Earlier today, the Chancellor delivered his last Budget before Parliament dissolves and the country go to the polls in early May. Amidst all the economic statistics and political row that always surround a budget, the Chancellor announced a number of measures that will directly impact the charity sector in the coming years. The Chancellor’s Red Book of course has a full breakdown of measures, but there are some particular areas that stand out.
George Osborne’s big announcement for the sector was an increase in the annual maximum amount of donations, per charity, which can be allowed under the Gift Aid Small Donations Scheme. This will increase from £5,000 to £8,000. This means that eligible charities will be able to claim Gift Aid style top-up payments of up to £2,000 a year from next April. However, only a small proportion of charities are eligible for this scheme, and the complexity of its administration means that it is not as successful as the sector had hoped. To really increase the effectiveness of Gift Aid, government needs to simplify it, make it easier to use and encourage take-up from both charities and the public.
The Chancellor has continued his Government’s record of using LIBOR fines – from misbehaving financial institutions – to support charities. This year, the majority of the £75 million (over five years) announced is going to military charities and includes a series of grants, in addition to the creation of a £25 million healthcare fund targeted at veterans. Of course any support for the sector is welcome and there is no doubt that the recipient charities play an important role in communities across the country, but these announcements do not do enough to address the wider concerns and challenges faced by the sector. It’s important that, post-election, charities are able to work closely with government to ensure that the right conditions are put in place to allow all charities to thrive.
Measures announced by the Chancellor include the planned introduction of subsidised fundraising training, which will give smaller charities access to a programme provided in partnership by the Office for Civil Society and an external body. The goal of this is to ensure that smaller organisations are maximising the income that they raise from their supporters and, if delivered effectively, could make a sizeable impact on the finances of smaller charities. Of course, training could be used effectively in a number of different areas, and one persistent theme that we hear from (particularly smaller) charities is that they would really appreciate training about bidding more effectively for public service contracts. The sector will now have to wait and see whether the role of charities in providing public services makes it into the election campaign.
Other announcements included moves to make hospice charities and search and rescue, air ambulance charities and blood bike charities exempt from VAT from April. This is significant progress in a complex policy area that will make a real difference to the charities that benefit, and offers a boost to the sector as a whole. In addition, the introduction of Charity Authorised Investment Funds regulated by the Financial Conduct Authority is a very positive step for the sector as a whole. Of course, we do have a tongue-in-cheek concern that CAIFs are not characterised as CAFs, else we at CAF will find it difficult to keep up!
Finally, one of the Chancellor’s headline measures was the announcement that existing pensioners will be able to cash in their annuities, extending a change in the financial climate for older people that became available to new pensioners earlier in the year. To make this a success, he acknowledged that retirees would need guidance about what selling annuities means and how the power can be used responsibility. Given that, as the Growing Giving Inquiry discovered, there are so many older people who want to find out more about volunteering, these advice sessions should provide pensioners with information about how they can continue to support charities in retirement. Such a post-careers advice service would provide older people with practical support to help them adapt to their changing circumstances, but also ensure that charities and communities are able to draw upon their experience and expertise to make a positive different in their local area.
There are of course other measures in the Budget that will impact upon the sector, but now political attention will begin to turn to manifestos, with each party expected to release theirs in the coming weeks. We will of course be bringing you analysis of each party’s policies and what they would mean for the sector in due course.
In the meantime, next week sees our Social Leaders Debate, which offers the first opportunity for major parties to clash on their vision for the future of the charity sector. No doubt some of the issues touched upon in today’s Budget will drive debate, and Guardian columnist Zoe Williams will be tasked with keeping order over what promises to be a lively discussion.
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