The sector has responded relatively positively to the 2013 Budget.

ACEVO, CFG, NCVO, CAF, the IoF and Social Investment Business all focus on positives in the Budget, but the Directory of Social Change stresses the failure of the Chancellor to pay back money borrowed from the sector to fund the London Olympic and Paralympic Games and UKSIF stated it was a missed opportunity.

ACEVO: social investment help charity leaders
Sir Stephen Bubb, CEO of ACEVO and chair of Social Investment Business and board member of Big Society Capital, said: “By committing to introduce tax incentives for social investment, the chancellor has delivered a diamond in the rough of on-going painful spending cuts.

"The further cuts will hurt, and it is essential that the government works with charities to deliver services differently rather than attempting to do the same with less. Our sector must be a participant, not an audience, to the upcoming spending review and the big decisions on welfare and spending.

"But social investment could help charity leaders achieve more against their ambitions, and the Chancellor's proposed tax incentives are a welcome step forward. ACEVO looks forward to working with the government on the details of this scheme over the coming months."

Charity Finance Group: Gift Aid into the 21st century
The Charity Finance Group's (CFG) reaction to the Budget was a relatively positive one.

Caron Bradshaw, CEO of the CFG, said: "We are pleased that calls in our submission to look at options for donors to make single Gift Aid declarations for specific digital platforms has been taken on board. We look forward to working with Government to make this a reality.

"This will help us to bring Gift Aid into the 21st century; HMRC representatives also provided reassurance at a sector event yesterday that the new Charities Online system will have the flexibility to deal with such proposals and we are delighted that there is a good level of joined up thought in HMT and HMRC on this.

"We are also delighted to see an announcement of a consultation on Social investment tax relief. This is a much needed incentive for social investment and have real potential to stimulate growth of incoming funds to this market.

"There will also be a new tax relief to encourage investment in social enterprise. It’s important the sector engage on the development of this to ensure that this is directed towards achieving the most social value.

"Measures to reduce costs to employers on staff fuel and pensions are really welcome. The Employment Allowance will make it more affordable for charities to employ staff and benefits the smallest charities and community groups – those that need it most. This additional £2,000 will make it easier to get the right skills where needed and direct more money to the cause.

"The duty on the Pensions Regulator to support scheme funding arrangements that are compatible with sustainable growth for the sponsoring employer will hopefully be a useful lever to achieve more flexible pension arrangements for charities and is in line with CFG’s recent recommendations to Government. A useful first step, but more needs to be done on multi-employer DB schemes."

NCVO: social investment tax reliefs
Also welcoming the Government’s consultation on a new social investment tax relief, was Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations.

He said: "Charities run expert, high quality services, but often struggle to find the finances they need to expand their work. Social investment is an increasingly important way for charities to grow.

"We’ve long argued that levelling the tax playing field to ensure that social investments are just as attractive as other investments is a crucial part of supporting this burgeoning market. This consultation is a very welcome step and we look forward to contributing.

"Currently, most social investment products are outside the scope of existing tax reliefs, so investors have had greater incentives to invest in traditional companies.

"Research by Big Society Capital published earlier this month suggested an extra £480m could be attracted into the social investment market if social investors were able to access existing tax reliefs."

An NCVO Commission on Tax Incentives for Social Investment last year recommended the government extend tax relief to cover social investment as well as traditional investment in order to benefit charities and social enterprises.

Since the Treasury announced its review of social investment tax barriers in last year’s Budget, Sir Stuart, NCVO staff and the NCVO Commission group have met with Treasury officials to inform their decisions, while Sir Stuart has also highlighted the issue in letters to the Chancellor and to the Economic Secretary over the past year.

CAF: delighted
The Chancellor’s Budget proposal to make Gift Aid fit for the 21st Century could help charities gain more than £700m a year, at a time when one in six charities fear they may face closure during 2013, the Charities Aid Foundation (CAF) said.

CAF is delighted that the Chancellor has responded positively to its long-standing calls for reform and will consult on replacing the current cumbersome system of Gift Aid.

The Budget Document pledges that: “The Government will consult on proposals to make it easier to claim Gift Aid through a wide range of digital giving channels, including options for enabling donors to complete a single Gift Aid declaration to cover all their donations through a specific channel.”

CAF has estimated that reform could help bring charities up to an extra £735 million by increasing public awareness of Gift Aid and boosting ways of giving such as Direct Debit and via social media which make it easy for people to ensure tax relief goes to charities.

