The Big Society - steps in the right direction?
"A society should not be judged just by the strength of its economy, but also the compassion of its people"
So said Chancellor George Osborne, as he announced a series of reforms within his March 2011 budget.
70 per cent of the population in the UK make a regular donation to charity, but only a small proportion does so tax–effectively. Consequently donors and charities alike are missing out on millions of pounds in tax relief. It is estimated that the total of £7.3bn given to charity in 2003 could have been increased by £900m to £8.2bn, simply by changing the method of donation.
Giving and Philanthropy
Traditionally, giving money away has been often been regarded as an optional extra within financial planning, open to the minority who have surplus wealth, or perhaps to those who have a strong social conscience. Over recent years, however, we have noticed that a change has begun to take place. An increasing number of clients have begun to list giving money away to others amongst their financial planning goals. In response to this, we have therefore decided to make giving and philanthropy an intrinsic part of our overall planning advice.
We see our role as your Financial Planner as being to guide you as to how best to manage your money, by maintaining an appropriate balance between the five ways it can be used:
Money can be used to:
- Repay debt
- Pay tax
- Give away
Not everyone will wish to give away, or be in a position to do so, but for those who are interested in pursuing such a strategy we will help them to understand their potential to give, either during their lifetime, via their estate, or through a combination of the two.
What is involved?
As with any aspect of financial planning we will help you to answer a series of questions.
Can I afford to give?
Each client will want to ensure that they have sufficient to meet their lifetime goals. Once we can show you that you have enough funds available via your existing savings and future earnings to meet the cost associated with such needs as education, repaying borrowing and making provision for retirement, it will become clear whether or not there is, or is likely to be, a surplus which could be used for charitable giving, should you so wish.
To demonstrate this we will prepare for you a lifetime cash flow. This analysis will help you to understand your potential to give away, without compromising your ability to achieve the other goals that you have set.
How do I give?
Our Giving Flow Chart explains the process from beginning to end. Our task is to take you through this process step by step. For example we will help you to identify:
- From capital
- Via a regular giving account
- Through a gift of shares
- Through your will
- Amounts and frequency
- The most tax efficient for you
- The vehicle - Charitable Trust, Community Foundation, Charities Aid Foundation etc.
We have connections with solicitors should the creation of a charitable trust be appropriate.
- What are your giving interests and passions? Our questionnaire will help you to decide.
- Do you wish to give of your time and expertise as well as your money?
- Do you wish to invest in several causes or will you concentrate on just one?
The Giving Plan and the Giving Portfolio
Clients are accustomed to receiving regular updates which explain the position of their investment portfolio. They are keen to ensure that the make up of their portfolio reflects their risk profile, and that their investments will do the job required of them, in the meeting of personal lifetime goals.
Likewise, clients engaged in giving and philanthropy are energised when they review their giving portfolio.
Such a portfolio is one of the outcomes of a Giving Plan.
Client requirements vary at this stage. Some already have firm ideas about the causes they wish to support, whilst others require detailed input from us.
As in other areas of our work we have developed a series of professional third party relationships with organisations which are able to enhance our service to you. You may require guidance as to the overall direction of your giving, or you may have decided upon the sector you wish to support, but would like to know about possible beneficiaries.
Likewise, you may have identified a beneficiary, but require confirmation that they are running a viable and sustainable operation.
You may wish to diversify, to include Social Investment and Micro Finance schemes within your portfolio.
You may wish to invest abroad, but require reassurance about the validity of a particular project.
The giving and philanthropy professional community in the UK is fast growing. Paradigm Norton is well positioned within this network to point you in the right direction when specialist expertise is needed.
We have observed that those who are engaged in giving and philanthropy would appear to benefit as a result. This sense of fulfilment, frequently expressed, is one of the reasons why Paradigm Norton encourages clients to consider the giving option.