The chief executive and co-founder of a large charity that administers the giving of high-net-worth individuals has said that major donors “don’t understand gift aid”.
In a session at the Charity Tax Group’s winter conference last week, Prism the Gift Fund CEO Anna Josse said she was “really shocked” at the number of “very significant and generous donors” she deals with who “have never heard about most of the other tax breaks, but don’t even understand gift aid”.
She called for action from the government to increase understanding of charitable tax breaks and promote philanthropy more generally.
Josse also said that the Labour government’s recently announced tax changes for non-UK domiciled individuals could have a “massive” impact on donations, with many choosing to leave the country.
‘Challenging’ to get message across
Josse co-founded Prism the Gift Fund in 2005 to increase the flow of funds into the charitable sector by administering the giving of high-net-worth individuals, groups of donors and established foundations.
Her charity, which recorded an income of £115m for the year ending 30 June 2023, holds around £206m of investment assets, most of which are donor-advised funds.
Josse told attendees that educating those in the sector about the value of gift aid is “really challenging”, adding that some people including herself have been trying to do so for over two decades.
She asked “what if we had a minister for philanthropy, one person we could all talk to?”, adding that a conversation must be started “each time with successive governments”.
“But given other priorities, philanthropy is often at the bottom of the pile.”
About a year ago, Josse said, the Charity Commission hosted a roundtable where participants discussed “some of the tax breaks in America that we’ve been talking about for 20 years” among other things.
She then asked if the UK could adopt and simplify some of those incentives.
“We then talked about financial advisers and having a module in philanthropy so that they’d have to bring up philanthropy, which happens in America, without question.
“It takes a lot of time and some people will talk about it at some point. There are people who rattle on the door but not a lot has changed.
“We could totally revolutionise gift aid. There’s something in America called charitable remainder trusts where you make an irrevocable gift to a charity in your lifetime and benefit as a donor from income.
“The remainder, when you die, goes to the charity. It’s an amazing vehicle where the donor benefits but also the charity benefits.”
She argued that for this to work in the UK, the government would need to implement “complex tax changes”.
“Given the crisis this country faces now, maybe the Department for Digital, Culture, Media and Sport has no choice but to begin to look at some of these pieces and what they’ll mean for the charitable sector.”
Non-UK domiciled individuals
Josse was also asked about the Labour government’s changes to the current rules for non-UK domiciled individuals and how these might impact donations from high-net-worth individuals.
The government said it intends to replace “the remittance basis of taxation, which is based on domicile status, with a new tax regime based on residence from 6 April 2025”.
”The new regime will provide 100% relief on foreign income and gains for new arrivals to the UK in their first four years of tax residence, provided they haven’t been UK tax resident in any of the 10 consecutive years prior to their arrival (four-year foreign income and gains regime),” it said.
Josse said the changes could have a “massive” impact on donations.
“When I talk to some of the private client lawyers we work with, they say 50% of their clients are leaving the country.
“I find that very terrifying because we’re all facing a cost-of-living crisis and government cuts.
“I believe the last people standing are high-net-worth individuals and if a large slug of them is going to leave the country, who’s going to fill the gap?
“We’re hearing on a regular basis of the closure of charities and long-serving institutions.”
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