SMALL CHARITIES COALITION - Manifesto

As a board member of the SCC I thought you'd like to read and hopefully comment on our top recommendations for the 2010 general election

Introduction
The Small Charities Coalition exists to help small charities access the skills, experience and resources they need to achieve their aims.

We know from our own experience that many small charities suffer from a chronic lack of resources, skills and expertise, despite having an abundance of passion and commitment. The Small Charities Coalition is like a voluntary sector matchmaking service, matching small charities with other organisations that have the skills, experience, and in some cases resources, that the small charity lacks.

The Small Charities Coalition is about helping small charities to help themselves, and enable them to have access to the considerable expertise of their larger counterparts in the charitable sector or those from other sectors.

Our services include:
• Matchmaking small charities with other organisations to increase resources or improve knowledge and skills;
• Providing support, guidance, encouragement, advice and information to small charities;
• Presenting personal and vocational development opportunities for individuals who volunteer to help small charities; and
• Offering a resource for small charities to get their voices heard within the media and Government.

Manifesto Recommendations

Advice and support
HM Revenue & Customs and the Charity Commission should develop a section on their websites specifically for small charities.
Our recent survey of small charities found that around a third of respondents believed that HMRC information on tax issues is too complex and technical to understand; and a third did not know what requirements do or do not apply to them. In addition, although many respondents found HMRC’s and the Charity Commission’s websites helpful, it was not always easy to locate the relevant information. Currently a lot of guidance is written with larger charities in mind. However, it is often the case that different rules apply to small charities. Furthermore, many smaller charities are run exclusively by volunteers without the funds to engage legal or accountancy professionals. We believe that HMRC and the Charity Commission should jointly create a specific online portal dedicated to small charities, including step by step guides written in plain English.

HM Revenue & Customs and the Charity Commission should retain and expand their telephone services.
The Small Charities Coalition welcomes online developments by the Charity Commission and HM Revenue & Customs. However, we also stress that many small charities do not have easy access to the internet and will face increasing difficulties if the internet becomes the preferred or sole channel of service delivery. We believe that HMRC and the Charity Commission should jointly create a bespoke telephone service for small charities, including tax, fundraising and other regulatory advice.

Deregulation of small charities
More charities should benefit from the lighter regulation enjoyed by ‘small charity’ status.
At the moment there are around 100,000 ‘small charities’ with a gross annual income of less than £10,000 who benefit from less onerous reporting requirements. In particular:
(a) small charities are not required to complete an Annual Return (although they must inform the Charity Commission if any changes to the charity’s details, including income and expenditure.
(b) if the charity’s income does not exceed £25,000, the trustees are not required to file their Trustees’ Annual Report (although they must complete it and make it available); and
(c) small charities can prepare ‘receipts and payments’ accounts (rather than more complex accrual accounts) and these need not be audited.

We believe that these thresholds should be raised so that more charities benefit from lighter regulation. It would also be beneficial for small charities to ensure that the monitoring thresholds are co-ordinated and aligned across the UK jurisdictions.

Public consultations should consider the regulatory impact on small charities
In recognition of the role of small charities within the Third Sector, public consultations should consider the impact of any proposal on small charities and not just larger ones. After all, continuing change has a disproportionate impact upon smaller charities.

VAT
Simplify the rules; The current VAT rules for charities are extremely complex and reform is long overdue.
Encourage collaboration by exempting shared services. Currently, charities which charge each other for shared services currently have to pay VAT. This often ends up costing more than simply working separately. We therefore support proposals to exempt this form of cost-sharing from VAT. This will encourage greater collaboration between charities.

Gift Aid
Simplify the Gift Aid rules
We support the simplification of rules for Gift Aid and the further promotion of its use. We also believe that an individual’s donation should be Gift Aided unless expressly stated. This would make a larger number of donations tax-efficient and increase charities’ income. These proposals are also supported by NCVO.

Extend the transitional relief
We propose to extend the transitional relief beyond the current end date of April 2011. This is in the hope the end of transitional relief will coincide with the implementation of Gift Aid reforms. This proposal is also support by the Institute of Fundraising.

Trading
Raise the limit on the small charities’ trading exemption
We call on the Government to raise the small charities’ trading exemption from the current limit of £50,000 to £250,000. This would give charities greater flexibility and obviate the need to create a subsidiary. This proposal is also supported by the Charity Finance Directors’ Group.

Treat sponsorship and advertising the charity’s work as primary purpose trading
We support calls to treat as primary purpose trading (a) sponsorship where it is directly related to charitable purposes and (b) advertising that supports the charity’s charitable activities. Many charities give corporate donors recognition for their sponsorship of an activity or event. However, this can have adverse tax implications for the charity if appropriate arrangements are not put in place. In particular, if HMRC believes that the substance of the relationship involves the charity providing advertising services, its sponsorship income will be treated as trading income. If the level of sponsorship takes the charity over the threshold of the small charities’ trading exemption, the charity would need to divert the sponsorship income through a trading subsidiary. We believe that donations currently treated as taxable sponsorship should be reclassed as primary purpose trading so that charities are not forced needlessly to establish a trading company to receive them. This is cumbersome, expensive and serves no useful purpose. In the same way, advertising income should also be reclassed as primary purpose trading if it is revenue that supports the charity’s charitable activities. These proposals are also supported by the Charity Finance Directors’ Group

Recognising volunteering
We support NCVO’s proposals to formally recognise the importance of volunteering.
Introduce a bank holiday dedicated to volunteering.
We believe that a bank holiday dedicated to celebrating the voluntary sector and recognising its role in society would encourage greater participation and build community.

Give employees a right to take five days’ paid leave for voluntary work
We believe that employees should have a right to take additional paid leave for voluntary work. We believe this will particularly benefit smaller charities which foten do not have the resources to pay for staff.