Collaboration and Philanthropy in Scotland

Media attention on the recent UK Government Budget Statement has focussed on the personal tax consequences for individuals, and we cover the aspects relevant to charities elsewhere in this newsletter. As ever, as a statement of intent from a new government, of whichever hue, a budget statement serves to underline the relationship between the party of power and the voters whom they govern. We should not, however, lose sight of the importance of the relationship between government and philanthropists.

In a period when government resources are stretched, even with the prospect of tax increases, the role of philanthropy is vital.

Whilst countries such as the USA have a well-established culture of giving, with swathes of advisors specialising in philanthropy, recent research by the think tank ProBono Economics has revealed that the wealthiest people in the UK have wealth to spare and that they may be willing to give more to good causes each year, but that those potential donors need advice which they rarely if ever receive. It concludes that if those with wealth in the UK could be encouraged to leverage their wealth in the most appropriate ways for their circumstances by their advisers, the total contribution to Britain’s charity sector could increase by an extra £2.8 billion.

That advice must come from solicitors, wealth managers and accountants, who should have the knowledge to be able to guide their clients as potential donors, helping them to decide on the right way to give, based on what suits them and the causes they want to support. This group of advisers, often working together, can help them further identify financial incentives to giving if appropriate, such as the UK Gift Aid Scheme which allows both the registered charity recipient and some donors to claim money back from HMRC for direct cash donations. Indeed, in the 2020-2021 tax year, Charity Finance Group estimated that a quarter of all eligible donors neglected to claim Gift Aid leaving approximately half a billion pounds in unclaimed charity revenue.

Given the untapped potential of a single scheme already in place and the possibility of creating something more, there is a clear conclusion for all of us in civic society: there must be a national strategy to encourage philanthropy.

Donors, their advisers, and charities need a framework and the support of those in power to do this. The introduction of a national philanthropy strategy might involve the appointment of officials responsible for encouraging philanthropy; the expansion of the regulatory framework, perhaps through the introduction of compulsory training for professionals; and the possible further incentivisation of giving through the tax system. Whatever its shape, it requires all of us: government, the third sector, private individuals and professional advisers to join together and harness the power of philanthropy, to help maintain the social framework and strengthen the work of our charities.