We all know there are tax benefits to making gifts to charity but do we always think how best to make these donations?

Gifting cash to the charity

The most common form of gifting - and if the donation is ‘gift aided’, there will be tax benefits for both the donor and the charity. 

The charity will be able to claim back an additional 25p for every £1 gifted and if the donor is a higher or additional rate tax payer they will also knock off 25p/31.25p from their tax bill for every £1 donated. 

It can get even better for individuals if their taxable income falls in either of the two quite punitive marginal tax bands – if their income is between £50,000 and £60,000 the tax saving could be higher as it will reduce the amount of child benefit claw-back, or more commonly for individuals who earn between £100,000 and £125,140 the tax saving could be 50p per £1 donated (on top of the 25p claimed directly by the charity) as they will be able to extend the band at which taxpayers start to lose their tax free personal allowance. 

It is also important to consider the timing when you make donations. Donations can be carried back one year on the tax return as long as this tax return has not already been filed – worth considering if one tax year you are in these marginal tax bands not the year after.

Gifting an asset to the charity 

Our client did not have much income in the year in question and so there would have been very little tax relief in gifting cash to the charity. We therefore discussed gifting an asset to the charity instead. If the charity is willing to accept the asset the gift could happen without a Capital Gains Tax charge.    

The charity would be able to sell the asset with no tax charge and the donor would be able to make a gift and save themselves a potential Capital Gains Tax bill. 

If the individual also had income in the year there might be an Income Tax deduction for certain qualifying assets (broadly listed shares and interests in UK land and property).   If the gift of an asset is a possibility for both the donor and the charity this is worth exploring as the combined Capital Gains Tax and Income Tax saving may exceed the tax reliefs for a gift aided cash donation. 

Understandably it is a big ‘if’ that the charity will accept the asset as you would be passing on the burden of administering and selling the asset to them, which the charity may not have the capacity to do. Sussex Community Foundation will accept a donation in the form of assets in certain situations so it is certainly worth a conversation with them if this could be on the agenda. 

Selling an asset to the charity

Our client was looking to gift a certain amount to the charity and was thinking of selling an asset worth more than the intended gift. We therefore discussed the possibility of selling the asset to the charity at undervalue to achieve the same result.  

For example, say some shares are worth £75,000 and the intended gift was £50,000. Our client could have sold the shares to the charity for £25,000.  

The donor would be in the same position – they would have £25,000 cash in their pocket but importantly the sale at undervalue to the charity could happen on a no gain/no loss basis.  Therefore, no Capital Gains Tax to pay (although worth noting that if the £25,000 proceeds was higher than original purchase price there would be Capital Gains Tax to pay). There could also be an Income Tax deduction if there is sufficient income and the assets were qualifying listed shares. 

The charity would also be in the same position – it would have shares worth £75,000 which cost them £25,000. The net donation to them is therefore £50,000 as intended by our donor. 

Again, this puts an administrative burden on the charity so it would need a discussion to see if something like this could be accommodated. 

Deed or Gift

In some cases, a charity may be reluctant to take on the management of an asset. The charity may accept the gift but ask the donor to sell the asset on their behalf. By signing a deed of gift, or exchanging letters, the donor may be able to achieve the same tax benefits while saving the charity significant administration and management time. 

In summary, it is always worth discussing alternatives with clients when discussing charitable gifting and always worth discussing with a representative of the charity to see if they will accept donations in the form of assets or sales at undervalue. I’m sure Sussex Community Foundation would love to have conversations like these with potential donors.

I’m not sure I agree wholly with this famous quote from one of the world’s best-known philanthropists but it expresses a sentiment with which many can identify. That we want our personal giving to make a real difference in the world and that it’s often hard to know how to do that well.

It’s easy to get stuck on what is and what isn’t philanthropy, so let’s deal with this before we move on. 