A CAF survey of senior charity executives published last year found that:

17% said it was likely that their charity may face closure in the next 12 months

40% worry that their charity may have to close if the economic situation does not improve

49% say they have had to use reserves to cover income shortfalls over the last year

26% say they had cut front-line services

25% say they had made staff cuts

John Low, chief executive of the Charities Aid Foundation, which promotes charitable giving and provides financial services and social finance to not-for-profit organisations, said: “It is excellent news that the Treasury has responded positively to our long-standing call for a single Gift Aid declaration that people can use to cover all their charity donations. Such a reform will make it easier for people to add Gift Aid to all their donations whether via smartphones, tablet computers or more traditional methods.

“Gift Aid is vital for charities, but it simply isn’t fit for purpose in the 21st century. By bringing it up to date, charities stand to gain hundreds of millions of pounds a year.

“We need this fundamental reform of Gift Aid to make it work for the millions of people who support the causes we all care about.”

The Government also announced a commitment to introducing tax reliefs on social investment.

Low added: “The Chancellor's commitment to introducing a new tax relief to support social investment is very welcome.

“Britain leads the world in using social investment to make a difference to people’s lives. We need to increase the flow of investment capital to our pioneering social enterprises so they can create new ways of working, and innovative solutions to intractable social problems in Britain today.

“We will work closely with the Treasury to ensure that this welcome reform of the tax system does indeed deliver the social impact that innovative social entrepreneurs can create.”

Institute of Fundraising: welcome Chancellor’s decision to consult
Commenting on the Budget announcement on plans to improve the take up of Gift Aid through digital channels, Institute of Fundraising chief executive Peter Lewis said: “We welcome the Chancellor’s decision to consult on a range of options to encourage and improve the take-up of Gift Aid through digital channels.

"We’ve been working with the Treasury over the past few months and are glad that they are taking forward the views of our members on how Gift Aid can work better online and through text donations.

“This is also an ideal opportunity to look at the simplification of Gift Aid declarations that will help take up across all channels. We look forward to working with the Treasury on the consultation.

“We will also be looking closely at Treasury plans to cut employers’ national insurance bill by £2,000. This could mean that charities are able to hire more staff and contribute to growth as well as providing more support for good causes.”

Social Investment Business Group: pleased the Government has listened
Jonathan Jenkins, CEO of the Social Investment Business Group, commented: “The social investment market can play a key role in backing innovative ways of delivering essential services to communities across the UK.

"A recent survey of 188 organisations that deliver social impact in their communities by the Social Investment Business Group showed that at least £344m in additional finance was needed to grow or start new services. We need more incentives for investors looking for both social and financial returns to meet this growing demand from the social sector.

"We are really pleased that the Government has listened to this demand from the social sector and announced new tax relief measures that will encourage more private investors to use their money to create social impact.

"This measure will go a long way to helping social investors like us raise more risk capital to back ambitious social ventures deliver better services to our communities.”

DSC:clear moral case for swift return of funds
But the Directory of Social Change, noted that despite the Government’s focus on repaying its debts, in his Budget the Chancellor offered no news for the tens of thousands of charitable good causes which it borrowed from to fund the London Olympic and Paralympic Games.

The last Government annexed £425 million pounds of lottery money from the Big Lottery Fund to help pay for the Games.

DSC noted how this money should otherwise have been available to support charitable causes across the UK.

The Big Lottery Refund campaign, run by the charity Directory of Social Change, says this amount of money could help at least 10,000 charities to continue to provide vital services to around 8 million people.

In his statement to Parliament, Chancellor George Osborne claimed that £11 billion had been saved in departmental expenditure.

This is likely to include the £377 million unspent Treasury contingency for the Games, reported last year.

Despite this, Government continues to hold to the position that its debt to the Lottery good causes won’t be fully repaid until 2030.

Reacting to the Chancellor’s statement, DSC’s chief executive Debra Allcock Tyler said: "This Budget comes just over six months since the Paralympics closing ceremony, but the Government still needs to pay the £425 million debt it owes to communities and vulnerable people who sacrificed to support the Games. Despite some other positive measures for charities in the Budget, there was no reference to paying back the lottery – or anything related to the Olympics legacy for that matter. It’s not good enough."

Allcock Tyler continued: "There is a clear moral case for the swift return of these funds to the thousands of good causes which sacrificed to make the Games a success. It’s well past time the Government resolved this scandalous situation and repaid its debt to Britain’s charities. The clock is ticking."

