Using my taxes to bail out charities crosses a dangerous line
Dear Liam Byrne,
I understand that the moral justification for supporting charities through this financial crisis is a compelling one. No-one wants to see good intentioned and often successful charities either downsize or disappear completely during these difficult times. Unfortunately, the moral case becomes considerably more complicated when it is taxpayers’ money that is used to bail out struggling charities. Disturbing as this may sound, by bailing out some charities you have probably destroyed them forever.
Today you will announce a £40 million bailout for charities struggling in the recession. This sum looks paltry compared to the £500 billion given to the banking sector and is a fraction of the £500 million the government was urged to provide at crisis talks with charities last year and still far below their more recent request for £100m to keep vital services alive. This news was further soured by Alistair Darling saying yesterday that the Treasury may be powerless to prevent bankers at RBS receiving large bonuses. According to the government’s charity ‘action plan’, a survey of 260 large charities found that moneys held by charities fell by 13% in the past year, while in October 2008 a Charities Commission survey suggested that one in 12 charities was having to make redundancies to avoid cuts in services with one in three predicted to do so in the forthcoming months. Your response has been to offer £9 million of funding from existing DWP funds for volunteer programmes for the unemployed in addition to redirecting money from the Treasury and Department for Health, with a further £15.5m being provided for a community resilience fund for small and medium size community groups in deprived areas who offer debt advice and services supporting families and young people and £16.5m to help third sector organisations merge to be able to cope with the downturn (Help the Aged and Age Concern have already done so).
How can I possibly argue with this, you may ask? Charities being supported by the government as their donation base decreases appeals to our sense of decency and will presumably meet with little or no opposition. However, this situation needs some perspective. Private sector companies have been disappearing by the minute, jobs are being lost in their thousands every week, bankruptcies and repossessions are spiralling out of control – why should charities not be shedding staff as well? Is one in thirteen charities making some redundancies sufficient justification to throw millions at them? I remember how upset the unions got when some local councils admitted that they might have to lay off some staff. When their entire economy is in freefall, people lose their jobs and you really have to get your head round this concept. Stephen Bubb, chief executive of the association of chief executive officers of voluntary organisations (great job title, I know) said: “Those smaller charities who support people who have lost their job will be coming back to the government and asking how can you support us more?” This is so wrong, this is so very wrong. Charities and government must always be kept apart because the second that a charity feels a duty towards the government rather than to the people they help, the charity might as well not exist because their independence has been comprimised. We already have enough problems with charities who receive funding from the UK or EU governments (or both) acting as a government mouthpiece when Labour needs someone to feign indignation. The harsh reality is that charity donations are drying up and they will keep drying up until our economy hits rock bottom – and I fear we’ve still got a long way to go on that front.
If charities are to perform their role properly in the absence of government interference, it is essential that they feel no ties to anyone other than the people they help. Giving them taxpayers’ cash is totally incompatible with this aim and crosses the fine line between supporting charities and controlling them. Giving them additional donations may seem like the right thing to do but once this money has been received the operational independence of these charities no longer exists. The sad reality of what you have done is that these charities can no longer claim to be servants of the people because they are now indebted, morally and financially, to the British government.
Yours sincerely,
A.Tory
Charities being supported by the government as their donation base decreases appeals to our sense of decency and will presumably meet with little or no opposition.
No it doesn’t, and yes it will.
Charitable donations are voluntary. We give them because we choose to give them.
Taxation is not voluntary. If we choose not to give money to charities, for whatever reason, but HMG then decides for us to give our money to the charity we decided not to give to, and then – forcibly if necessary – takes the money from us, then waht freedom of choice do we have? In what way is that “fair”?
I think the public would support this bailout if surveyed on the matter, even though the principle that it violates has serious implications.
The lack of freedom is indeed disturbing, as charities should be supported by donations made without the interference of government.