Yes, its etymology is in the Greek ‘love of humanity’. Yes, it’s historically often associated with super-rich western, white men who are either dead and well-known (Carnegie and John D. Rockefeller for example) or alive, associated with the tech industry and well-known (Gates, Bezos, Zuckerberg and co). And yes, it’s probably helpful to make some distinction between charity and philanthropy.

Whilst both are a form of private action for public good, charity can be thought of as more impulsive and emotionally driven, short-term in nature and perhaps responding to a public appeal or requests from networks to support a particular cause. Philanthropy is usually thought to be more strategic, considered and taking a longer-term approach that seeks to make meaningful change and address the root causes of issues if it can. Of course, both are critical to a well-functioning civil society.

There are also numerous different approaches people and institutions might take to philanthropy: cheque-book philanthropy; citizenship philanthropy; wholesale philanthropy and venture philanthropy are just some. Impact investing and participatory grant-making too. Some approaches are now virtually movements themselves, such as Effective Altruism or the Patriotic Millionaires.

But as the world moves on so does philanthropy.

Today, I would argue that anyone who thinks deeply and considers how they can best deploy their time, their talent or their treasure to create social impact should be considered philanthropic. So, this includes the many thousands of inspiring volunteers who give their time and expertise each week to our local community groups. For example, by helping at food banks or giving expert advice on benefits with their local citizens’ advice bureau. 

And wealthy tech bros don’t have the monopoly on being strategic with their use of capital to address social goals. Indeed, they’re not always very good at it. The command & control, top-down approach suitable for a Silicon Valley start-up doesn’t translate well to the messy, real world of non-profits and social impact.

By contrast other voices and methods are now coming to the fore.

Mackenzie Scott has given away billions of dollars to non-profits around the world since 2019 with $2.15 billion to 360 organisations in 2023 alone. She does it quickly, over multiple years and largely without restriction on use, recognising that those doing the work know how best to use the funds.

Mackenzie Scott

What could loosely be called ‘community philanthropy’ is also on the rise. Taking one example from thousands around the world, in Nepal, Tewa, is a community of several thousand ordinary women, pooling their resources to transform the lives of other women and the most vulnerable in their communities.

Another is the ‘soup’ model which started in Detroit and has now spread around the world including to Sussex. You pay a few pounds to enjoy a bowl of soup in a community venue, network, hear pitches from within the community, cast a vote and the winning pitch takes the pot.

These different models and approaches aren’t mutually exclusive. But you might still need help and advice to ‘do’ philanthropy well. Which brings us to Charles Dickens…

Was Dickens the UK’s first philanthropy advisor? The famous Victorian novelist and depicter of the urban poor worked closely advising Angela Burdett-Coutts, a wealthy heiress of the fortune from her grandfather who was former Senior Partner at the famous bank. Angela had the capital and the power to spend it but her status as a woman in Victorian society prevented her from accessing the information required to do so well. Dickens supported her with this, researching need, presenting ideas and even directly managing projects such as Urania House, a home for former prostitutes and their children. Coutts estimate that with Dickens’ help she gave away at least “£350 million in today’s money” and was also key in setting-up the NSPCC and Royal Marsden specialist cancer hospital.

Angela Burdett-Coutts

Very few of us have access to the capital that Burdett-Coutts did yet the need for some help and advice in giving well can be just as compelling.

At Sussex Community Foundation we meet people every week who want to put something back into the community in which they live and work but aren’t sure what route to take. We are here to help.

Sometimes they are passionate about particular causes such as homelessness or supporting children & young people but need advice to navigate a complicated sector so any financial support makes the biggest difference possible.

Often, people want to hear from us what the local challenges are in Sussex. Here our deep connections with the voluntary sector and research such as on ‘Tackling Poverty’ are invaluable in sharing stories and providing an evidence base for effective decision making. This can really help with the move towards a more strategic approach with philanthropy.

Ultimately, our mission is to champion and enable all who want to make a positive contribution to our local area through effective philanthropy and community action. We believe in the power of community and if you do too let’s talk.

by Stephen Chamberlain, Head of Philanthropy

Writing this at the end of just over ten years in the Sussex Community Foundation Grants Team, I realised that my working career after leaving university started out in a Grants Team. So, in a way I really have come full circle!

