Charity finance policy

General Election 2017

In the run up to the General Election on 8 June this blog post will provide you with all the resources and analysis CFG produces. We urge you to use them ...

In the run up to the General Election on 8 June this blog post will provide you with all the resources and analysis CFG produces. We urge you to use them to inform politicians and their parties of the transformative role charities can play and what they as political actors can do to ensure charities achieve their full potential.

To keep up-to-date with CFG's election coverage you can:

  1. Subscribe to the CFG blog.
  2. Keep an eye out for our weekly emails to members starting on Monday 8 May.
  3. Follow @CFGtweets, and the CFG policy team (@CFG_OBrien@AnjelicaSeason and @CFG_mcloughlin) on twitter.

General Election 2017: an opportunity for charities

The general election presents an opportunity for charities to reinvigorate their relationships with politicians and their parties. At CFG we know that charities will be focused on their beneficiaries during the campaigning period - whether this is through continuing to work directly with the people and communities they support, and/or pushing for policy change at the national and local level. It is important to remember that whilst charities are not going to feature heavily during the campaign, we remain a trusted sector working across the key domestic issues that prospective parliamentary candidates will need to be on top of  - e.g. employment support, health and social care and education. CFG wants to avoid the risk that charities will ignore this position of strength and slip into the traditional role of offering ideas for the next government across various policy agendas, without securing any support in return. To do this CFG's policy team will be working hard over the next five weeks to negotiate the support charities need in order to reach their full potential. Your charity can also play a role - CFG is urging charity finance professionals to make their policy colleagues understand the pressures that charities are facing and ask politicians to address them during the campaign. By advocating for an improved operating environment for charities we can secure better outcomes for the people and communities that they work for.

Pre-election resources.

1Unleashing charities to build a better society - CFG's essential election briefing for charities
Download CFG's essential General Election 2017 briefing and learn how the next government can improve the operating environment for charities, and what key messages your charity can be communicating to politicians, their parties and the government.
2. Manifesto for an Inclusive Economy
The Social Economy Alliance, of which CFG is a member, has put forward an ambitious, positive vision on how the next Government can harness the energy of businesses, community groups, charities and co-operatives to tackle the inequalities, divisions and lack of trust in the economy. The manifesto offers ideas to deliver a more inclusive economy and solutions to empower communities to truly take back control.

3. Charity Tax Plan: using the tax system to build a better future

This plan details CFG's proposals for charity tax reform. You will find fully-costed, detailed policy proposals including: Increasing mandatory business rate relief to 100%;  Introducing sector-wider rebates for irrecoverable VAT and replacing existing VAT exemptions with zero-rates; Giving higher rate taxpayers the opportunity to give all their Gift Aid to the charity; Radical reform to the Gift Aid Small Donations Scheme; Exempt charities from the Insurance Premium Tax.

4. Civil Society briefing for political parties

Ahead of the General Election on 8 June, the leading civil society representatives produced a joint-briefing for the major political parties. In this briefing we:

  • Put forward a positive vision for civil society working in partnership with the next government to establish a thriving economy, grow cohesive communities, and deliver effective public services.
  • Provide 3 example actions that the next government could take to unlock potential in the sector. These are: reducing the tax burden on charities and community interest companies; investing in community assets; reviewing the Social Value Act.
  • Call on all political parties to commit to working and engaging with civil society.

Election Manifestos - Charity Sector Analysis

CFG will be analysing all the party manifestos for their impact on the charity sector. 1. Labour Party Manifesto (12th May 2017) The Labour Party manifesto balances the budget through tax increases mostly aimed at business. For charities, VAT will be protected from tax increases which means that the irrecoverable VAT bill would not increase further. Increasing taxes for higher rate taxpayers could both push down level of donations from this group (as they have less disposable income) but would make Gift Aid tax relief more attractive. VAT relief on private school fees will be ended. The manifesto also outlines using “best standards on government contracts” and protecting workers rights. For charities, which receive £12.4bn in contracts, this could have positive implications if it leads to strengthening of legislation such as the Social Value Act. However, the introduction of “pay ratios” (20:1) for those receiving government contracts may have an impact on pay structures within some charities, although we assume most charities will not be impacted. Labour would keep the Apprenticeships Levy and seek to get more apprentices hired through public contracting, we know that that this would be challenging for many charities. Labour would also ask all organisations delivering public contracts to recognise trade unions. The cost of operating as a charity would increase through the introduction of £10 minimum wage, which is more than the £9bn an hour that it is expected to reach by 2020. Including taxes and pensions, this could increase the cost of an employee on the minimum wage by around £2260 per year. This would be a significant cost increase. There would also be the introduction of sectoral collective bargaining, which may impact the voluntary sector. 2. Liberal Democrats Manifesto (19th May 2017) The Liberal Democrat manifesto does contain some specific references for charities including the use of social investment to support the development of the sector. Social investment has been a mixed bag for charities so far and this would be a continuation of Coalition (and current government) policy.  It is not stated whether this would see more funding put into institutions such as Big Society Capital and Access Foundation or whether it would be a continuation of existing funding arrangements. CFG would recommend that the government does more to build the financial capacity of organisations so that they are in a position to develop business plans and ideas which can be investment ready. The Liberal Democrats will be increasing direct taxes to fund public services which may have a knock-on impact on disposable income, and therefore, disposable income for people to donate and spend with charities. Reform of the National Insurance system, if it leads to higher contributions from employers, could also have an impact on the cost of charities delivering public services.  Charities would need to monitor any changes carefully. There would be a significant increase in public service spending in relation to current plans and this may help charities working in challenging public service markets, particularly health and social care. The commitment to improve use of the Social Value Act may also help charities operating in these fields.  There would also be a continuation of free access to museums and galleries. The Liberal Democrats would also review the business rates system which could have an impact on charitable reliefs – charities will need to make sure that their voice is heard on this issue. Employers would also likely see a strengthening of employee rights which could increase the costs of doing business, particularly those that rely on workers on zero-hours or fixed term contracts. There would be significant changes to the constitution and to civil rights, which could impact on charities operating in these sectors. 3. Conservative Party Manifesto (19th May 2017) The Conservative Party Manifesto will push back the date at which the deficit is cleared by several years, which should in theory give a shallower profile to cuts in public spending and give charities more time to adapt. However, as with other parties, there will be further increases in spending areas such as Health and Education which may trickle down to charities working in these sectors. On tax, the level of VAT will be kept the same although there is no comment on whether that will mean changes to special rates or exemptions. Charities will need to be cautious that government does not expand its income by scrapping valuable tax reliefs. Business rates reform is again on the agenda, and charities need to monitor developments in this space carefully given the importance of business rate relief which is worth over £1.5bn to charities every year. A number of new “funds” are going to be created by government in culture, regional development and UK-wide projects. It is important that the work of charities is included in such funding, particularly if these are likely to be funded by the use of monies which currently go to the European Union. Two areas of low-key focus, but potentially important for charities are on countering extremism and data protection. Firstly, on the data protection side, a new Data Use and Ethics Commission could have an impact on charities data collecting which has already been under significant attention from the ICO and media. Charities must be represented on the Commission, on an operational level as well as in terms of their expertise on protecting vulnerable people. Secondly, there is a reference to civil society being part of the Commission on Countering Extremism. We know that the regulator and government have expressed concerns in the past about charities being infiltrated by extremists. It is important that this Commission looks at the positive work that charities do, not just the potential risks.   « Back to all blog posts