Charities selling donor data may prejudice tax relief worth billions

02 September 2015

George Bull 

The latest exposé of the alleged abuse of donor data by charities should act as a wake-up call for those who wish to protect the sector’s tax exemptions worth £4.5bn annually

Charities are once again in the spotlight, with allegations that a widower’s details were passed on 200 times by various organisations including charities, leading him to lose £35,000 while receiving 731 requests for cash. The Fundraising Standards Board is now investigating this latest case, as is the Information Commissioner’s Office.

While it is too early to say whether any of the charities concerned acted illegally, there is an outcry that they are perceived to have abused the trust of their supporters by selling personal data to other organisations. That of itself risks driving donors away.

Once again, this illustrates public intolerance of conduct judged to be unacceptable even though it may be legal.

We have of course been this way before, with multinational corporations such as Amazon, Apple, Fiat and Starbucks accused of unethical tax avoidance even though those organisations protest that they had done nothing illegal. As all those companies are now facing European Commission investigations into their tax affairs, the Court of Public Opinion is shown to have real teeth.

The Court of Public Opinion may prove to be one of the hallmarks of our time. On 23 March 2010 David Cameron announced plans to crowd-source public reaction to the Budget by consciously seeking to harness the 'wisdom of crowds'. Little could he have anticipated how powerful that 'wisdom' would become.

Hardly a week now passes without suggestions that a form of conduct which is publicly unacceptable should be named, shamed and taxed. If charities, through their use of donor data, undermine their standing in the eyes of their supporters as well as the public at large, they risk calls that their tax privileges should be curtailed.

How much are these tax privileges actually worth?

Coincidentally, only last week HMRC published an update on the 2014-15 costs of tax relief provided to the charitable sector. The figures makes interesting reading:

 

 

£m 

Total

£m 

Charities

Tax repayments

1,210

 

 

Gift aid small donations

21

 

 

Non-domestic rates

1,690

 

 

VAT

300

 

 

Stamp Duty Land Tax

190

3,390

 

 

 

 

Individuals

Inheritance Tax

600

 

 

Payroll giving

40

 

 

Gifts of shares and property

60

 

 

Higher rate relief and Gift Aid

480

1,180

Total

 

 

£4,570

Apart from the overall total value of the relief, £4.57bn, many will be surprised to see that the biggest component is the relief from non-domestic rates at almost £1.7bn.

However one looks at the figures, they make a huge amount of difference to the good which charitable donors and the charitable sector can bring about in society. It would be shame, therefore, if the actions of a few charities now brought the sector, and the security of the tax relief regime from which it benefits, into disrepute.