Popper and the Poker

A talk given at the Barnes Philosophy Club, September 2014. Thanks to everyone who came along, and asked such insightful questions.

“Did two Austrian logicians really come close to blows over the nature of philosophy? At the Cambridge Moral Sciences Club in 1946, Karl Popper and Ludwig Wittgenstein had a brief but heated argument about whether philosophical problems really exist. But what did they mean, and why did it matter? Though accounts of the meeting are hotly contested, Popper’s wide-ranging work on science and politics reveals a passionate commitment to rational discussion and a rejection of all forms of mysticism, which placed him on a collision course with one of the most volatile and influential 20th century philosophers.”

Lecture:

Discussion:

Slides:

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Nietzsche at the Barnes Philosophy Club

I gave an introductory (and strictly amateur) talk on Nietzsche’s philosophy of art at the Barnes Philosophy Club.

Nietzsche talk

Discussion and questions

Slides:

 

 

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“Digital Gift Aid” and the 2013 budget – will we see progress?

Two years ago, my essay for the Giving Green Paper recommended a reform to Gift Aid, which would enable charities to claim the tax relief on a larger number of donations made through digital channels, while reducing the burden on donors:

“Allowing charities and companies to offer a “universal” Gift Aid declaration, in which donors could enable Gift Aid to be claimed across all eligible charities, would give the fundraising world the basis for exploring a more efficient and better adopted system.”

Since then, attention in the sector has focused on the feasibility of building a database of such declarations, accessible to all donors and all charities, while remaining secure. Since HMRC has refused to fund or manage such a database, it would be down to organisations in the sector to set it up. Charities Aid Foundation has shown the most interest in taking the project on, and costed it at around £1m.

There remain significant problems with take-up and awareness of Gift Aid in general.

  • £750m in Gift Aid goes unclaimed each year, and 32% of the public have never heard of tax-effective giving. (CAF Research Paper, April 2009, p10; CAF estimate)
  • Gift Aid is claimed on less than 5% of text donations (Res Publica 2010, Digital Giving)
  • Three quarters of small charities find Gift Aid complex and time-consuming, and 80% of small charities (in one sample) do not claim Gift Aid on any form of donation below £5. (Small Charities Coalition Survey and various 2010, Gift Aid Simplification Survey – Headline Findings )
  • Each Gift Aid claim costs HMRC around £5 to process (Res Publica 2010)

Many in the sector have called for a universal register of Gift Aid declarations, as a potentially complete solution to the problem. There are certainly some operational obstacles to overcome in developing it:

  • Incentivising take-up of the database by private donors, who may be resistant for reasons of privacy, and at present have limited incentive to bother
  • Enabling and training charities to interrogate the database using a variety of potential unique identifiers for donors (e.g. mobile no., email, surname, postcode), while protecting personal data with the requisite level of security
  • Some charities may also wish to retain the practice of using individual Gift Aid asks as an opportunity for further donor engagement

As a first step, I’ve recommended that the Government use this budget to make such a system legal in principle. They could do this by removing the requirement for Gift Aid declarations to name the specific charity to which they apply, which is set out in a Statutory Instrument, the Donations to Charity by Individuals (Appropriate Declarations) Regulations 2000. Around 3,500 Statutory Instruments are introduced each year (more than 20 for each day the Commons sits).

This seems particularly appropriate, given that donors must refer to all their donations each time they make a declaration: HMRC’s suggested declaration states that “I have paid …tax…at least equal to the amount… all the charities…I donate to will reclaim on my gifts for that tax year.”

I briefly outlined some of the benefits for Third Sector recently, which are as follows:

  • Giving Platforms such as JustGiving, Virgin Money Giving etc could collect a single declaration per donor, rather than needing one for every donor/charity combination. This would reduce friction for donors, and increase Gift Aid take-up.
  • Platforms that enable direct giving to multiple charities, e.g. PayPal and Link Cash Machines, could collect a single Gift Aid declaration for all donations and pass copies to the benefiting charities. This might significantly increase giving through those channels.
  • The sector could continue to explore and develop a universal Gift Aid register, without any legal obstacle.

Since the proposal is relatively minor and straightforward, and doesn’t necessarily imply a government-led overhaul of the Gift Aid system, I am optimistic that we might hear something positive on Wednesday.

