Philanthropy

Lord Best Excerpts

Thursday 2nd December 2010 Lords Chamber

[Lord Best]

My Lords, I, too, thank the noble Lord, Lord Janvrin, for allowing us to have this excellent debate. I declare the interests that I have on the register, which include acting as chair of the giving forum, which brings together a number of interested parties to increase giving within the UK. Like the noble Lord, Lord Brooke of Sutton Mandeville, I declare an interest in having a charitable trust of my own. It is a very small one, and is administered by the Charities Aid Foundation. Perhaps it might be of value if I highlighted some advantages of creating those small trusts, or even of opening a simple account with the Charities Aid Foundation and of combining it with the use of the payroll-giving arrangements.

I want to explain to your Lordships why combining a CAF account or trust with payroll-giving—the CAF administers one of those schemes, called Give As You Earn—has huge advantages. Let me see if I can spell out those advantages. They will, I hope, appeal to that new group of people in the 30 to 50 age group whom the noble Lord, Lord Hodgson of Ashley Abbots, pointed out—they are, not least, in the City and earning money in the financial sector or the legal profession—and who may be in a position to make a monthly donation to the world of charity. Using the payroll-giving instrument and a charitable foundation—a small trust, or simply by opening an account there—has the following seven advantages.

Payroll-giving allows you to plan the amount that you are going to give each month, and then forget about it. When appeals come out of the blue, you do not have to put your hand in your pocket; you take it from the account that you have already established and into which your monthly payment goes. You have the satisfaction of watching the funds accumulate there until such time as you wish to spend them. You also get automatic tax relief paid into that account. It is not only tax relief at the standard rate, which is what happens with gift aid, but an automatic credit to your account of tax at your highest rate. If you are a 40 per cent tax rate payer, 40 per cent is credited to the account; and if in the future you are a 50 per cent tax rate payer, 50 per cent will accrue to your account. If you do not want to get some of that money back by reclaiming it from the Revenue by filling in a lot of forms, it is a very simple and straightforward way to give all the money that you wish to give and of having it all credited against your account for additional tax.

You can be generous when the office marathon runners all suddenly decide that they wish to approach you for sponsorship in a month when you have had rather a lot of other expenditure, because it is going to come out of your separate account. You can change the charities that you support at whim. You are not boxed into a monthly payment to the same charity month after month. You can do as you please. If, as I suspect some Members of this House do, you receive occasional fees for lectures or conferences, you can ask for the cheque to be made payable to your charitable account instead of to yourself, and in that way you do not have all the hassle of remembering to declare the money, pay tax on it and then perhaps donate it to charity; the cheque can just be made out to your charitable account. No administration is involved, there is no tax return entry to make, and there are no setting-up costs, so the lawyers get nothing out of this arrangement at all. Finally, and most importantly, it is hugely rewarding to be able to make your cheques out to local charities.

Nowadays, I am afraid that I am approached by charities that are struggling, perhaps because their statutory funding has been cut back, but it is important to be able to assist without damage to one’s own finances. I am sure that I shall be more than tempted by the See the Difference programme, which I think the noble Baroness, Lady Barker, will tell us about later.

For all those reasons, the combination of payroll-giving and opening a CAF account has huge advantages. I ask the Minister to consider ways in which the corporate sector—businesses and companies—can be helped to foster arrangements of this kind, making it as easy as possible for people to sign up to payroll-giving and making it part of the culture of the workplace. People in a company simply sign a form and the payroll-giving system allows them to opt to donate so much per month, which they can always top up. If the tsunami appeal comes along, you can donate through payroll-giving just by dropping a note to the HR department. Companies can make this extremely easy for everyone, and I believe that Nick Hurd, the Minister in the other place, is looking at potential incentives for companies to do more. This is one way in which businesses can be very helpful—not least with auto-enrolment, whereby people are included almost whether they like it or not. Everything is made so easy that the process happens almost automatically.

In conclusion, I very much support the suggestion of the noble Lord, Lord Brooke of Sutton Mandeville, that we have a debate on another occasion about charitable remainder trusts—the lifetime legacies to which the noble Lord, Lord Hodgson of Astley Abbotts, also referred. I think that these trusts were first dreamt up in about 2001 by the Institute for Philanthropy, and they were the subject of a debate that we had in 2006—a debate in which some noble Lords here took part. I think that we are now ready for lifetime legacies; they, too, could make a big difference.