Under pressure Charities need a Budget Break

By Denise Charlton,

Charities, community groups and organisations working with vulnerable people are under pressure like never before. The Covid-19 pandemic is pushing many to breaking point as they respond to hugely increased local needs while at the same time experiencing dramatic falls in funding.

 The impact of the virus has created a perfect storm with demand outstripping support.

 Whether it is meals on wheels, ensuring the mental health or wellbeing of friends and neighbours or being a vital lifeline to shops and pharmacies and other services, across the country volunteers and community workers have never been needed more.

 They have stepped up to the plate from the moment the first Covid-19 case was confirmed on 29th February and its subsequent spread throughout the country.

 Those in the frontline have been carrying out vital services in a way which is safe for both the people they care for and support as well as for their own wellbeing. However, behind the scenes another challenge has deepened.

 The closure of charity shops, the inability to carry out physical street collections as well as the impact of Covid on household incomes has seen donations and financial support fall.

 At The Community Foundation for Ireland we found that since the virus more than half the groups we work with and support are facing difficulties. As a philanthropic foundation which has for over two-decades provided €60m to communities we decided we must respond.

Covid-19 Response

The first step was to address immediate needs. A €1.5m fund was established with the support of our private donors for groups seeking urgent help and assistance. This was followed by the huge success which has been RTé Does Comic Relief.

This unique partnership of 1.4m television viewers, corporate donors and a substantial funding contribution from Government saw €6m raised. The process of distributing that to groups and services is now underway.

 While the generosity of people has once again come to the fore during this time of crisis, it is also clear that if we are to have a more sustainable and long-term impact in tackling social issues that more needs to be done.

 Taxing charity

 Government policy regarding larger charitable donations has long been questioned and needs to be addressed. Currently gifts and contributions over €5,000 fall under a 2013 tax donation scheme. These regulations which may have been well intentioned have not had the desired results.

It was hoped that the Scheme would allow charities to access larger funds to undertake strategic planning for the future and put in place the measures needed to respond to a crisis such as Covid.

 Instead it has left organisations tied up with red tape. The administrative burden placed on charities to seek the tax relief on these larger donations is such a drain on resources that the cost of responding often outweighs any benefits to be gained.

 The result is that only 1-in-5 charities engage with the tax relief scheme at all. While for those who do make the effort almost 9 out 10 claims for tax back are rejected. The unintended consequence is that money donated as a major gift, donation or a legacy by an individual, a family or from a private donor can end up instead as taxes.

 It is estimated that since the 2013 scheme was introduced that almost €50m which was intended to support people with disabilities, the health and wellbeing of our young people, the needs of older people and many other important causes is instead going to the taxman.

This has also seen Ireland fall behind in terms of philanthropy. There are relatively few grant making trusts and foundations when compared with other countries.

 The overall result is less than 1% 0f charitable donations are more than €5,000 – the lowest level in Europe, stifling the ability of organisations to make long-term sustainable plans.

Budget 2021

 This weakness in our flawed system could be easily fixed if a recommendation made in a 2012 Forum on Philanthropy Report on Major Gift Giving was implemented. It wants to give a direct tax incentive to the donor. This is the only recommendation of the Forum not to be acted upon.

The need for our charities to have reliable longer-term funding has never been greater. We all recognise that and so do most other countries which unlike Ireland incentivise large donations.

Budget 2021 and the Finance Bill offer an opportunity to create the environment to make that happen. It has the possibility of moving our frontline community services from constant firefighting, to a position where they have reliable funding to make plans for better services, resources and supports at community level.

Our non-profit sector has been a crucial, on the ground support during the pandemic. local charities have been there to support our family and friends. The challenges now facing these organisations has never been greater. They need support if they are to continue to be there to support us when we need it.

 Denise Charlton, is Chief Executive Officer of The Community Foundation for Ireland.