In defence of tax relief on donations to charity

Richard Ross

Alliance is a magazine about philanthropy and Richard Murphy is entitled to his opinion that ‘rich people’ should not receive tax relief for making charitable donations. Tax relief has led my family to give disproportionately to charity and it is an unwitting slur (hopefully) on the people who do give to mention organized crime in an article on philanthropy.

Richard Murphy doubts the value of this tax relief and questions whether rich people in the UK should ‘benefit’ from up to £2 billion of tax relief, given that this money is directed as the donor chooses.

What is overlooked is the fact that before £2 billion of tax relief is given an additional £2 billion to £3 billion of donors’ money has to be provided so that up to £5 billion of rich people’s money goes to charitable causes.

My parents set up Rosetrees Trust in 1987 on their golden wedding anniversary to give back to society, and without tax relief the money gifted over the years would have been much less. Rosetrees funds cutting-edge medical research, and as a result of seedcorn funding in venture philanthropy style, co-donations from like-minded donors and major grants awarded,  £150 million has been directed to world-class researchers. Without tax relief this would never have happened.

One of the reasons a small proportion of ‘rich people’ donate their time, money and expertise to a chosen philanthropic cause is because they recognize the growing gap between rich and poor and want to bridge this gap. There are many fine examples in education, social causes and developing countries of how these contributions make a considerable difference.

Sadly the majority of well-off people present a wall of resistance when asked to make a charitable donation.  Even the tax incentive will not move most of them to give meaningfully. Part of the answer might be to provide an even bigger tax saving for the first donation, if it is shown to be well thought through and potentially beneficial to society.

At Rosetrees we are trying to understand why the large majority of the well-off refuse to give meaningfully. If Richard Murphy can help find the answer to this important question it will do infinitely more good than his objections to (inevitable) injustices in the current system.

Rosetrees is considering commissioning an academic psychologist specializing in philanthropy to analyse and explain why people don’t give, with a view to advising how to change their attitude and encourage them to become philanthropic.

Can Alliance readers provide answers that would be worthy of the Nobel Prize?

Richard Ross
Chairman, Rosetrees Trust

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