After 27 years in the British Council (where I started as a Grants Officer and then took on a variety of different roles), I took the plunge, heading into the voluntary sector in Sussex, working for three very productive years in a volunteer hub, managed by Crawley CVS. It was there that I first heard about the Foundation and its philanthropic work, supporting communities across the county. I can still recall a slide from CEO Kevin Richmond’s presentation, which featured a filing cabinet. But this was not just any filing cabinet Kevin explained, this had been purchased by a group using a grant from the Foundation to bring order to its office! From that moment my attention was grabbed, and interest in the work of the Foundation was born.

It was serendipitous that the closure of the volunteer hub in 2013, coincided with the Foundation recruiting for a Grants Administrator, for which I immediately applied. I arrived to join a very friendly and supportive team of five based in Lewes, and I always knew when it was Wednesday as the gentle aroma of brewing beer from Harvey’s brewery would greet me as I stepped off my train at Lewes Station.

There were just two people in the Grants Team in those days, and I found myself on a fast learning curve (not least discovering just how extensive the voluntary sector was across the county). At the same time, the Foundation was implementing a new system to manage its grants – an exciting challenge, but not without its stresses!  

I recall a busy office, and being a small team frequently meant all hands to the pump. Inevitably administration occupied a significant proportion of our time, but there were plenty of opportunities to interact with applicants, whether on the phone or in person. At that time, we were giving out just under £1m in grants (a figure that would rise to over £4.2m during the height of the Covid pandemic) across four grant rounds. I recall panel meetings for which mountains of papers had to be meticulously prepared (and worrying just how many trees had been cut down in the process) and always feeling a certain sadness that there were always more worthy applications than we had money to fund. 

Under three inspiring managers, both the scope of the Grants Team and my role in it grew and developed. As well as playing a largely administrative role, I became gradually more involved with specific programmes, especially those funded at a national level by statutory and private sector partners and those developed in partnership with UKCF. There were local initiatives too, including those embracing the arts (a passion of mine) such as the Westdene Fund, which supports talented young musicians. One of the delights of administering these awards was meeting young inspirational people, who were so passionate and knowledgeable about music. 

Interaction with community groups across Sussex was an especially important part of my job, and it was a delight to get out of the office to witness what was being achieved with our grants. It was little surprise that my interests were soon focused on encouraging and advocating the work of infrastructure (Voluntary Actions) and ‘second line’ groups – something I am still passionate about and believe in today. The partnerships formed are some of the most positive aspects of my time at Sussex Community Foundation and I leave this behind as my legacy.

The past ten years have seen considerable growth in the Foundation’s grants activity, and a doubling of the grants team to four full-time staff in response. Online systems have replaced paper files, and we (mostly) marvel at the relative ease with which we now process applications that previously had required much ‘copy and paste’. Increasingly we work with our colleagues in Voluntary Actions delivering training and workshops to help potential applicants access our funding: which has helped develop a special relationship between the Foundation and these organisations.

There have been many highlights for me during my time at the Foundation. This includes the huge honour of being invited to a Buckingham Palace Garden Party in 2018, in recognition of a particular programme I had worked on. 

I couldn’t end though, without mentioning the amazing work the whole Sussex Community Foundation Team put in during the Covid pandemic, often under very demanding circumstances. Untested, untried, hitting the ground running this work was exciting, challenging, at times frustrating, but ultimately hugely impactful and life changing. It was humbling to be so regularly involved in activity that presented the voluntary sector at its very best, and which achieved such remarkable impact.  

I leave the Foundation with many happy memories, colleagues past and present who have become friends for life, a real sense of achievement, but above all heartfelt thanks for the privilege of 10 years of helping make Sussex a better place to live in for those now and future generations.

Adrian Barrott

Grants Officer from 2013 to 2023