Mark Lyttleton is an investor, business mentor and philanthropist who draws on his extensive experience of the business world to support founders and small business owners growing their businesses. Mr Lyttleton is also the Founder of Percent for Good, a charitable organisation that enables professionals to support inspiring charitable causes by facilitating and inspiring people to make regular donations. This article will explore some of the many advantages of charitable giving, from supporting much-needed causes that are struggling to meet the demand of their services to enhancing company brands and material tax incentives for individual donors.
Despite the vital work of charities all around the world today, the benefits of charitable giving are all too often overlooked, particularly from a commercial perspective. For any small or mid-sized charity, a regular donation of say a hundred pounds could provide a vital lifeline. There are also tangible benefits from the donor’s perspective too, enabling them to get involved with local causes and see and feel the impact of their donations. For commercial benefactors, charitable giving also offers a very valuable opportunity to improve the business’s reputation, attract new clients and instil a sense of loyalty and togetherness in the workforce.
In the United Kingdom, the Gift Aid scheme provides a valuable boost to charitable donations, with the government paying an additional 25% on gifts made by UK taxpayers. Charitable donations can also help to reduce inheritance tax liabilities. Where 10% of an estate’s total value is gifted to charity, the rate of inheritance tax is reduced from 40% to 36%, potentially amounting to a significant tax saving.
Payroll Giving schemes are becoming increasingly popular among employers, enabling workers to give to the charity of their choice directly from their gross salary. Payroll Giving saves charities administration costs, eliminating the need to claim back tax paid through Gift Aid as it is already included in the donation. Many employers even operate a matching scheme, effectively doubling the employee’s charitable donations to achieve an even greater impact.
For charities seeking to secure support in local communities, local businesses are a vital source of funding. From the business’s perspective, supporting local causes offers a variety of different benefits, including increasing engagement with clients and customers and creating internal opportunities. Businesses that give to charity also benefit from tax relief, though tax savings vary according to how much was pledged, how the donation was made and the business type. In addition to monetary gifts, commercial charitable donations can take other forms, such as a gift of shares or land. In the UK, a limited company that makes charitable donations of £1,001 or more benefits from 5% tax relief on those donations, up to a maximum of £2,500. Non-monetary corporate donations that also qualify for tax relief include donations of services or equipment and the sponsorship of a charitable event.
Getting employees involved in charitable activities is an effective way of boosting workforce morale and encouraging cohesion. In addition to pledging financial contributions to charities, many employees are keen to volunteer but simply cannot find the time. By providing employees with an opportunity to support causes they care about, businesses not only reduce staff turnover but also give their enterprise a significant edge in the recruitment process. Numerous studies show that employees prefer working for companies that are active in supporting the local community, particularly by providing staff with volunteering opportunities.
Finally, businesses that get their customers involved in charitable activities not only forge stronger relationships with existing clients but also attract new business. By supporting local charitable causes, brands demonstrate that they care about the community, creating a significant competitive advantage. According to a report by Forresters, 82% of consumers favour companies that support charity work in their local communities, highlighting the significant commercial benefits of charitable giving from the business owner’s perspective.