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MissionFish UK is recruiting a marketing and customer service coordinator

MissionFish UK aims to help charities get the most out of online commerce, through our long-standing and unique partnership with eBay and PayPal. We want to make it possible for any charity to benefit from any gift from any donor, and are a registered charity (No 1110538).

We offer an experience hard to find anywhere else: the opportunity to interact with one of the Internet’s largest businesses, work with cutting-edge technologies in a friendly and energetic small-team environment, and do a lot of good in the process.

Our major initiative is eBay for Charity, a unique programme that helps charities of all sizes to raise funds through trading on the eBay marketplace. It also gives 17 million unique eBay.co.uk visitors each month a secure and efficient way of donating a percentage of their sales to a charity of their choice, or adding a donation at checkout.

As eBay’s partner for the eBay for Charity programme, MissionFish UK vets charities, processes donations, collects Gift Aid and advises charities on how to make the most of the eBay marketplace. eBay for Charity has helped raise over £40m for nearly 7,000 UK charities since its launch in early 2006. We are also working with eBay Germany to support the launch of their German charity programme.

We work closely with eBay Inc, both in the US and UK, and relevant subsidiary companies, particularly PayPal. The technical and financial infrastructure behind eBay for Charity is shared and jointly operated by MissionFish UK, eBay Inc, and our sister organization in the US, the PayPal Charitable Giving Fund (PPCGF). We are currently reviewing the MissionFish UK brand and may align it more closely with PayPal in the near future.

You can find a full job description and details on how to apply through the link below:

Job description – Marketing Customer Service Coordinator MF UK Final

Closing date: 12 December 2012.

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Charity tax and the rich: donors or dodgers? #giveitbackgeorge

The cap on tax relief for charitable donations, proposed in the 2012 budget by UK Chancellor George Osborne, has galvanised rapid and forceful opposition from charities and philanthropists. The cap will hit a large number of high-value donations, dramatically decreasing their value to charities and increasing their cost to donors.

The response from government has been even more worrying than the announcement, both in terms of the technical clarifications made, and its generally negative tone about charitable giving. This post aims to clarify some of the more confusing aspects of the cap and its effect, and explode a few of the myths recently promoted in its defence.

How did this happen – isn’t the government supposed to be promoting charitable giving?

Up until now, the government seemed to be strongly in favour of charitable giving. One of the key planks of the “Big Society” agenda was to encourage greater public engagement in volunteering and charitable giving. A green paper (to which I contributed) and a white paper on giving were published. Last year’s budget provided a tax break for people who donate 10% of their legacy to charity. There have been moves to simplify the process of claiming tax reliefs for smaller charities. A Philanthropy Review group, whose members worked closely with the government, recently called for tax relief on donations to be extended.

On the other hand, HMRC and HM Treasury have a history of making it harder for charities to operate, with the supposed aim to catching those committing tax fraud. For instance, the recently introduced “Fit and Proper Persons” guidance suggested that charities ask all their trustees to sign declarations saying they’re not tax criminals, at a likely cost to the sector of more than £20m. In the first 18 months, these rather patronising measures did not result in the refusal of a single tax relief claim, and (according to HMRC) led to “a couple” of people leaving charities.

The decision on the cap was almost certainly made at the last minute by the Treasury alone, without consulting ministers who are working to promote and encourage charitable giving. It seems to have been part of moves to increase the tax burden on the richest in society. Nick Hurd, the minister for charities, did not appear to have been closely involved in developing the policy:

Nick Hurd tweet

 

Sir Nicholas Hytner, from the National Theatre, said the changes also blindsided the culture secretary, who has been working to encourage donations to arts organisations. He said they, “came completely out of the blue and I have to say I think it came completely out of the blue for the department of culture as well. I just don’t believe they were included in these discussions.” (The Guardian)

How much is at stake, and when?

The wording of the proposal is as follows:  “The Finance Bill next year [will] apply a cap on income tax reliefs claimed by individuals from 6 April 2013. For anyone seeking to claim more than £50,000 in reliefs, a cap will be set at 25 per cent of income (or £50,000, whichever is greater).” (HMRC website) Since the Gift Aid claimed by charities will count towards the limit, any donations over £40,000 will be hit by the cap.

There is no data available on donations over £40,000, but we can get a feel for their scale by looking at the largest donations.  According to a recent Coutts report, 174 donations worth at least £1 million were made by UK donors or to UK charities in 2009/10, with a combined value of £1.3 billion. CAF reports that the top 100 donors last year gave £1.6 billion. That is a highly significant amount – around 15% of total donations by value, and doesn’t include any donations between £40k and £1m, which will also be affected, and might be even be greater by value.

