Financial sustainability

Spring budget submission

Charity Finance Group, in partnership with eight other voluntary sector bodies have written to the Chancellor ahead of the Spring Budget on 8 March.

The six proposals are focused on strengthening the economy. They offer concrete and vital policy options that could build a truly shared society. They are aiming to:

  • Support charities by reducing the tax burden
  • Allow charities to use their income as intended
  • Strengthen the strategic funding for the whole of the charity sector.

These proposals are:

  1. Reduce Irrecoverable VAT for charities.The current VAT system costs the charity sector £1.5 billion. Resources meant for public benefit should not be wasted due to complexities within a system that was designed without the unique position of charities in mind.
  2. Increase mandatory charitable non-domestic business rate relief to 100% - With the proposed £6.7 billion cuts to rate relief for businesses we could be in a situation where charities are paying more in business rates than businesses, thereby resulting in charitable funds subsidising private profit. The move to increase charitable rate relief to 100% would put civil society on an equal footing.
  3. Increase pay back of National Insurance Contributions for charities– This is to specifically address the additional cost of the National Living Wage incurred by charities. This would provide support relative to that currently enjoyed by private businesses(through measures such as corporation tax cuts) to the voluntary sector.
  4. Lower the Insurance Premium Tax for charities to 6%– IPT has increased by 100% in the last 18 months to 12%. This is estimated to cost the sector £87 million per year. By introducing a lower rate charities could save millions of pounds every year that could be spent on delivering public benefit.


The letter also outlined two spending proposals:

  1. Adopt a strategic approach to voluntary sector funding– Since 2013 the government has committed some £550 million of Libor fines to good causes. Our proposal calls for the government to ensure future funding for voluntary organisations outside of normal departmental spending (such as Libor fines) is distributed on an impartial basis according to the sector’s strategic needs. This is as opposed to individual charity giveaways.
  2. Increase funding for the Charity Commission– We propose the government increase funding to the Charity Commissions to fully cover the cost of delivering the Commission’s support and regulatory functions.

Download the full statement

Caron Bradshaw, Chief Executive of CFG says:

“After six years of giveaways to individual charities, it is now time for the Government to invest in strengthening the operating environment for the whole sector.

Charities are facing a triple whammy of increasing demand on services, increasing strain on income and increasing uncertainty over our future. With the proposals we’re putting forward today, the Government have a number of options to ease the tax burden on charities and relieve some of this pressure.

Whilst Government continues to believe that private business is the sole driver of economic growth and produces a tax system to match, it ignores the net contribution that charities make to UK Plc which threatens the whole sector and especially small specialist and local charities that are the bedrock of our society.

CFG is honoured to be part of a group of leading voluntary sector bodies, campaigning to improve financial conditions for the sector. I urge the Chancellor to recognise the value of our vibrant and diverse sector, and adopt our proposals forthwith.”

The organisations who have jointly submitted the proposals are; Association of Charitable Foundations, Charity FinanceGroup, Children England, Institute of Fundraising, Locality, NAVCA,Small Charities Coalition, Social Enterprise UK and Voice4Change England.

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