My name is Greg Secker and I am a philanthropist.
Far from being an honorable confession or something that I can be proud of, thanks to the government, the term "philanthropist" has become a dirty word. For, according to the government, philanthropists are all tax-dodgers who only donate money to charity in order to lower their tax bracket and minimise the amount of funds they are giving to the government.
Starting in April 2013, the government is introducing a new limit on the amount of income tax relief an individual can claim by donating money to charity. The cap is being set at £50,000 or a quarter of an individual's income - whichever is greater.
According to the government, this cap is being applied because the richest people in society are abusing the current tax relief system by making donations to charity to avoid their tax bills. Indeed, they claim that as the system stands many of the country's wealthiest inhabitants are paying less tax than their poorer counterparts by choosing to make large donations. At an extreme, it is even possible to bring tax down to zero. In a recent survey, they even found that 12 people in the country who earn more than £10m pay less than 10% tax due to their donations and tax relief.
These comments are not only insulting, but dangerous. Charities across the country are dependent upon the generosity of their supporters, and without large gifts, the majority of them couldn't function at all. What is it going to take for the government to see sense? How many charities will have to shut down before they realize the gravity of their actions?
Charities have already been hard hit by the recession and the current financial climate. Charities are now expecting to lose further millions of pounds from donations - money they cannot afford to lose.
There are a number of reasons people donate their money to charity. They may have personal motivations or they may simply want to give something back to their community. Personally, I set up the Knowledge To Action Foundation along with my partner Katherine as I wanted to use my success to make a difference and help build a compelling future for those who need support the most. It is clear to see, however, that tax avoidance is not a key reason for why the majority of philanthropists donate to charities.
It is important to note however, that donors do not gain or benefit from donating their money. They do not end up with more money in the bank. The simple difference is, that when they give money to charities, the donors can choose where their funds go, which is not an option when you pay tax.
Naturally, charities and philanthropists alike are objecting to the new cap as it is putting the wealthiest people off donating to charity. Last year over £11 billion was donated to charity, and of this staggering amount, 45% came from just 7% of donors. These donors are the very people who are likely to be affected by the cap.
Amidst public backlash, the government are hinting that a compromise may be struck and are promising that talks have begun. In a recent survey by the Charities Aid Foundation, 55% of voters want the government to rethink the cap. A number of mitigating measures have been discussed in the press from raising the cap to 50% of their salary to allowing donors to roll their unused allowance from one year to the next, and the government are claiming that they want to take time considering the situation, listening to the people and ensuring their decision is right. Surely this is too little too late? Now the government have condemned philanthropists as tax avoiders, it is too late to take this back and change their minds!
Ultimately, the tax cap itself, which could naturally have a detrimental affect on charities, is going to be less detrimental than the effect caused by the attitude the government have shown to philanthropists. Demonising philanthropists and suggesting they are only in it to dodge tax rather than that they are genuinely passionate about the cause, is corrosive, and British philanthropists, although generally more reserved than their American counterparts, need to feel that their deeds are encouraged and supported.
If the government takes this away from philanthropists, and turns philanthropy into a selfish rather than selfless act, then the effect of the tax cap could be far greater than anyone is predicting, and that is when charities will really begin to lose out.
Follow Greg Secker on Twitter: www.twitter.com/@gregsecker