Of course, the cap affects all uncapped tax reliefs, not just relief on charitable donations. So a donor who was already investing £50,000 in an Enterprise Investment Scheme, for example, would not be able to claim any tax relief at all on donations to charity. This aspect of the cap shouldn’t be neglected: according to HM Treasury charitable donations only account for 20% of uncapped tax reliefs claimed by the richest 20 people affected. So many of them will have exhausted their tax reliefs through their own investments or business losses, which may be far harder for them to unwind, give up or reverse than their highly discretionary charitable donations.

Faisal Islam tweet


Won’t only the big charities be affected?

In fact the majority of the large donations are made to foundations, which typically  regrant their funds to smaller charities that actually deliver services. In 2009/10, reports the “Give it back, George” campaign site, more than 75% (£594m out of £782m) of donations over a million pounds went to foundations in this way. So the disappearance of these gifts will mean the disappearance of tomorrow’s grants, creating a problem later on for many small charities.

But can’t rich people just give the same amount, after paying their tax?

Some will – the point is that a certain level of financial sacrifice from a donor (say £1 million) will be worth far less (up to 50% less) to the charity benefiting. Many large donors might be motivated, at least in part, by the perceived impact their money will have, in relation to the cost to them of giving it up, and they will give less as a result. Some clear examples are worked through by More Fundraising Consultants.

Survey data supports this hunch: the Charities Aid Foundation polled 183 donors who gave more than £50k per year. 37.5% said they’d reduce their giving because of the cap, and two thirds of that group said the reduction would be significant. 83% expected giving generally to be impacted.

Some charities will be affected disproportionately: the Christian philanthropic charity Stewardship says that 20% of its £55m income comes from donations of more than £50k, and one major donor has said he’d reduce his giving by 75%. Capital appeals by charities building anything from cancer treatment centres to art galleries will be worst hit. As Stephen Bubb commented on Newsnight last night, up to 80% of the funding for such projects comes from major donors.

Philanthropists are already saying the cap is affecting their own gifts, and those of others. Last night Dame Stephanie Shirley, who has given away £60million herself, published an open letter to the Prime Minister criticising the Government’s ‘a cack-handed assault on philanthropic giving’. She said, ‘These plans are already discouraging major giving, with donors informing charities privately of their intention to put on hold plans to give five-, six- or even seven-figure sums.” One of Stewardship’s donors gives 90% of his £1m income to charity each year – this would be impossible if he were then hit with a tax bill far exceeding his remaining income .

But the rest of us don’t get tax relief on donations, why should the rich?

Anyone with an income can get tax relief on their donations through the Gift Aid scheme. In the UK, however, most people don’t complete tax returns, so claiming the Gift Aid for themselves could be too laborious, particularly for smaller donations. Instead, the tax relief for basic rate taxpayers is claimed directly by the charity, so a £100 donation to charity will cost a basic-rate taxpayer £80. A higher rate taxpayer paying 40% tax can reclaim the difference – a further £20 – off their tax bill.

Who actually gets the tax relief isn’t as important as it may appear. The point is that a certain cost to the donor (£60 or £80) is worth more to the charity (£100). People who are basic rate tax payers and want to claim tax relief “for themselves” can do so through payroll giving, through which donations are deducted before income is taxed.

The important principle is that people shouldn’t be taxed on income they’ve forgone by giving it away for the public benefit. While the Gift Aid scheme is complicated, with reliefs claimed partly by charities and partly by donors, it’s this key principle that’s under attack.


Well, don’t the richest people give much less than the poorest anyway?

This claim is frequently made by ministers and many in the fundraising sector, but it doesn’t really stack up. The most authoritative source  I’ve  found is a press statement from Bristol University, which said “poorer donors are still more generous than richer donors in terms of the proportion of their budgets they give to charity.”

In one, fairly narrow sense, the claim is true. According to page 29 of the report, of those who give to charity, the poorest tend to give a higher proportion of their household expenditure. The bottom 10% of donors by household expenditure give 3.6% to charity, while the richest 10% give only 1.1%.

Unsurprisingly enough, however, the richest people are far more likely to be donors in the first place. Almost half of the richest 10% give something to charity, while only 1 in 10 from the poorest 10% do so. So although we can claim that the poorest give more to charity as a share of income, this only refers to the poorest donors, and ignores the fact that 90% don’t make donations. If you consider all households, the richest 10% give a greater share of their income than the poorest 10%, though not by much.

