Encouraging charitable giving under the Giving Pledge
Do you feel inspired by the philanthropy of Bill Gates and Warren Buffet when it comes to making a charitable donation? Every donation, no matter how big or small, really counts.
This article considers how the examples set by Bill Gates and Warren Buffet are changing the world, and how donations can be made tax efficiently.
The giving pledge – what’s it all about?
Bill Gates was recently named the world’s most admired man according to a YouGov poll. The Microsoft founder is one of the world’s most successful businessman, and also one of the most generous when it comes to giving to charity. Forbes magazine places him as one of the US’ top philanthropists, second only to Warren Buffet.
Buffet and Gates have both used their influence to promote philanthropy in recent years by setting up the Giving Pledge. The Pledge is a list of billionaires who have committed to give over half of their wealth to charitable causes. The Giving Pledge started with 40 signatories in the United States in 2010. There are now 175 billionaires on the list from 22 countries. It has also been signed by business leaders such as Mark Zuckerberg, Lord Sainsbury and Richard Branson.
Scottish business leaders have also signed the Pledge including the founder of The Wood Group, Sir Ian Wood. Sir Wood is a trustee of his own charitable foundation, The Wood Foundation. The foundation works with 45,000 smallholder tea farmers in Tanzania and Rwanda and to tackle childhood poverty in Scotland. The Wood Foundation has already committed £9.1 million to programmes helping young people in Scotland.
Speaking about the Pledge Gates commented: “It’s exciting to see how serious and energetic people are about philanthropy, and this truly applies at all levels of giving…People are inherently generous and they want to make a difference.”
Bill Gates set up his own charitable foundation, the Bill and Melinda Gates Foundation, in 2000. It has so far spent $13 billion helping to accelerate the end of AIDS, tuberculosis and malaria as epidemics. It appears to be working, helping to reduce malaria deaths by 60 percent and new HIV infections from 3 million to 1.9 million by 2015.
How can we maximise our donations?
For those who are not billionaires, we can still help to make a difference. There are many tax breaks that may be available to you if you want to make a charitable donation allowing you to maximise the impact of your donation.
For example, there is no Capital Gains Tax (CGT) due on gifts of shares, land, property or other assets to charity. The value of the gift in the charity’s hands will be the actual value at the date of the gift. There will be no CGT payable by the donor, even if the gifted asset had significantly grown in value and would otherwise have been liable to CGT if it had been disposed of in some other way.
Charities can also reclaim Income Tax from any donations they receive under gift aid, which will increase the value of the donation by 25%. For higher or additional rate tax payers, charitable giving under gift aid also benefits you directly. Those paying income tax at 40% can claim back £25 for every £100 donated and those paying income tax at 45% can claim back £31 for every £100 donated. For further information on the new Scottish rates of income tax, view our recent article here. This can be claimed by individuals directly through Self Assessment, or can be passed onto the charity itself at the discretion of the donor.
So, perhaps its time to think about giving back in some way by making a charitable donation. It doesn’t matter how you give, whether it’s in the form of cash, goods or property. Gift aid especially will benefit both the charity and the donor, if the donor qualifies for gift aid.
Go on, be inspired and give it a go!