UKSIF: disappointing Budget
The UK Sustainable Investment and Finance Association (UKSIF) highlighted the missed opportunity in UK Chancellor George Osborne’s Budget to focus on the long-term investment agenda.

UKSIF was disappointed that the Budget did not clearly strengthen Government support for measures recommended by the Kay Review of UK Equity Markets and Long-Term Decision Making, nor set out the Government’s next steps to encourage a focus on the long-term in capital markets.

UKSIF had hoped that the Budget would announce measures to mark developments in the run up to the Government’s scheduled progress report in Summer 2014 on delivering Professor Kay’s recommendations.

However, although the Chancellor acknowledged that the financial services industry encompasses much more than banking, he did not make reference to the influential and timely Review.

Caroline Escott, UKSIF head of Government Relations, said: “It is disappointing that the first Budget after the Kay Review seems to have been a missed opportunity for the Treasury to strengthen the long-term investment agenda.

"A clear public policy framework would encourage asset owners, asset managers and company directors to take the necessary steps to build a positive culture of long-termism along the investment chain.

"The lack of reference to Professor Kay’s report follows recent news that the Treasury decided not to give their backing to an economic review of resource depletion, climate change and growth that had been backed by other Government departments.

"We therefore urge the Treasury to help break down the barriers to effective long-term investment, and ultimately to help secure sustainable growth which boosts the economy while safeguarding the environment for future generations.”

4Children: welcome suppprt
Anne Longfield OBE, chief executive of 4Children, commented: “This Budget provides some welcome support to families on two of the big issues, buying a home and covering the cost of childcare.

"But with families set to be financially worse off in 2015 than they were in 2010, many still face an uphill battle to make ends meet against the soaring cost of living. With the Chancellor announcing that he will make a further £11.5bn of savings in the Comprehensive Spending Review, we will be campaigning hard in the coming months to ensure he does this in a way that is fair4families.”

Crisis: breaking the link between need and welfare spending
Leslie Morphy, chief executive of Crisis, the national charity for single homeless people, said: “Any encouragement to build more houses is welcome, though the key question will be whether this initiative works better than the many that have gone before at getting bricks into the ground and new homes actually built.

“There was nothing in today’s announcement to help the many hard-pressed people for whom home ownership will remain unrealistic. With 5 million people on housing waiting lists, homelessness, rents and living costs rising, and further wave of cuts to housing and other benefits just weeks away, we needed substantial effort to build more genuinely affordable homes to rent across the country.

“Breaking the link between need and welfare spending by limiting annually managed expenditure is a fundamental shift that will hit the poorest hardest. Cuts to welfare are already driving homelessness upwards – we fear further reductions will tip more households over the edge and into homelessness.

“With 5 million people on social housing waiting lists we have to ask whether selling off more of our dwindling supply of social housing at knock-down prices is the right priority.

"We would also be very concerned to ensure that stock that is sold off does not quickly become taken over by landlords to be rented straight back to local councils to house homeless and vulnerable people at much higher cost to the taxpayer."

NPC: some movement on the tax treatment of social investment
Dan Corry, chief executive, New Philanthropy Capital, highlighted the tax treatment of social investment. He said: “For the sector, there are a few interesting things in this very political budget.

"There is some movement on the tax treatment of social investment (although not clear what), a consultation (only) on simplifying Gift Aid in the digital giving era, plus a small bit of help for charities through the new Employment Allowance for the first£ 2k of employee National Insurance Contributions.

"But the main story is that growth is even worse than we feared, that cuts go on and will be bigger than we thought for 2015/16 as the debt is worse than expected, and that the deficit is still not going down.

"Beer tax may have come down but for the charity sector it is certainly not the time to crack open the champagne.”

Citizens Advice Scotland: little relief
But Citizens Advice Scotland said the budget offers little relief for the hundreds of thousands of vulnerable families who have been driven into poverty by the government’s welfare reforms.

CAS chief executive Margaret Lynch said: “This government’s benefit cuts have already driven hundreds of thousands of people into, or further into, poverty. With even further cuts now being announced, things are set to get even worse.

“So we were looking today for some signs that the government understood what was actually happening to those people and their families, and was willing to take steps to ease the burden on those who have been hit hardest.

"But there was nothing today that will help ease their plight. So for all those families, the misery will not only continue, it will get worse.

“The Chancellor talked a lot about the importance of aspiration. The trouble is that for increasing numbers of people in Scotland today, their biggest aspiration is to put food on the table to feed themselves and their children, or to pay this month’s rent or heating bill without going further into a spiral of debt.”