% Given (all households) % households that give % Given by those who give
Poorest 10%

0.40%

10.70%

3.60%

Richest 10%

0.50%

47.20%

1.10%

No doubt many rich donors could afford give more, and many of the poorest households can’t afford to give anything. The point is that we are not going to encourage the richest to support charities by presenting those who give as selfish tax-dodgers. Instead we should be focusing efforts on the 50-60% of rich households who give nothing to charity, and explaining how it can be positive, enjoyable, and highly rewarding.

Participation in giving among the richest 10% has increased very slightly in the past 30 years, while giving from the poorest has significantly decreased (from 17% in 1978). The amount given by donors in the richest 10% has more than doubled, from 0.5% to 1.1%. It would be a shame to reverse the increase in giving amongst the wealthy by too harshly questioning their motives.

But don’t they give less than rich people in the US, which has a cap on donations already?

As the Philanthropy Review noted, rich people in the UK do appear to give much less than in the US, which has a cap on tax relief from donations. However, the US cap is set at 50% of income for donations alone, which is far more generous than the proposed UK cap of 25% for all uncapped reliefs. Other aspects of the US system are far more generous, in particular concerning the gift of items to charity.

As Karl Wilding of the National Council for Voluntary Organsations noted, “If HMT are suggesting that we adopt the US system of tax reliefs I think many people would snap their hand off! The system is totally different – simpler and far more generous than the current UK system, never mind the proposed scheme.”

Giving by US vs UK richer donors

 

What does the government have to say for itself?

In response to early criticism HMRC made some infuriating and irrelevant comments. Since then, things have got rather worse.

Back on 2nd April, a spokesman for HMRC said that “The bulk of charitable donations come from basic-rate taxpayers, not from the super-rich.” This is obviously true: most people aren’t super-rich, and can’t make large enough donations to be hit by the cap. However, it’s completely irrelevant – large donations (by definition) are disproportionately important, and those are the donations at stake.

HMRC also said “the cap was not aimed just at charitable tax reliefs, but at a whole range of reliefs.” Again, this is irrelevant and disingenuous. If the government really doesn’t want charitable tax reliefs to be affected, then they shouldn’t include them. It really is that simple.

More recently, the Government has turned on donors and charities. In perhaps the most damaging intervention since the announcement, the Prime Minister’s spokesman said yesterday said that multimillionaires are donating to charities which do little work for good causes [primarily] to “wipe out” their income tax bills.

First, it’s insulting and silly to claim large donations are motivated mainly by tax relief. In fact, this is arithmetically impossible – donors must give away much more than the claim back, so there’s nothing to be gained financially by doing so. As John Low, chief executive of the Charities Aid Foundation, said: “Philanthropists who make large donations give away far, far more than they could ever claim in tax relief. That money goes to fund projects for the public good, such as medical research and help for the most vulnerable in society.”

Or take the comments of Ian Theodoreson, Chief Finance Officer of the Church Commissioners:
“I really don’t understand George Osborne’s logic. How can paying a charity £100,000 to save paying tax of £25,000 be considered as a sensible tax avoidance strategy?… If the Chancellor is concerned that the charitable donations are not genuine then there has to be ways of stopping these rogue payments and not take the attitude, which is so often adopted by Government, that everyone is on the make so let’s hit the innocent as well as the guilty. This fiscal equivalent of carpet bombing simply is not acceptable.”

The indignation from major donors is clear from quotations in the letter from Dame Stephanie Shirley: “The government says that it is pro-philanthropy, and then absurdly limits the amount people can claim against their income. How do they imagine that any future capital programme will succeed without major donations? Do they think people like me who give money are motivated by tax avoidance?”

But what about these bogus charities?

As the Daily Mail reported, No.10 and the Treasury haven’t previously been good enough to share their intelligence on bogus charities with their regulator: “The Government’s claims that there is a widespread problem with the wealthy funnelling cash to bogus charities was quickly shot down by the Charity Commission. The watchdog, which registers charities and investigates claims of wrongdoing, said it had never been contacted by the Treasury about the issue.”

It’s important to note that any such bogus charities are breaking the law. All charities have a legal obligation to use their assets (including donations) to promote their charitable purposes and benefit the public. All their decisions must be made in the interests of the charity and its beneficiaries. Any significant complaints about particular charities should be investigated by the Charity Commission, which takes action and publishes the results of its work. So if the government genuinely has any evidence that charities are being abused by wealthy donors, they should report them to the regulator. To coin a phrase, put up or shut up.

