Spending Review
16 September 2003
The Government is committed to building strong, healthy and active communities. The businesses that operate within communities can make valuable contributions to this aim.
Through the Corporate Challenge the Government wants to encourage a real increase in the numbers of companies involved in communities. The Home Office citizenship survey (2001) showed a significant difference to the level of employee volunteering and other forms of community involvement where employers support the efforts of their staff. Through this Challenge the Government seeks to encourage more employers to adopt such policies and provide them with the tools and advice to do so.
The Corporate Challenge seeks to increase involvement in community activity in three main areas:
"The Government is determined to do more to build, strengthen and extend the links between the public, private and voluntary sectors" Gordon Brown at the "Future Wealth of Nations" Conference, March 2003
The first stage in the development of the Corporate Challenge is to ensure that the benefits of involvement are clear, that the range of incentives and support available is widely recognised and understood, and that best practice is spread through the corporate sector.
Corporate Community Involvement is a three-way partnership between the employer, employee and the community. As with any partnership, there are positive benefits for all those involved.
"Corporate and individual responsibility go alongside Government responsibility" David Blunkett speaking to the CBI in May 2003
Companies win Contrary to common perception, there can often be a strong business case for a company to be involved in the community. Experience shows that companies which have active community policies develop an enhanced reputation in the community. This can present new opportunities for business, have positive effects on staff morale and employee retention, and attract new employees - graduate recruits in particular often expect their employer to have good community policies and will be attracted to those that do.
Staff win Staff who take part in their company's schemes, whether by giving time or money, tend to stay with a company longer - they take pride in working for a company that cares about the community. The presence of a Payroll Giving scheme allows the contribution an individual makes to charity to cost them less, and where employers offer matching donations, it demonstrates the employers' support for the individual staff member's charity of choice. Volunteering can give staff the opportunity to increase their understanding of community issues and develop skills in a way that would not be possible in the work place. They can also have fun whilst doing it - often getting to know their work colleagues better through group volunteering and promotional activity and developing broad networks of contacts.
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Thames Water UK and Ireland Volunteering Programme Staff involvement is firmly integrated in Thames Water's community investment philosophy. They believe that volunteering helps develop valuable skills in staff as well as offering balance to their everyday roles. The range of opportunities includes the WaterAid Speaker Programme, where employee volunteers speak to community groups about the WaterAid charity which is dedicated to the provision of safe domestic water, sanitation and hygiene education to the world's poorest people. Thames Water gave 70 talks last year and raised £4000 for WaterAid. Staff are also encouraged to donate to charity by running regular promotions of the Payroll Giving scheme Give As You Earn. One of the most unusual ways they have promoted Payroll Giving is by putting the Give As You Earn logo 'Ernie' and Thames Water logo on boiled sweets and giving them to staff. |
Voluntary and community organisations win Most voluntary and community organisations (VCOs) have very limited resources and rely heavily on volunteers to deliver their objectives. Corporate involvement helps by providing valuable skills, funds or in-kind support that the VCO would not be able to secure elsewhere. Corporate involvement can support, strengthen, and raise the profile of the VCO and the issues it seeks to address in the wider community. The experience of being involved in community activity can often lead to the impulse to make a financial donation and, through Payroll Giving, donations are worth more to the recipient.
As a part of the Government's commitment it seeks to facilitate and incentivise companies to get involved in two ways. The first is through the provision of tax incentives, and the second is through support for a range of organisations which seek to ensure companies have access to all the information and resources they need. The Government has developed and extended a range of tax reliefs aimed at encouraging charitable donations - worth a total of £2billion a year to charities - many of which are directed at companies and their employees.
Money Your company can get tax relief on any gifts of money. There is no limit to the amount the company can give. It simply pays the money to the charity and deducts the amount when working out its profits for corporation tax purposes, this can include matching employees Payroll Giving donations.
Secondment of employees If your company allows an employee to work for a charity - whether for a period of weeks or months, an odd day, or just a few hours on a regular basis - it can deduct any costs incurred in connection with the employment of the person on secondment (including his or her salary) in calculating profits for tax purposes.
Gifts of shares or securities Your company can get tax relief for gifts to charity of certain shares and securities. This is in addition to the relief when calculating capital gains. The company can claim this relief if it gives, or sells to a charity at less than market value, any qualifying shares or securities. Your company simply calculates the value of the shares on the date of disposal (plus any incidental cost of disposal, less any benefit to the company of disposal) and deducts that figure in working out its profits for corporation tax purposes.
Land or buildings Your company can also get relief for any gift of land or buildings, whether freehold or leasehold, as long as the whole interest is given. The company can deduct the full market value of the property (plus any incidental costs of disposal, less anything received in return) from its profits for tax purposes. The charity has to agree to accept the gift of the property.
Equipment or trading stock The gift must be an article which is either:
When your company gives to charity an article manufactured or sold in the course of its trade, the market value of the gift is not included in calculating the taxable profits of the trade. In the case of machinery or plant used in the course of the trade, it is treated as having been disposed of at nil value for capital allowances purposes.
| KPMG KPMG re-launched Payroll Giving in 2002 and enrolled 120 champions across the country to help communicate the scheme. Staff voted to choose a Staff Selected Charity to support through their donations and KPMG match the first £50,000 of donations to that charity as well as covering the administration costs. The re-launch resulted in a 112% increase in the number of donors supporting the Staff Selected Charity. KPMG also believe that employee volunteering is a very effective way for a company to make a positive contribution to the communities in which it operates. Volunteering can bring real benefits to community and charitable groups, as well as giving the employee a sense of achievement and help in acquiring new skills. It is a win-win-win as it's good for the community, the employer and the employee. |
Sponsorship payments Your company can claim relief for payments to sponsor a charitable activity, provided the payments are made wholly and exclusively for the purpose of the trade, and are not of a capital nature. A payment made to get publicity for your company's name or product, which represents a reasonable return for the amount paid, will normally attract relief. The company deducts the sponsorship payments in calculating its trading profits for tax purposes. Whether a particular payment qualifies for relief will depend on the individual circumstances.
