The proposal to boost funding for charities through a new tax relief scheme to encourage business donations may not be as simple as it seems.
The spirit that inspired the Centre for Social Justice (CSJ) to make the proposal is undoubtedly sound. The idea is that companies should allow employees to volunteer for charities inside company time while also paying into a charity account in the employee's name the minimum wage for the time the employee has spent volunteering. The employee then decides to which charities that accumulated cash should go, not necessarily those benefitting from the volunteering.
Like so many good ideas, however, much of the scheme already exists and has failed to set the world on fire: up to five days 'volunteering leave' is already available in some big firms and government departments, while a charity bank account facility, which does the job described above while claiming the relevant Gift Aid, is available from the Charities Aid Foundation.
Most bizarrely, the report has not yet been published – according to CSJ's own website. It is difficult to see therefore what new elements within it are attracting the Treasury's interest, as reported in the media.
Even more worryingly, nowhere in the media reports or the CSJ website is the argument made for why businesses should support such a scheme. There is in fact a strong case for corporate Britain to engage with charities, communities and good causes generally: it is not only good for brand image, employee engagement and marketing but, used properly, employee volunteering can be significantly more cost effective in terms of skills acquisition than many current HR practices are. The yet to be published report, thus, should be seen in context.
The aim of the proposals, we are told, is to create American levels of corporate engagement and giving. That is a fine aspiration from an avowedly rightwing thinktank, one of the strongest proponents of the greater recognition of marriage by the taxation system. Normally, such a wish is followed by its counterbalance: '... and US levels of corporate and personal taxation, too'. Yet such spending should surely not be an alternative to public spending funded by taxation but a complement to it. It may be that the excellent corporate engagement programmes found in US might not have developed under UK levels of taxation; by contrast levels of community volunteering (as opposed to employee volunteering) are lower in US than in UK.
Some UK companies such as City law firms could actually see the value of their voluntary work go down if the proposal became law. The provision of pro bono legal services to charities is rarely costed on company accounts as being at the level of the minimum wage and why should it be? If a charity receives £1,000 worth of legal advice in a day then this should be recognised. Companies may also not relish the idea of giving up not only employee hours but an additional cash value to those hours as well, which is apparently proposed. (We will know more when it is finally published.)
Will the new scheme distinguish between the value of a finance officer painting a wall or giving detailed budgetary advice to a charity? It appears not.
Finally, tax relief comes from the same pot as public spending. Any system of tax relief that supports good causes needs to: provide a net outcome which is socially valuable (there is much potential leakage in this one), be accurately costed and be justified within the Treasury that is overseeing massive cuts to many socially valuable charities.
Companies that do adopt community engagement through giving and volunteering are already doing so. Others should be encouraged to do the same through understanding the business case. I suspect that far from attracting 'Treasury interest' the CSJ, which does not have a brilliant record of influencing policy despite its antecedents, will not see this one pass into legislation.
Tom Levitt is a freelance consultant on cross-sector partnerships. He established Sector 4 Focus in 2010 to specialise in bringing together businesses and charities. He was Labour MP for High Peak from 1997 to 2010
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