As Conservative MP Zac Goldsmith succinctly put it:

Zac Goldsmith - the Government doesn't have evidence for charity tax

 

Further, the Government already has extensive tools to deny tax relief to bogus charities.  As Stephen Lloyd, partner at Bates Wells and Braithwaite, has said: “You only get higher-rate relief when you put in your tax claim, so if the Revenue doesn’t like the look of your donation to, say, the ‘widows of the Mafia’ charity in Palermo, they can simply say ‘we’re not going to give you this relief, we don’t like the look of it, it doesn’t pass any of the tests, sue us if you want to’.”

In short, if bogus charities are claiming large tax reliefs for themselves and their donors, let’s close them down. But to suggest this is widespread, and use it as a reason punish thousands of well-known and entirely legitimate charities, is unfair and will be highly damaging.

So what now?

While the Government is planning a consultation on how to limit damage from the cap, the obvious move is simply to exclude charity donations from the cap, and do it quickly, before more large donations are cancelled. You can join the campaign against the tax relief cap at http://giveitbackgeorge.org/.

You can follow some of the key people, behind the campaign - Karl Wilding and Rhodri_H_Davies  on Twitter, or add to the conversation using the #giveitbackgeorge tag.


 

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Does actual giving behaviour match expressed giving preferences?

or Can people tell you which causes they’ll support?

There are plenty of surprises in the causes people choose to support on eBay for Charity. While the most obvious causes (children, animal and cancer-related charities) tend to attract plenty of support, much depends on the exact nature of the fundraising message we show to eBay users.

Through eBay Give at Checkout, we’re able to show short fundraising messages to many thousands of people each day, inviting them to add a small donation to their purchase on eBay. Since launching in 2008, the feature has raised over £5m for UK charities. A couple of examples are below:

Leukaemia Care Give at Checkout placement

We’re obviously interested in whether people’s giving behaviour on eBay is similar to their expressed preferences, and giving behaviour in other contexts. To understand these relationships better, we looked first of all at causes by overall popularity, using NCVO and CAF’s UK Giving report.

NCVO and CAF graph on most popular causes

 

We didn’t find huge surprises here: most of the popular causes tend to perform well on eBay. However they are a little broad and vague to be useful in helping us find and feature new causes people are likely to support.

Another obvious (though expensive) tactic is simply to ask people which causes they support. One doubt was raised though: how reliable will the information be? After all, as Karl Wilding of NCVO has highlighted, giving surveys are particularly vulnerable to “social desirability bias”, in which “individuals respond to survey questions in a way that makes them look good, avoids embarrassment or tells the interviewer what they want to hear”. Would this affect surveys concerning specific causes: for instance, are people likely to say they will support sophisticated international development charities, but when shopping on eBay they might prefer to rehome abandoned kittens? By working with research firm nfpSynergy, we were able to find out.

Methodology

We chose a wide sample of causes and displayed each of them to more than 500,000 users on the eBay site, asking each to donate £1. Taking 1 as the average response rate within the sample, we indexed the causes by popularity among eBay users.

nfpSynergy then surveyed (online) a nationally representative sample of 1,000 adults. They asked the question, “If you had £1 to donate to charity, which of the following causes would you be most likely to donate to? Please select up to 3”. The wording of the cause and amount of the donation was identical in each exercise.

The causes are shown below, ranked by popularity in the survey shown by the pink bars. The blue bars represent the causes’ popularity at checkout amongst eBay users.

Give at Checkout and nfpSynergy data full comparison

 

There appears to be a fairly broad correlation between the two. The least popular cause is the same on both eBay and in the survey, while the top two in the survey are both strong performers on eBay. On the other hand, there seem to be some real outliers – the third cause (supporting small, local charities), and the second last (helping a child in Kosovo). You can see this in more detail in the scatter diagram below.

While there is a trend line, very few points are close to it. The causes marked out in green perform much more strongly on eBay than in the survey, while those in pink do better in the survey.

Give at Checkout and nfpSynergy data scatter

 

What could explain the differences?

Some of the variation may be due to sample differences (frequent eBay shoppers versus the general population). Another possible explanation lies in the emotive component of the messages, which is most evident in the two furthest outliers.

