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LJR Marketing Investigate The Potential Effects Of Limiting Charitable Donations
LJR Marketing discovered this week that some universities have voiced concerns over plans to introduce a cap on the amount of money a person may donate to charitable organisations.
LJR Marketing understands the reason behind the cap is to ensure that the system is not abused by high income earners using charitable donations to minimise their income tax payments and save money. Under current rules, anyone can donate unlimited amounts of money to charity but according to The BBC: “From 2013, uncapped tax reliefs - including those on charitable donations - are to be capped at £50,000 or 25% of a person's income, whichever is higher.” UK universities are understandably concerned as the leading university has raised over £1.25bn in the past eight years, with many sizeable donations above the proposed new limit. Lawrence Randall, Managing Director at LJR Marketing commented: “It is understandable that the Government would want to stop people abusing the system for tax breaks, but at the same time they need to seriously address the potential harm this will cause to the bodies relying on these generous donations.”
Opposition to the proposed tax relief cap appears to be growing with Vince Cable, the business secretary voicing his concerns for charities and universities over the past week. The Chief Secretary to the Treasury Danny Alexander remained defiant however, stating: "We have put in place a cap on unlimited reliefs, we have done so for the very good reason that everyone should pay a decent proportion of their income in tax and that is a policy that we are going to stick to.” LJR Marketing, who specialise in Direct Sales & Marketing, have represented a number of the UK’s largest charities and understand more than most the good that such donations do. Lawrence Randall commented: “Working closely with charitable organisations you really begin to understand how they work and the importance of long-term reliable donors. I fear that the cap on donations could end up costing many charities money as they will need to increase spending on recruiting new donors.”
Danny Alexander did say that the government would “ensure the removal of the tax relief does not have a significant impact on charities which depend on large donations" but has not revealed much detail of how this would be done. LJR Marketing believe that many charities will be “bracing themselves” for a reduction in donations and should already be revising their methods in preparation for the potential drop. Lawrence Randall concluded: “It just means the job we do here has taken on more importance than ever before. We need to work as hard as we possibly can and our only goal will be to ensure we help our clients through a rough time if they need us to. We’re ready.”