2018 Budget Submission

2018 Budget Submission

Posted on October 09, 2017

The Community Foundation for Ireland was established in 2000 with the intention of helping to grow a philanthropic ethos within Ireland and building a perpetual fund to support charitable causes and communities in Ireland and overseas. In 1998, a paper discussing the establishment of a community foundation was produced on behalf of Combat Poverty. This led the Government to issue a challenge to the private sector to establish a community foundation. Founded by businesses, NGOs and employer organisations, the Government issued a challenge grant of £1million which helped kick start The Foundation’s endowed fund. This endowed fund has grown to exceed €40million today through the support of donors to The Community Foundation for Ireland. By the end of 2016, cumulative grant-making from the Foundation to charities in Ireland reached €30million.  All of which is to explain our origin. It is to say regarding the original challenge set for us by government, that we have met it more than 40 times over by growing our permanent endowment. We have multiplied it thirty times in terms of grant-giving. The issue now, and the one we are writing to you about, is not whether we can deliver; it is how we can grow further and do more.

Figures are only a partial guide to what we do, and the true value of change that results from strategic giving. But the real values are deeper.

The Minister for Finance and Public Expenditure has set out the key objective for Budget 2018 as being the need to “use our recovery to invest in the change and the supports we need for better opportunities for all”, against the backdrop of an economy which is recovering from  “the scars of the Great Recession [which] have yet to heal”. It is a salient fact that though government must lead, no government can ever encompass the full range of need, or effectively tap into all resources. There is always more to be done and other ways to do it.

The Community Foundation for Ireland empowers people who want to make a difference through a model of strategic giving which is effective and delivers. We connect the generosity of donors with the energy, ideas and time of people in the community. We work with individuals, corporations and charitable agencies to create permanent endowment funds and then use the income to support causes around the country. The original capital is endowed so that it generates income in perpetuity. Every year, through the generous support of our donors, we fund hundreds of innovative projects – large and small – in areas such as education, children and youth issues, older people, women’s issues, health and LGBT+.

No one knows what the future holds but whatever future we face The Community Foundation for Ireland will be here to support an equitable, thriving, caring society.  The purpose of our establishment in 2000 was to be another resource for society.  It was a call on those for whom government policy and public resources in education, in business and in positioning Ireland in the world had enabled succeed. It was a way of saying that aside from what the state obliges them to give back in taxes, there is a need and an opportunity to give more.  That need is underlined by the requirements of our society. It is a need not just for resources alone but for an investment of commitment and expertise over time that addressees not just need itself, but its fundamental causes.  Altruism is an antidote to cynicism. Strategic giving can change underlying causes. The fact of commitment, aside from and different from government, is another pillar strong for our society.

The Community Foundation for Ireland proposals are based on the belief that there is a need for Government to play a leadership role in promoting philanthropy in Ireland and in ensuring that there is an encouraging environment for larger scale and strategic giving. A restatement of public policy and a mapping out of associated administrative arrangements within the public sector are also required.

Specific measures advocated are:

  • Refund of Water Charges for New Environment Fund

Preparation for the repayment of water charges is underway. A significant percentage of householders are in favour of charging for water, and were prepared to pay. They see it as a mechanism to help ensure good quality drinking water supplies and supporting a thriving natural environment. In keeping with that spirit of intent we proposed that bill-payers be offered the opportunity to allow their refund amount to be diverted to a new Environment Fund to be managed by a credible philanthropic organisation – The Community Foundation for Ireland. With virtually no philanthropic funding available in support of the environment, this is a unique opportunity to establish a perpetual environment fund. A new fund could be one positive legacy from what has been a difficult overall process.