  • “Help small UK charities…” may make a lot of sense in principle (survey), but is perhaps too abstract to inspire an actual donation. How exactly would the donation help?
  • “Give a child in Kosovo a pair of shoes…” might seem an odd cause to say you’d support in the survey, but conjures up a powerful and emotive image that can trigger a donation.

Some of the other outliers may derive from the complexity or controversy surrounding the issues. Feeding a malnourished baby sounds simple, obvious and helpful, whereas intervening in families with potentially more complicated needs (involving asylum seekers or child carers) perhaps less straightforward.

If we accept that explanation, there are some striking implications for fundraisers. First, potential donors may turn out be more responsive to simple, emotive imagery than they claim or indeed believe. Conversely, donors may overestimate their interest in discriminating between causes on rational grounds. In shaping fundraising campaigns or messages, fundraisers should not imagine that potential givers will make a rational judgment in response. There is plenty of scope for fundraisers – even those supporting somewhat obscure causes – to capture the attention and commitment of potential donors through the skilful use of imagery and language.

I’d be very interested in any readers’  thoughts on how to explain the differences, and identify (if any) the implications.
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Reflections on Charity Hack 2011 – charities and technology

 This year’s Charityhack brought together 50 web developers and designers at the PayPal office in West London. The brief was to come up with an idea that could benefit charities through web or mobile technology, and then build a working version of it, all in 24 hours. MissionFish, as eBay’s charity partner, helped to shape and deliver the event alongside Justgiving.

 

I’ve been keen to support any activity that brings charities together with the technical experts who could end up shaping the way we interact over the next 5-10 years. That’s why I’ve been excited to get involved in Spring Giving, a new initiative to help realise the potential of technology to enable giving of time and money.

 

The barriers are significant: charities are already disadvantaged in two crucial ways, as a result of (largely reasonable) efforts by government bodies to identify genuine donations for the purposes of tax relief.

 

First, charitable giving takes place within nations, partly due to local loyalties, and partly because of tax laws. In practice, a UK donor can only claim Gift Aid on a donation to a UK charity. HMRC has said it will include other European charities in this, but any change looks a long way off. Meanwhile all the major online platforms are global, and few have the patience to spend time enabling national charitable giving. Apple for instance, simply bans charitable donations through its own payment system.

 

Second, charitable gifts must be “pure” in order to attract Gift Aid – the donor can receive very little in return. The thresholds for this are absurdly complicated, and need to be simplified. These issues make it less attractive to embed or incorporate charitable giving in other forms of activity, such as ecommerce. We had to do a huge amount of hard work (and take significant professional advice) to make eBay for Charity fully compliant with Gift Aid, for example. Blue Dot World is a new and interesting attempt.

 

With the pace of technical innovation becoming ever more rapid, the risk is that messages from charities slip to the bottom of the pile without active support from the platforms, or the major content providers within them. We already know that charities’ donor bases are skewing increasingly to older demographics and becoming less inclusive. For instance, people over 45 account for 72% of donations to charity, while the percentage of households participating in giving has dropped from 33% to nearer a quarter.

 

At Charityhack, we ended up with 19 really good ideas, and three main winners, as judged by Sophie Cox (Worldeka), John Lunn and Oktay Dogramaci (PayPal), and Jonathan Waddingham (JustGiving).

 

  • 1st Prize: Charity Auction: an auction integration with Twitter to enable rapid-fire online charity auctions at live events.
  • 2nd Prize: Give Stuff: a mobile application for rapidly uploading eBay listings in support of your favourite charity.
  • 3rd Prize: Charitysite.me: a charity “site in a box” for small organisations to develop a website with zero resource, and very little work!

 

In the build-up to the event, we had a number of great ideas from charities, particularly Comic Relief and the Red Cross, that didn’t make it through to development. If you’re interested in working on them, do drop me a note through the contact form.

 

Bump to sponsor (mobile)

PayPal Mobile Apps support bump technology, through which people can transfer money (or information) between phones. Could this be incorporated into event fundraising, so that you could make a donation via someone’s JustGiving page (or similar) by bumping phones with them?

 

Sponsored Training

Currently the focus for event sponsorship is on the event itself (e.g. the London Marathon), rather than the gruelling and tedious training process that comes before! You could integrate PayPal and/or Justgiving with a run-tracking service such as http://runkeeper.com/. Friends could promise to donate £1 for every 5 mile training run, spreading their donations over time and keeping the runner motivated.