Payroll Giving Donations through the payroll can be made from pre-tax pay. Your employees authorise you to deduct donations from their pay and pass these to a Payroll Giving agency approved by the Inland Revenue - the agency then distributes the money to the employees' chosen charity. Until April 2004, the Government will add a further 10% onto the donation increasing its value to the charity even further.
If in doubt, contact your Tax Office. More information is available at http://www.inlandrevenue.gov.uk/
| BT BT matches staff donations through Payroll Giving to the tune of £1 million per year as well as paying the administration costs. Over 14,000 employees participate, donating more than £1.8 million annually. The mechanism has been promoted through a series of roadshows in BT buildings around the UK as well as on the intranet and internal BT publications. BT employees also have the opportunity to donate their time via the BT Volunteers initiative. This enables BT and ex-BT people to volunteer in UK schools to help children improve their communication skills. Other opportunities include answering calls during telethon appeals, providing work experience for students, or organising team-building events to support community or environmental projects. http://www.btvolunteers.org/ |
The Government recognises corporate involvement is not just about tax benefits. In order to get involved companies need information about the opportunities available. There is a range of sources of information and advice. These resources help to build relationships between the corporate and the voluntary sector, provide inspiration about opportunities available and can act as a brokerage service for opportunities between the sectors.
Business in the Community (BitC) is a unique movement of over 700 top UK companies that runs a number of programmes to assist in getting your company involved in the community. Among these are: Cares - the main business-led employee volunteering programme in the UK. It acts as a broker between local businesses and local voluntary and community organisations to allow employees to give their time and skills to their communities. http://www.bitc.org.uk/ Community Mark - a national standard for small and medium-sized businesses, benchmarking and recognising business involvement in the local community and providing a simple model to maximise community impact and business benefit at the same time. CommunityMark
Employees in the Community Network - part of the National Centre for Volunteering, this membership network is made up of employee volunteering professionals from companies, charities and the public sector. It provides information and advice on how to set up and run employee volunteering programmes. http://www.volunteering.org.uk/Resources/goodpracticebank/Specialist+Themes/Employer+Supported+Volunteering/Set+up+an+Employee+Volunteering+Scheme.htm
Community Service Volunteers (CSV) - among its many volunteering projects, CSV has a corporate team that acts as a source of information on corporate involvement as well as brokering employee volunteering with a wide range of 'blue chip' companies. CSV - Employee Volunteering
The Giving Campaign - supported by the Government and the charitable sector, the Campaign seeks to increase the amount of money given to UK charities. One of the aims of the Campaign is to promote tax effective giving mechanisms, and to provide charities and companies with the tools to be able to make the most of these mechanisms. The Campaign has produced guidance on a number of aspects of Payroll Giving including two free toolkits to assist with its promotion - one for large employers and one for SMEs. The Campaign has invited employers to aim to achieve a 10% participation rate in Payroll Giving.
Payroll Giving Agencies - a number of agencies administer Payroll Giving, removing any administrative burden from the company offering the scheme. The agencies distribute the donations to charities and charge a small administration fee. A list of approved agencies can be found on the Inland Revenue website. http://www.inlandrevenue.gov.uk/
Want to become involved?
A range of different approaches to promoting community activity have been proven to work for different companies; from focusing on visible support at the top of the organisation, to appointing staff champions to encourage peers to become involved in volunteering or Payroll Giving, and from providing accessible online opportunities to sign up, to setting up information desks at key locations. In order to spread best practice through the sector the Government is encouraging the sharing of these ideas and approaches to encourage companies that have active community involvement programmes to influence others.
In order to achieve this, the Government is looking to identify business leaders who are committed to community involvement and who are willing to take on the role of Champions. These Champions will form a network that will identify and spread best practice, seek to engage companies not currently involved and establish a collaborative approach to the Corporate Challenge, particularly to developing measures of success. Should you wish to express an interest in being involved please complete the attached nomination form or email the address below and you will be sent further details.
As well as inviting nominations for Champions, the Government is keen to get a range of views on how it can facilitate and support increased levels of community involvement. If you have ideas, suggestions or examples of innovative approaches to community involvement then the Government would like to hear from you. corporate.challenge@hm-treasury.gov.uk
To obtain further copies or for general enquiries, contact HM Treasury Public Enquiry Unit: Tel: 020 7270 4558 Fax: 020 7270 4574 email: public.enquiries@hm-treasury.gov.uk Letters: Public Enquiry Unit HM Treasury 1 Horse Guards Road London SW1A 2HQ You can also find HM Treasury on the internet: Home
To contact the Home Office Public Enquiry Unit: Tel: 020 7035 4848. Fax: 020 7035 4745 email: public.enquiries@homeoffice.gsi.gov.uk Letters: Direct Communications Unit Home Office 2 Marsham Street London SW1P 4DF
You can also find the Home Office on the internet: http://www.homeoffice.gov.uk/
If you wish to express an interest in the corporate challenge champions network, please email corporate.challenge@hm-treasury.gov.uk stating your name, position, organisation, telephone, email and post address.
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