Charity Finance Group (CFG) has called on the government’s upcoming civil society strategy to offer “the biggest shakeup of support for charities since the Victorian Age”.
In its submission to the consultation, CFG renews a previous call for the government to unlock £2bn a year for charities by reforming the charity tax system by making changes to Gift Aid, irrecoverable VAT, business rates relief and insurance premium tax.
It says the current system “dates back to the Victorian period” and has never been fundamentally assessed to see whether it meets the needs of modern society.
“Our tax system provides ad-hoc reliefs to charities based on the idea that money which has been given for public benefit should not be taxed.
“Yet this has not been applied consistently and has created perverse situations where the government gives significant tax reliefs on the one hand and then takes it away with the other.
“This is not only complex and confusing for charities, but involves the government taking away the limited pool of resources available for public benefit.”
CFG also urged “fundamental changes” to charity regulation, procurement and skills and capacity building.
Investment
It said these changes must be backed by long-term government investment in growing the charity sector.
Andrew O’Brien, CFG’s director of policy and engagement, said: “The government has said that it wants to have an ambitious strategy to support civil society and this is good news. Many of the structures that support charities, particularly around tax, date back to the Victorian period.
“This Civil Society Strategy is an opportunity to update these structures and principles for the 21st Century so that we can create a growing charity sector which can meet the social and economic challenges our country faces.
"This has to be backed up with government investment, just like the Industrial Strategy has been. Business would not accept a strategy without investment, so why should civil society?
“If the government is prepared to use this Civil Society Strategy to comprehensively reform the support for charities, it could leave a positive legacy for decades to come – just like our Victorian predecessors.”
The government's consultation on its civil society strategy closed this morning.
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