 

National giving game

A mass participation (national) game which can raise funds by taking advantage of smartphone technology to enable tracking and donations. For example, people could sign up to run a virtual relay race, agreeing to pass on a virtual baton at a certain meeting place, making a donation when they receive it.

 

Give as you gamble

People placing bets online want to feel “luckier”, and sometimes have unexpected windfalls from their bets. Could they be asked to donate when they place a bet (for luck), or share future winnings with a chosen charity? One challenge here is that many charities will be reluctant to associate their brands with gambling activity.

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The London housing market – leading us to a smaller society

Exactly how much truth was there in my recent claim that the UK’s housing market (and London’s in particular) make shared ownership of social problems less likely, as excessive house prices interact with incoming caps on housing benefit, leading to further segregation between rich and poor? I suggested that the growing gap between owner-occupiers and everyone else, combined with existing incentives for affluent people to move to affluent areas, would make this aspect of the “Big Society” agenda ever harder to achieve, as communities become less heterogenous and social deprivation is cordoned off and intensified.

A recent report by the Pro-Housing Alliance campaign group, the Housing Crisis in London, states that within 5 years most inner London boroughs will be almost entirely unaffordable to benefit-reliant households. Those boroughs that remain affordable, already characterised by multiple deprivation and high unemployment, will house ever increasing numbers of poor and vulnerable households, thus increasing “the segregation of poor and better-off households within London.”

A shortage of social homes will exacerbate the issue. The current target to create 30,000 new social rented homes in London during 2008-12 is likely to be missed: the net increase between 2008-10 was 10,000. In any case, the target if met would only address around 50% of the real needs identified in assessments by the Greater London Authority. Meanwhile, so-called “affordable housing”, typically defined as 80% (or below) of market rent and requiring a household income of £44,500, is in reality only affordable to the top third of London households (the median London household income is £30,000 on equivalent measures). Meanwhile 80,000 London homes remain empty, with insufficient incentives and efforts to bring them back into use.

The most obvious effect of our dysfunctional housing market, in which unaffordable housing is the norm, is the large number of people in over-crowded and unhealthy housing (25% of households in 9 inner London boroughs), filtering down to an increase in street homelessness (8% during 2010/11). Besides its severe negative impact on physical and mental health, overcrowding at home also affects school standards, with children slipping into anti-social behaviour and falling behind in their studies.

The numerous adverse effects of poor housing have been conservatively quantified and costed in a variety of separate studies. Putting the studies together, the report estimates the annual cost of poor housing at upwards of £5bn to the NHS and other public agencies: enough to pay the annual interest on borrowings in the order of £100bn. This sum would put all existing housing in good order and provide enough funding to solve current supply problems by meeting real housing need in the long-term.

The reports can be downloaded from the Pro-Housing Alliance website.

 

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Good news for charity managers: your time is free!

Last year I complained about the burdensome and apparently pointless “Fit and Proper person” test, which appeared to require that HMRC be separately notified of every new trustee and manager appointed by every UK charity. Since incorporated charities already need to register every trustee with the Charity Commission and Companies House, I suggested that the sheer quantity of form-filling was becoming off-putting and offensive.

The new rules will mean millions of extra working hours spent form-filling for HMRC rather than delivering public benefit. This is exactly the kind of unnecessary bureaucracy that the “Big Society” agenda should be weeding out.

Since then, the Fit and Proper Persons test has withered somewhat, and the process provides a textbook illustration of the worst possible way to introduce new regulation.

In April 2010 the initial HMRC announcements clearly indicated the kind of tedious burden I mentioned above. Legal firms and advisors ran seminars and workshops in attempts to interpret the requirements; Lords and lawyers campaigned against the test, the Charity Tax Group set up a working party to challenge it, umbrella bodies lobbied for it to be abandoned.

Then in October 2010, HMRC published 5,345 words of further guidance, and a 1,035 word basic guide setting out a revised view of what charities should do. The key measure outlined in the basic guide is a “suggested procedure”, in which every trustee and manager of the charity should sign a declaration stating that they are fit and proper. Naturally this will do nothing to weed out dedicated wrong-doers, but any well run and risk-averse charity will feel the need to perform this charade in order to protect itself if anything goes wrong. In the unlikely event of a trustee being involved in tax fraud, the first question anyone will ask is “did you follow HMRC’s suggested procedure?”

