Widely welcomed as good news, the Chancellor announced a new £80 million fund to support community action and voice. The community organisations’ fund, to be operated through the Office of the Third Sector, will provide core funding to grass-roots community organisations. The fund will award the £80m over four years, using local distributors with relevant community knowledge to award specific grants.

Chief executive of NAVCA Kevin Curley said this finally represented some “good news” for local voluntary groups, following recent losses in terms of Community Chests and Single Regeneration Budgets as well as a slew of rejected applications to the BLF’s Reaching Communities fund. “The need for small grants was a repeated cry at all the local Treasury Review consultation events last year. So, the government has listened and the new money will help,” he said.

He acknowledged that that fund was quite small, at £20 million a year, but added: “NAVCA members will be able to use it to lever more grant aid out of local strategic partnerships and local area agreements, in those areas where the local council understands what the sector needs and works well with it".

Mubeen Bhutta, policy officer at NCVO also welcomed the announcement of the new fund saying: “In our responses to the Third Sector Review we pressed for a small grants programme to support local groups’ voice and advocacy work and look forward to further details on how this fund can make this a reality.”

Tax issues

The Chancellor confirmed that there would be a consultation with the charitable sector on how to increase take-up of Gift Aid, and that this will be accompanied by an awareness-raising campaign. He also said that the government would be working with the sector on payroll giving and would publish guidance on tax-effective giving for individuals.

The timing is good for such a review, as Brown’s major announcement of a reduction in the basic rate of tax from 22% to 20% next April is likely to have an adverse effect on charity coffers.

Megan Pacey, director of policy and campaigns at the Institute of Fundraising described Brown’s on-going commitment to tax-effective giving as heartening, but warned that the reduction in income tax was likely to result in a reduction in income for charities. “Many charities are still not using Gift Aid to its full potential,” she said, “but for the small number that do, this change will result in a small drop in income from the contribution that Gift Aid makes.”

This reduction, according to the CFDG, would be in the realm of £70 million annually, and the umbrella group has called for urgent reform of the Gift Aid system. Chief executive Keith Hickey said: “The decrease in the basic rate of income tax from 22 pence down to 20 pence while good for the general public will roughly result in a reduction of 11.4% in Gift Aid for all charities or in monetary terms a loss of over £70 million. We will push for a simpler, opt-out system to drive up usage.”

A statement from the Charities Aid Foundation confirmed that the tax regime change could see the amount of Gift Aid reclaimed drop from £625 million to £554 million annually.

“The UK already enjoys one of the most favourable environments for giving to charity of any country in the world,” CAF said. “But charities consistently fail to reclaim the tax that’s currently available to them because they believe it’s ether too costly, too complicated, or they simply don’t understand the rules. As a consequence, around £700 million goes unclaimed by charities every year on donations that could so easily be converted to Gift Aid. So we very much applaud the commitment from Gordon Brown to help charities to make the most of Gift Aid.”

Brown also announced that the Futurebuilders fund would be extended to support all public service delivery activity undertaken by the third sector, and that from 2008 the sector would be able to apply for funding to deliver in all areas of service provision.

In addition, he announced a second consultation on unclaimed assets in the spring (click here for the Charity Times article on unclaimed assets) and that the government intended to discount tuition fees for those students who volunteer.

On this final point, Christopher Spence CBE, chief executive of Volunteering England said he welcomed the Chancellor’s commitment to increasing the quality and quantity of volunteering opportunities, but was concerned about the proposals to encourage students to volunteer by receiving a discount on their tuition fees.

“While efforts to increase community participation amongst young people should be lauded, such activity should not be described as volunteering,” he said. “Volunteering is – in the government’s own definition – unpaid and freely entered into.

“VE believes that, as well as being contrary to the spirit of volunteering, offering incentives sets a potentially dangerous precedent which other voluntary organisations may feel pressurised to follow, leaving them open to severe legal problems and destroying the nature of volunteering itself.”

Complete details of this year’s budget can be found at:
/www.hm-treasury.gov.uk/budget/budget_07/bud_bud07_index.cfm

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