philanthropist, as well as the eventual receipt of a lump sum from his or her estate. Meanwhile, the philanthropist receives a guaranteed income from the asset.”
The topic of Living legacies was debated in the House of Lords in 2006 and again in March 2010 when the Government’s review stalled. This was as a result of current tax rules that state that all rights must be forfeited by the donor in order that tax breaks apply. However, EAPG is now working with the Charities Aid Foundation and the Charity Tax Group to develop a proposal for HM Treasury by the end of the year.
What could such an incentive, so well deployed in the U.S, mean for the UK? Figures from a Mintel research report in 2006 showed that in Britain there were 3 million “affluent” people with free assets valued between £70,000 and £350, 000. If proposals were taken forward, this would allow many amongst the affluent to make an immediate secure and unrestricted contribution to society. This in turn would create emotional bonds between charities and the family of those that donate and provide motivation to the next generation to continue in support.
Furthermore, with Britain’s 1,000 richest people’s combined wealth still struggling to reach the £412.8 billion of 2008 - as published within The Sunday Times Rich List in April - this could be the trigger that encourages levels of giving to be increased or at least maintained.
We believe at Cause4 that the concept of ‘Give as you Live’ should become an immediate priority. We also believe that Government should explore ways by which directly or through a third party to advance gifts so that money earmarked for charities can find its way immediately to the causes for which they are destined. Creating the right tax structures is critical for unlocking much-needed new funds for charities. Come on, Government, let’s breathe some life into our tax structures and give tens of thousands of budding philanthropists the chance to give while they live!