Infuriated by the process and time I’d spent on all this, I decided to cost it. The bulk of time was spent in reading and summarising various HMRC announcements and pieces of guidance for the trustees (and attending events to learn more), then discussing what I’d learned at board meetings. All in all, it added up to around 12 hours of my time, and 1 hour from each of our trustees. The approximate value of all our time to the charity was £1,200.

It is highly unlikely that many other charities will have been through this process with the same rigour, but if they all did, it would cost the sector £200m. Assuming only 1 in 10 charities have done so, the cost to the charitable sector would be £20m. This doesn’t include any of the time spent on the test by lawyers and umbrella groups, which are all ultimately funded by the charities. The figures are worth bearing in mind, the next time you hear someone complain about charities wasting money on admin.

I then put in a Freedom of Information request to HMRC, asking two questions, presented below with answers:

1)   What was HMRC’s own estimate of the cost of the new test?

Our Impact Assessment, published in March 2010, stated our view that we anticipated no additional cost to charities in complying with this new test and we maintain that position.

2)   In how many cases has the Fit and Proper persons test directly led to the removal of a trustee?

“We may sometimes raise concerns with a charity about a particular manager. We have done this on a couple of occasions, and as a result, the manager has left the charity, but there was no formal refusal of a claim to tax relief.”

Just to repeat that: HMRC says the new regulations in their entirety, over 18 months, have not cost charities a penny, and might have prevented fraud on “a couple of occasions”.

In more detail, HMRC’s position is that:

-      Charities didn’t need to do anything in response to HMRC’s initial announcements in April 2010

-      All the other work charities have done to understand the test, its rationale, and its requirements, is unnecessary.

-      The suggested process for charities (as published) along with 6,000 words of guidance is voluntary, so can be ignored.

I think the crucial point here is that charities do not know in advance which HMRC announcements and lengthy pieces of guidance will be pointless. Refusing to read anything from a key regulator, on the grounds that it might turn out to be unnecessary, would be an unwise strategy.

Further, although HMRC claims that most UK charities don’t need to do anything about the test, in fact they will all need to register “responsible persons” in order to make any changes to the charity’s details, e.g. its name, Gift Aid administrator, or bank details. This requires them to complete an “HMRC Charities Variations Form’, which is a Javascript-infested nightmare. All this time is, of course, free in the eyes of HMRC.

From this extensive and unedifying exercise, I think it is safe to conclude that:

1)   HMRC simply does not grasp that reading and interpreting its extensive guidance is an important precaution for charities, and costs time and money.

2)   The Fit and Proper persons test may have led to a tiny number of managers standing down in return for millions of pounds of time (and donors’ money) wasted on pointless bureaucracy.

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Givey – social media donations made easy

I’m delighted that Givey, an initiative we’ve been supporting since the last PayPal Charityhack in September, is launching tomorrow at a Big Society Network event.

The conversion of followers and fans into active supporters and donors remains a challenge for charities using social media. Tweeters and Facebook users may be happy to post supportive replies on social media platforms, but may not be ready to visit the charity’s website and filling in a donation form.

Givey blurs the boundaries between the two, by allowing users to link their social media accounts and PayPal accounts, so that they can send a donation simply by posting a message. My example Tweet instantly sent £5 via MissionFish to Rainbow Trust.

What’s more, each donation can include Gift Aid (just add it during registration), which means Givey might make a dent in the estimated £750 million of Gift Aid that goes unclaimed each year. Since the donations are made to MissionFish and regranted to the relevant charity, the donor only needs a single Gift Aid declaration.

Tomorrow, David Erasmus, identified as a leading online social entrepreneur by the Big Society Network, will make a presentation and invite Nick Hurd to make a live donation on the platform – let’s hope his account is in order…

David Erasmus, CEO, says:

“Social Media has had a huge impact on the way charities communicate and engage with supporters. Givey allows those followers to become donors whilst they spread the word about the charities they love, and allows the opportunity to make an instant financial response to a campaign or appeal. Making a donation is literally as simple as sending a Tweet or a Text.”

9 charities are registered to benefit from Givey on launch day, including British Red Cross, RNLI and The Rainbow Children’s Trust, but all registered charities are able to sign up providing they are part of the MissionFish UK database, which also powers eBay for Charity.

If your charity is already registered with MissionFish, contact Givey via www.givey.co.uk and sign up. If not, register first at www.missionfish.org.uk/register.

If you want to sign up for donations, register at https://www.givey.co.uk/signup.html

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