Agree with patently – if the public were aware of the extent of the collusion between government and charities over their desired ‘isshoos’, they’d be even less likely to give them any money!
Wasn’t the public very surprised recently when they discovered the extent of charities losses. £120 million of charity money may be lost in Iceland bank crisis. That was just the money in Icesave.
Many of the largest fund managers from the largest financial institutions have only charities as their clients
Exactly. Once the boundary between government and charities has been crossed, they are no longer servants of the people (or animals) that they are supposed to focus on.
LFAT, I like your last paragraph and second (or third) what Patently says.
We know that there are a huge amount of registered charities who derive most of their income from the State, however this is dressed up, and are little more than quangoes. The National Drug Prevention Alliance derives most of its income from a fakecharity in the USA!! Once they have sucked from the taxpayer teat, they are then beholden.
I for one would scrap all charity tax breaks and GiftAid relief, that cuts people’s taxes a bit and if they want to donate a bit more out of their higher net income, then good luck to them.
I think the public would support this bailout if surveyed on the matter, even though the principle that it violates has serious implications.
Wasn’t this what the lottery was for? Where’s John Major when you need him?
I for one would scrap all charity tax breaks and GiftAid relief
I think that the tax breaks encourage philanthropy as does GiftAid. If you genuinely think that any savings made from scrapping these would end up with us having lower taxes, I think you’ve not been paying attention to our kleptocratic government. Jaqui Smith’s mortgage doesn’t pay itself, you know!
The National Lottery is never challenged in public, even though I’ve heard quite a few people describe it as a ’stealth tax’ of sorts. Seeing as many people are losing their jobs, playing the lottery to dig themselves out of a financial hole might look pretty enticing right now.
I agree with Shaun that the theory of scrapping GiftAid wouldn’t match the reality of our current government’s attitude towards tax-and-spend, although the idea does have merits.
The lottery was established to help sport and good causes. It now gets borrowed from to fund what are, in effect, public health campaigns and government initiatives like the Olympics. The government was always entitled to a slice of it but now seems to see it in the same way it viewed pension funds… It’s not really a stealth tax, it’s a voluntary tax that leverages people’s weak understanding of probability to entice them to cough up money they can’t afford for a 14,000,000:1 chance of a jackpot.
I think the word “charity” is highly contentious now. We all know about the “fake” charities that the government funds with taxpayers money to enforce laws like the no smoking ban or to tell us how obese we are.
Most of these “charities” are simply another government department in disguise and should be not be called a Charity.
It’s a confidence trick and the public are not stupid, they know what’s happening.
They also know that millions of their tax money gets gifted abroad as “aid”. So, you ask yourself, why should they also give their hard earned cash to a woman shaking a tin outside Tescos, when the government is giving it away without their permission regardless!
We also know that the lottery money is stolen for “good causes” and as soon as I found out that happened, I stopped buying them.
In a recession, everyone suffers, even charities. That’s life.
Time to separate out the real charities from the fake ones and perhaps the public would start to donate again.
[...] da da dee daa another day another state bailout. Now our self-appointed leadership is in control of even more “charities” as well as the banks and money supply. Is there any individual [...]
A recession does indeed cause everyone to suffer, which is why I’m so angry that the very principle of charitable donations is being undermined just to secure a few more charities as ‘loyal supporters’ of the Labour Party.
That said, I don’t think the public have any idea what’s going on with charities. How many of them know about who funds charities? How many of them know about the dubious origins of many charitable organisations? The definition of a charity certainly needs clearing up because independence from government should surely be an essential criterium.
The definition of a charity certainly needs clearing up because independence from government should surely be an essential criterium.
Yes it’s a mess. Private Schools are often charities (for the purpose of education), Thinktanks are too and these often look remarkably like lobbying firms with sketchy ‘charitable’ aims and then there are the ‘fake’ charities set up seemingly to parrot Government propaganda with the appearance of independence. I would suggest that the schools, thinktanks et al should be lumped into a new non-profit vehicle which is neither a company nor a charity, just to make categorising things easier.
