George Osborne barely deigned to give it his attention – the word 'philanthropy' does not appear in the complete Budget document once
George Osborne is not a fan of philanthropy: that much we deduced from last year's Budget, with its (ultimately revoked) measure to limit income tax relief for charitable donations. But this year he went one step further, barely deigning to give it his attention – the word 'philanthropy' does not appear in the complete Budget document once, and the measures announced are vague and their benefit unknown.
The philanthropic sector is hardly cheering. Daniela Barone Soares, CEO of Impetus Trust, a venture philanthropy organisation which invests in charities and social enterprises, told Spear's this was a missed opportunity: ‘We certainly wouldn’t want a repeat of last year, but we do feel government has missed a trick by not working with venture philanthropy as a means to support the development of the social investment market. We are lobbying them to encourage this, but we know this is not one strictly for HMT.’
Dan Corry, CEO of philanthropic consultancy New Philanthropy Capital, was lukewarm in his enthusiasm: ‘For the sector, there are a few interesting things in this very political budget. There is some movement on the tax treatment of social investment (although not clear what), a consultation (only) on simplifying Gift Aid in the digital giving era, plus a small bit of help for charities through the new Employment Allowance for the first £2,000 of employee National Insurance Contributions.' Not time for champagne, he added.
CORRY'S REFERENCE TO the tax treatment of social investment is the one potential positive to come out of the Budget, although it is not strictly philanthropy. (Social investment refers to money put into businesses which have both a social and a financial return, whereas philanthropy only expects a social return.)
The relevant section of the Budget reads:
1.135 Social enterprises play an important role in growing the economy, reforming public services and promoting social justice. The Government will introduce a new tax relief to encourage private investment in social enterprise. The tax relief will complement the Government’s other recent measures to help social enterprises access the capital they need, such as the launch in 2012 of Big Society Capital. The Government will consult formally on the details of the relief by summer 2013 and the relief will be introduced in Finance Bill 2014.
Now, this could be good news for society, for social investors and for the economy. Social investment aims to tackle problems the government is not good at (such as offender recidivism or social breakdown) so the more money that goes into the sector, the better. There are countless creative projects which, with the right business structure and more investment, could have a positive effect.
HOWEVER, NOT ALL social enterprises will be suitable for external investment, which requires a robust business plan and a strong management team. Daniela Barone Soares was pleased at the tax-relief measure but added: 'We remain concerned that there are not enough organisations ready to take on this type of investment. If the social investment market is going to take off, more support like ours must be provided to scale up organisations so that they can genuinely provide a social and financial return.’
Social Enterprise UK, am umbrella group for the sector, was keener. Peter Holbrook, CEO, said: ‘With support from the Treasury the UK’s social enterprise sector is much stronger, and can move forward with confidence that it is recognised for the economic and social value it delivers. Despite the recession social enterprises are outstripping mainstream businesses for confidence and growth – 58 per cent of social enterprises grew their business last year compared to 28 per cent of SMEs.
‘The UK is at the forefront of social investment and we’ve already got in place Big Society Capital, the world’s first wholesale social investment bank with £600 million to lend. Our peers in other countries, particularly the United States, are very interested in the progress we’re making.'
Fiona Halton, CEO of Pilotlight, which connects charities with pro bono expertise, said the measure might help create more social enterprises: 'We welcome any move which will make it easier for social enterprises to increase their income, especially at a time when so many organisations are finding it tough. In the past twelve months we have seen a significant increase in interest from our partner charities about becoming a social enterprise.
Perhaps in the Autumn Statement, or in next year's Budget, George Osborne could see his way to practising what the Coalition preaches and making philanthropy easier, more attractive and more influential.