Legacy10 Report Both Wise and Foolish on Philanthropic Giving

With suggestions good and bad, a new report on philanthropic giving has tried to move on the debate about how we encourage wealthy individuals to leave money to charity in their will. On top of an existing inheritance tax break for those who leave money to charity, the report from Legacy10 has recommended philanthropic giving be encouraged by more honours and that advisers be forced to talk to their clients about it.

The report, commissioned by DCMS, has been produced by Legacy10, PR supremo Roland Rudd’s campaign group which was created to raise awareness of a tax initiative that came into force this April – namely that anyone who donates 10 per cent of their estate to charity will receive a 10 per cent deduction from their inheritance tax.

Therefore, much of the report is unsurprisingly given to raising awareness of this legislation, an area in which there is clearly work to be done: in the UK, three-quarters of the population give something to charity every year, but only 7 per cent leave a gift to charity in their will.

One way in which you encourage giving is by inspiring people by example and in this vein the report makes a good suggestion. The Community, Voluntary and Local Services Committee (CVLS), the body that decides who should rewarded in the Honours List for charitable activity, has 25 per cent fewer of the highest awards (Dame/Knight/CBE) available to it than the Economy Committee.

While it’s true that businesses employ more people than the charitable sector, the report suggests that the same number of awards should be available to both the CVLS and Economy Committee.

However, this sensible suggestion is somewhat spoilt by the recommendation that no-one should receive an honour unless they have in some way been involved in charitable giving. ‘Honours should not be awarded to… businessmen unless it can be demonstrated that there has been service above and beyond the call of duty,’ it says. This feels like a heavy-handed, artificial way of encouraging philanthropy.

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The broader problem the report has is this: raising awareness of the tax change is unlikely, in itself, to encourage the kind of sustained giving the report rightly attaches so much importance to.

This is seen in the third aim of the report, which is to ‘secure a commitment from each of the key advisor associations to compel their members to raise philanthropy, in particular the inheritance tax benefits of legacy giving, when discussing tax planning and will writing with their clients’. This compulsion is too far, but certainly philanthropy should be a more frequent subject of conversation with and recommendation by private client advisers.

But perhaps the entire idea of Legacy10 is misplaced. As Charities minister Nick Hurd said when Spear’s interviewed him in the last issue, the key to philanthropic engagement is emotional involvement with a cause, not tax breaks. Those committed over a sustained period of time to a particular charity are likely to investigate the legacy options open to them anyway, but trying to get advisors to push the relevant tax break to clients who know or care little about philanthropy is misguided.

Tax breaks help those wavering about giving, not those who have no inclination to give in the first place.