After a few days the 2014 budget announcements cease to cause much media attention as other news takes precedent, yet its impact will continue to be felt for a long time to come.
The Chancellor didn’t forget the non-profit sector in his budget and, while, there were no ground breaking changes, the promises he made could make a substantial contribution to the sector, with the modernization of the Gift Aid process being one of the more notable.
So what does the budget mean for Charities?
Among the 2014 Budget announcements were:
• The Government will encourage more donors to use Gift Aid on eligible donations and encourage smaller charities to register for the reliefs that they are entitled to:
• Relief from VAT on fuel for Air Ambulance and inland water rescue charities
• Tax relief on social investment set at 30 per cent to attract more investors
• £30m to £40m in the budget for the Cultural Gift Scheme, which allows the giving of pre-eminent objects, or items associated with historic buildings, in return for tax relief.
Despite the challenges of the past few years annual gross income for charities is at an all time high, up on the previous year by 5%. A cost of living crisis or not, the fact is that the sector has pulled out the stops to remain on top. The creativity that runs through the veins of fundraisers has successfully pumped through to the heart of their causes, and a little help from the Chancellor goes a long way in clearing out the arteries so that they can inject new oxygen into funds.
A drive to increase take-up of Gift Aid among smaller charities brings a commitment from the government to make the process simpler between the Charities Commission and HMRC. Although the detail has not been worked out and is left open to interpretation at this stage it is seen as a positive move that could substantially increase income from this source.
Those who would most benefit are the smaller charities having better access to ‘Gift Aid’. Acquiring the knowledge and skills in how this whole process will work will bring in fresh income not yet tapped.
The Chancellor’s relief on fuel for water rescue has been most welcome since the UK has been awash with water this year putting big demands on those charities.
The big scoop for fundraisers
But the big one for fundraisers is likely to be felt in the areas not directly associated with Charities; in the pensioners ‘scoop’ of the decade.
The Pension debate has been a thorny issue for some time, a mess that consecutive governments haven’t truly understood, or indeed faced up to. Annuities, the curse of the money purchase, personal pension schemes, no longer have to be purchased. Of course companies who sell these, especially after seeing their stocks plunge over the weekend, are not happy, but most people entering into pensionable age now feel that they have a choice and that Government is no longer treating people of a grand age like children. And we appear to have consensus from opposition parties on this.
But here’s the thing for Charities. When you buy an annuity, it gives you a pension for life, but when you die, it dies with you. If there is a surplus, and generally there is because the odds are stacked in the favour of the pension provider, the annuity company keeps it. Now the pensioner can spend or bequeath their money in any way they wish or see fit, they do not have to forfeit this to the pension company.
So this opens up new ‘arterial’ opportunities for fundraisers to be creative, to nurture this potential source of income from their followers.
The tax relief from social investment is clearly an excellent way to open up investment, lots of creativity for fundraisers here. And if a fundraiser knows anyone with the odd old building or two hanging around, under the cultural gift scheme, the tax relief might represent a nice charitable windfall too.
In summary the 2014 Budget has potential for fundraisers which should open up new job opportunities as there is much to do to make the most of what the Chancellor has put on offer.