State independence should be a pre-requisite for charities with charitable aims but as all parties move to get the ‘third sector’ more involved with delivery of social goods on behalf of the state, its hard to see who that would be kept honest.
A good angle on the whole issue LFAT.
It is unbelieveable that charities are being bailed out. They might do a public service that the Government and private companies haven’t allowed for but once Government give money then not only does it compromise the independence of the charity but also suggests that government rely on these services and couldn’t provide them adequately.
To make things extra complicated a lot of charities are listed as two entities. For example ‘Friends of the Earth’ get the benefits of being an independent business and being a charity by having a limited company and a charitable trust. I believe this is quite a common technique for charities who also participate in large scale demonstrations to avoid certain legalities.
Charities that are losing money should seriously consider the option of merging especially as there are many charities seemingly competing for the same resources for the same people/animals/environment.
Childline and the NSPCC merged years ago to combat financial difficultes and it sounds like charities are already going down that route in the current crisis. That isn’t necessarily a bad thing, although smaller, local charities might struggle to compete for funding against the larger ones (not that this provides justification for nationalising the smaller ones!)
I’m just getting involved in my local MS Society. They need c. £20k/pa to run the branch which does ‘worthy’ local stuff for MS patients such as provide some transport, social support, grants for equipment and help with forms and stuff. Any time money is collected centrally, if its for a local branch the overarching MS Society (national) is meant to pass down the money but does so patchily and with sub-par records so, subscriptions, for example, are almost impossible to match to members.
Both the local and the national charity do charitable works; the national does valuable work campaigning for awareness and so on, participating in Social Services/Care/NHS reviews and blah blah while also bankrolling research where no drug company would. The locals do the grunt work on the ground. Both deserve funding and have allied objectives so are, basically, one charity.
I’m musing, really, rather than making a point (beyond providing real-world anecdotal data) but it seems to me that in the casual darwinism of a capitalist system, if this (and presumably other charities with similar federated structures) charity is to survive the downturn, it will have to raise its game which in the long-run, ought to be a good thing!
Far too many so-called charities are nothing more than political pressure groups, many part funded at least by the Government so they can hardly be classed as independent. I only give to small local charities now, when the RSPCA became involved in the fox hunting debate I stopped giving to them. Whatever the views about hunting it was not what I gave for. My late husband did some IT work for Oxfam and for luxury living and offices he said is was a dreadful waste of money and never contributed again. Same with Cat Protection, I went off them when I found out what they were paying their CEO and the amount they held in Iceland. When it was the old Cat Protection league it was much better, no constant begging for money or bequests, never seem to stop now. I don’t mind the private schools being charities as they save the state a fortune by parents paying twice and put any profit back into the schools. I went to State schools but would use a private school if I could afford it.
[...] Using taxes to bail out charities crosses a dangerous line [...]
I was staggered when I found out that there are more than 160,000 charities, or 1 per 250 adults – and growing. Then, when I questioned a “chugger” from dear old Barnardo’s I found that they don’t actually look after waifs and strays any longer, but a “consultancy” – probably with posh offices.
Wasn’t the (relatively new) head of the Charity Commission appointed to look into such matters? – dubious intentions, fake charities, fronts for laundering drugs money and so on?
The fact that that person is “Suzi” Leather makes me doubt that this will be impartial – she has been a Labour Party member all her life (well adult life, at least) which is surely a disqualification rather than the opposite. Another area where we are being led by our noses, in the hope that we won’t notice.
Every stone that’s overturned has something nasty running around under it now.
Oh thank goodness this ball is starting to roll. A huge amount of donated money has not been going to the cause so many charities espouse for years.
And it’s going to get dirtier as both Labour and Tories want to make use of the so-called Third Sector for employment and social reasons. The Charities Commission needs a hard prune or a mauling, I’m not bothered which.
Thank you LFAT.