Directory of Social Change, the leading provider of information about charitable trusts and foundations in the UK, has argued that introducing a requirement that trusts distribute 5% of the value of their assets annually would be unworkable and undesirable.
Responding to the Government’s Giving green paper consultation, which asked for views on how to improve charitable giving in Britain, DSC’s Head of Policy Jay Kennedy said:
‘Hundreds if not thousands of trusts and foundations engage in both operational and grantmaking activity to meet their charitable objectives. A 5% payout rule based on the asset value could mean trusts might have to dispose of assets that are serving charitable objectives in other ways, just to meet the requirement.’
For example, a trust set up to help older or disabled people might use its property to house and support them, and also run a small grants programme worth far less than 5% of the total value of the trust’s assets.
Kennedy went on to say: ‘A 5% payout rule could conceivably lead to the trust having to sell off the property where the older and disabled people live, to fund an increased grants budget. That would be completely and utterly bonkers. There are plenty of other problems with this idea. The fact that the Charity Commission’s budget has been so severely cut by the Government means it’s hard to see how such a rule could even be properly implemented or regulated.’
DSC comprehensive response to the Giving green paper includes a more in-depth critique of the 5% payout idea, plus views on company giving to charity and government grantmaking practice. It includes five recommendations for government and five for the voluntary sector to improve giving.
Learn more.