Blackbaud: lengthy consultation could hurt
Though, Blackbaud’s product manager for European Markets CRM, Azadi Sheridan, warned that a lengthy consultation could hurt charities: “More and more people are donating online yet many of the not-for-profits we work with believe that digital donors are not making Gift Aid declarations, put off by having to fill out a form each time they donate.

"The Government’s commitment to a consultation on making digital Gift Aid more simple is a positive step but it cannot drag on too long or be sidelined by other matters. Consultations can be a lengthy process and all the while discussions are on-going, charities are suffering.

"But a willingness to have a consultation on digital Gift Aid is perhaps as good a result as the sector could realistically hope for. We've noticed some of the new Charities Online changes have been made in response to the needs of charities, which gives us hope that involving a broad range of charities in this consultation will help reach the right conclusion.”

“Overall, the Government does seem to have listened to the considerations of those that work in the third sector.

"In addition to the Gift Aid consultation, the UK will be the first of the G8 nations to deliver on its 0.7 per cent aid promise, charities will be entitled to a £2,000 Employment Allowance towards their bill for NI contributions and in a bid to encourage private investment in social enterprise, there will be a new tax break introduced.

"All these measures will have a positive impact on the sector. Whilst I certainly wouldn’t go so far as to say they usher in a new era of Government openness to not-for-profits, perhaps it is a more receptive time for charities to lobby Government for change.”

Key Travel: Rise in APD
Outlining his disappointment for the strained not-for-profit sector, Steve Summers, CEO of Key Travel, said: “Air Passenger Duty for Key Travel’s not-for-profit clients was up by £1.2 million in the year March 2012 – February 2013, up to £4.4 million from £3.2 million the previous year, with one humanitarian client having to find as much as £261,000 to meet the highest tax of its kind in the world.

“Charities having to send staff on humanitarian missions, such as the DEC Syria crisis appeal launched today, will find themselves saddled with even higher air passenger duty following the budget."

Schroders: smooth asset and liability values
Jonathan Smith, UK Strategic Solutions at Schroders, commented: "The government has announced that it has abandoned plans to allow pension schemes to smooth asset and liability values.

"While this might disappoint some hoping for a less bumpy ride, the devil was most definitely in the detail. In reality, smoothing would have only temporarily suppressed the true risk associated with providing defined benefit pensions, at exactly a time when sponsors and trustees should be focussing on managing this risk effectively.

"In a further development, the Chancellor announced that The Pensions Regulator (TPR) will take account of a scheme sponsor’s ability to maintain sustainable growth when assessing a defined benefit pension scheme’s funding plan. TPR will issue further detailed guidance in its annual funding statement shortly.

"Greater flexibility will inevitably be welcomed; however additional flexibility should not come at the expense of robust funding and investment risk management."

Withers: little interest to charities
Alana Lowe-Petraske and Graham Elliot from law firm Withers, said: "Unlike last year, the Chancellor delivered a budget with little of specific interest to charities.

"Of course, charities and their donors will be relieved to see confirmation that the disastrous cap announced this time last year will now exclude charitable reliefs, ending - for now - fears of a 'philanthropy tax'.

"The budget also announced a Government consultation on practical issues affecting gift aid and digital giving which may provide some concrete solutions so donors can take full advantage of existing reliefs when giving via mobile and text and ATM.

"Osborne focused part of his statement on tax avoidance generally, referring to the introduction this year of the General Anti-Avoidance Rule (GAAR). He made pointed comments for those who 'make a living advising other people how aggressively to avoid their taxes', saying in his statement: This Government is not going to let you get away with it.

"This could not be more timely in light of the recent Cup Trust scandal, which involved 'circular' donations. Hopefully joined-up regulation between the Charity Commission and HMRC can live up to Mr. Osborne's promise.

"In addition, charities, like other employers, will be entitled to a £2,000 Employment Allowance per year towards their employer National Insurance contributions bill from next year.

"Charities hoping that charitable buildings might receive a reprieve and come within the scope of reduced rate VAT for the supply and installation of energy-saving materials will be disappointed - the withdrawal announced last year will come into effect on 1 August 2013, owing to a challenge by the EC Commission to the current law.

"University supplies of research to each other will suffer the same fate owing to EU law, and become taxable on 1 August, while HMRC are struggling over the terms of making supplies by profit-making new 'universities' exempt from VAT to put them on the same level as traditional universities."

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