Pondering idly how different the coverage of the Commonwealth Games in Glasgow might be had the devolution debate already been concluded (either way), I was drawn to the online merchandise shop on the official website, where I was interested to see the association with UNICEF, a UK registered charity which provides aid worldwide.
This made me think about the hurdles faced by English donors when giving to foreign charities – not English registered charities which help people abroad but charities which are registered abroad. Given that the Commonwealth has 53 members spanning Africa, Asia, the Americas, Europe and the Pacific, among which are the world’s largest and smallest, richest and poorest countries, there are certainly many foreign charities one might want to help.
The problem in the EU alone remains seemingly intractable, with a major stumbling block being the differing tax incentives offered in the various member states for philanthropic activities. A recent study published by the European Foundation Centre and Transnational Giving Europe network concluded that there is no European Philanthropic Union yet and called for ‘less red-tape and non-discriminatory tax treatment for donors and philanthropic organisations throughout the member states’.
The benefits of philanthropic activities for society by providing favourable tax treatment for charities and their donors are clearly recognisable, however the situation becomes complicated when money is donated to a charity based abroad or when a charitable foundation generates income, through investments or fundraising for example, in a country other than the one in which it is registered.
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Despite a number of cases heard in the European Court of Justice which set out a ‘non-discrimination principle’ (member states must award equal tax concessions to charities based in other member states where the foreign charities can be shown to be ‘comparable’ to domestic charities), it is clear that the complexity involved in demonstrating such comparability means that cross-border philanthropy suffers proportionately.
The UK government has taken a few small steps, indisputably in the right direction, to allow Europe-based charities to claim tax breaks in the UK, but this requires registration with HMRC.
But why stop there? Why not have a worldwide charity? The news is awash with disasters – both natural (droughts in Somalia, hurricanes in the USA, tornadoes in France) and man-made (Gaza, Syria, Ukraine) which require humanitarian aid. Surely acts of selfless generosity (ignoring the tax incentives for a moment) should be facilitated?
And for those with a propensity for retail therapy, allowing the proceeds from sales to go to a ‘worldwide registered charity’ would certainly increase the range for our giving, and perhaps its volume too.
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At the moment, of course, it is our national sporting teams who most look like they’re in need of charity.
Sophie Mazzier is counsel at London boutique private wealth law firm Maurice Turnor Gardner LLP