  • Introduce a Match Challenge Scheme

Ireland does not have a strong tradition of longer term philanthropic giving. In recent years a number of large philanthropic funders (notably the One Foundation and The Atlantic Philanthropies) have adopted a spend-down strategy for their philanthropy whereby the trust or foundation gives away all their philanthropic resources within a specific limited timeframe. While is estimated that 8-12% of foundations in the United States are adopting such a sunset model[1], the remaining 88-92% are a source of long term and sustained support for the community and voluntary sector, including community foundations who provide perpetual funds in support of their local communities. In the absence of a larger pool of trusts and foundations in Ireland, the spend-down foundations mentioned above (in particular The Atlantic Philanthropies) have dominated Irish philanthropy, leaving a considerable gap as they exit the Irish funding scene.

To encourage individuals and families to engage in philanthropy and to address the paucity of long term philanthropic funds in Ireland, The Community Foundation for Ireland recommends that the Government should introduce a match challenge scheme to encourage the development of endowed funds in Ireland. An example of such a targeted approach was the Community First initiative operated in England from 2011 to 2015. Community First allowed community foundations to offer donors a 50% uplift on their endowment donations through government match funding, providing a catalyst for the work community foundations undertake to strengthen communities across the UK.  For example, a where a donor contributed £10,000 challenge grant, through Community First an endowed fund of £15,000 was available to support social action at a local level.

  • Incentivise Donations to Charity in Legacies

Incentivise donations to charity in legacies as well as on the part of those receiving an inheritance: Research undertaken in to legacy giving in Ireland in 2016[1] indicates that legacy income accounted for 11% of fundraised income over the period 2012-2014. In January 2017, The Institute of Fundraising reported that legacies in England and Wales now account for a quarter of the total amount given to charities each year and now top an annual £2.24bn. The Community Foundation for Ireland for Ireland believes that a dual approach should be considered to encourage giving on both sides, by the person who died and by the person who received the inheritance.

Specifically, similar to the UK, a 10% reduction in inheritance tax should be introduced where at least 10% is donated to charity. Ireland also has tax on gifts (not just inheritances) and, again unlike the UK, Ireland taxes the person receiving a gift or inheritance (rather than taxing the estate).  This may make it also appropriate to have a relief that is targeted at the person who receives the gift or inheritance and encourages them to give 10% to charity. Specifically a provision should be introduced whereby if someone receives a gift or inheritance and they donate 10% of that to charity, they could reduce their gift/inheritance tax bill by 10%.

  • Incentivise Donations to Charity through the Donation of Shares

Incentivise donations to charity through the donation of shares, through a simplification of the provisions in relation to stamp duty: Donations of shares to charity are relatively infrequent in Ireland and yet represent a significant opportunity for major gifts. Under current legislation, there is an exemption from Stamp Duty (normal rate 1%) where shares are given to a Revenue approved charity (Section 82A of the Stamp Duties Law).The purpose of the exemption is clear. It prevents stamp duty being a cost to a charity where shares (as opposed to cash) are donated to charity. However, instead of simply giving an exemption for “shares in a company”, the law is phrased in a much more complicated way. It provides that the exemption applies to “designated securities” which are, or form part of, a “Relevant Donation”.  These definitions are taken from the Income Tax legislation where they are relevant for other purposes. The effect of this is to restrict the Stamp Duty exemption to publicly quoted securities which have qualified for income tax deductions or credits when gifted to a charity. This could be changed with very little cost to the Exchequer.

The tax and regulatory system has the potential to incentivise philanthropic giving or to not. Research consistently indicates that while tax incentives are not often a motivation to give in their own right, they do influence how much people donate and in what way. In the longer term a wider review of public policies that impact on philanthropy, including tax, should be undertaken with a view to encouraging more strategic and donations over €5k.

The ask is to give serious consideration to these issues, where applicable in the forthcoming Finance Bill and through government policy more generally. Our agenda is about pursuing the public good, with means and in ways that are not always open to government. That empirical fact, points to a still greater good. Altruism which leads to action which delivers for society is itself a positive dynamic and a binding force, which ultimately cannot be fully measured at all.