Stop taking advantage of 'soft target' charities
An open letter to the States of Guernsey Policy & Resources Committee. I WRITE as chairman of the Association of Guernsey Charities – the umbrella organisation for the Bailiwick's voluntary and charity sector, with more than 320 members. Since early 2013 we have been pressing the States of Guernsey to bring in Gift Aid and Payroll Giving. Gift Aid enables charities to reclaim the tax paid by donors on income they choose to donate to charity. Payroll Giving enables employees to direct part of their income to charity before tax is deducted. At the beginning of 2015 Treasury & Resources was asked by Policy Council to explore the introduction of Gift Aid and Payroll Giving, but you undertook no work because of other commitments and you also said these were not affordable given the fiscal climate. In December 2015 you then committed, in a letter to us, to undertake a formal review to consider introducing Gift Aid and Payroll Giving in Guernsey, for the 2017 Budget. We did provide input to that review, but we did not see the results of it and we wonder whether in fact it was ever concluded. Nevertheless, now you say you cannot afford the cost (less than £1m. – our estimate – out of a total tax revenue budget of £393m.) and you will look again, next year.
We wonder what is going to happen to change your mind in another year's time?
We will of course work with you again on this re-evaluation because we gave a commitment under the Social Compact to work co-operatively with you.
Gift Aid and Payroll Giving are vital to charities because, without it, you are, in effect, taxing their donation income at 20%. This is worse than the way you treat businesses, where you tax only profits.
Losing 20% of an income stream is a much more significant loss when it is being used to help the vulnerable and disadvantaged in the community. That is why other jurisdictions, including the UK, Jersey, and the US, for example, have measures to make charity income whole again, through a version of Gift Aid.
We have also explained the multiplier effect; with Gift Aid, the reason you would have to return £1 in tax is because someone has already donated £4, so your £1 contribution means that £5 can be spent on helping the community on things the States of Guernsey either cannot afford, or is not best placed to provide.
It is true that you already make grants to charities; these are highly targeted to a very small number of charities, all to provide essential and tightly defined parts of the Bailiwick infrastructure, of around £7.5m. Most of this goes in grants for the ambulance service and the two libraries (£4.6m.). The rest (less than £3m.) is spread across 25 or so charities, but the grants you make are, in many cases, not enough to pay for what they do for you and they have to raise the balance from donations. The other charities in the Bailiwick get nothing from you.
Who are the charities that you give nothing to, but instead take 20% from? They are part of the fabric of the Bailiwick. Charities such as The Cheshire Home, Les Bourgs Hospice, the GSPCA, Guernsey Mind, Homestart, Headway, the Disability Alliance, Guernsey Autism, Age Concern, Every Child Our Future, the Disability Swimming Club, the Scouts, Guernsey Bereavement Counselling, the Samaritans, the Ron Short Centre, the Guernsey Voluntary Service, Guernsey Citizens Advice.
There are over 300 more and I mean no offence to them by not naming them. What would life in the Bailiwick be like without them? Just imagine that for a moment.
If you continue to do nothing, very little will change overnight. Charities will carry on because they are committed to helping the vulnerable and disadvantaged, whatever their resources. But none will achieve as much to support the community as they could do, some will fail eventually, and none will be able to help you by taking on things you would like to outsource so as to reduce States expenditure, which they can do more efficiently – and why would they?
In September 2014 you voluntarily signed the Social Compact, instigated at your request. Your primary commitment was 'to foster and encourage development of the Third Sector' but in the two years since then you have done nothing measurable to honour that commitment. Rejection of Gift Aid is perceived by many in the sector as just the opposite of this commitment.
Charities and voluntary organisations are a soft target. They rarely complain, they just get on with helping people. Many are uncomfortable making a fuss like this. So please stop taking advantage of them and live up to your commitment to them. Is the £1m. or so of income tax you are taking from them each year really that important to balancing your books, considering the good they do for the Bailiwick?
Your vision for Guernsey is that of a healthier, wealthier and happier island. We do not believe that it is possible for this to work without a thriving and sustainable Third Sector. So it really is in the interests of a better life in the Bailiwick to bring in Gift Aid and Payroll Giving as soon as possible .
PETER ROSE,
Chairman,
Association of Guernsey Charities.
