Tuesday, May 7, 2013

Should Charities Receive Tax Relief?

Irish charities and their donors are eligible to receive tax relief, including relief on Income Tax, Corporation Tax, Capital Gains Tax, DIRT, Capital Acquisitions Tax, Stamp Duty and Dividend Withholding Tax. This can be quite substantial: in 2010 over €30 million was paid out by Revenue on PAYE donations alone. Add self-assessed and corporate donors and you have a big chunk of our taxes.

The gut reaction is that this is justified - charities deserve as much help as possible and very often charities are providing services that the state should, and are doing so more cost-effectively.

So how does Revenue define charity?
"the body concerned is engaged in an activity under either one or more of the
following headings:

  • Relief of Poverty 
  • Advancement of Education 
  • Advancement of Religion 
  • Other works of a charitable nature beneficial to the community."

There are many that would object strongly to the funding of the advancement of religion, in the same way many would object to funding a charity promoting atheism. Essentially it comes down to a handful of people determining what is worthy and what isn't, and we only have our say through electing politicians we hope have the same beliefs.

In some cases the state is providing tax relief to organisations with contradictory views and policies, which could be interpreted as a government paying for people to debate, argue and undo each other's work.

And what if you don't agree with a charity's work? How do you feel that the tax you pay is going towards enabling this charity to run?

This becomes glaringly obvious when you look at a registered charity like Iona Institute. Promoting "the place of marriage and religion in society". This blog post isn't supposed to pass judgment on any charity or talk about my own beliefs/politics, so it's also important to point out that there would be charities on the other end of the spectrum. Great organisations working towards LGBT equality...there are individuals objecting to these. Similarly, some members of the public take issue with our government sending money abroad in aid. And the recent SpunOut controversy saw more conservative individuals furious at the charities approach towards education.

The fact is that whatever the charity and their cause there is an Irish tax payer who objects to their work and existence. And yet every Irish tax payer is partially funding these organisations through charitable tax relief.

Let's look at Iona Institute's most recent accounts. These aren't available on their website and at first glance are not available on the CRO website. But the Iona Institute is actually a registered charity named Lolek Limited ('lolek' is Polish for 'free man'). With an income of over €200k per year you could be looking at tax relief (funded by tax payers) at an amount of €20-30,000 each year. Many people would be happy for their taxes to be spent like that...but many people wouldn't.

Drilling down even further we can see where the Iona Institute is spending their money. 'Political donations' in 2011 caught my eye. Only €500, but still...IF Iona Institute is receiving tax relief from Revenue, then how do you feel about your tax going towards a charity making 'political donations'? And should they be eligible?

Anyone has the right to ask the question, should your charity be eligible for tax relief? And why?

In the charity sector we try to increase the relief the state gives and we campaign to see relief on VAT for charities. But are you able to vocalise why you are entitled to this relief? Can you show that you are benefiting the community? Can the tax relief you receive deliver a stronger impact than if the state had kept that money?


  1. - "Essentially it comes down to a handful of people determining what is worthy and what isn't, and we only have our say through electing politicians we hope have the same beliefs."

    And here we have the essence of freedom of speech. If we decide who has it or doesn't based on whether we agree with them it isn't really free speech. Because only those who agree with whoever is currently in power are actually free to speak. So it is all or nothing. Either we are all free to speak our minds or no one is truly free. (the exception for enciting violence is a whole other discussion)

    When it comes to tax exemption it is the same principle. We have to use pretty loose categories because you can't grant tax exemption based on whether or not a group agrees with those currently in power.

    To decide a group should not get a tax exemption because you don't agree with them is a violation of free speech, whether it is a religious group or not. If one religious group is restricted then any group holding a common a belief will be open to the same dispute from any taxpayer who doesn't agree with them. It becomes very sticky.

    Differentiating between political activities and other activities that are beneficial to the community is a different issue altogether. In both the US & the UK there is a legal distinction between charity & politics and the US has a number of special categories and restrictions for religious organizations involved in politics.

    But this brings up an interesting discussion, is an opinion driven by a religious teaching less valid than an opinion driven by a secular mindset? If two groups are supporting the exact same position and working toward the exact same legislation, is one less valid if it's motivation comes from a religious tradition? I realize this is a more difficult discussion to have in a country that has basically been a theocracy but it is still a valid discussion. What makes one persons motivation valid and the other invalid if the goals and outcomes are identical?

    Judging the core motivation of another human is tricky business. So, I think this brings us back to judging outcomes. As a society we need to put real thought into which outcomes we think are worthy of tax exemption. In a democracy those decisions mean allowing for the majority to rule while protecting the rights of the minority. So I think that means in order to ensure your tax dollars go to things that you believe in, you may have to practice a bit of tolerance toward the funding of some things you don't believe in. Messy. But like your mammy tried to tell you - "You can't have it all your way."

    - Denisa

  2. Great read. I can offer only one titbit of information - Lolek was Pope John Paul II's childhood nickname.

    How do you feel about organisations with charitable status like Human Life International Ireland and Family and Life, who campaign against vaccination?

  3. Just a hunch, but might be worth asking Senator Ronan Mullen did he receive that €500 from the Iona Institute. He doesn't have to disclose that because, under Standards in Public Office legislation, only donations from a given source totalling €634.87+ in a year have to be disclosed by politicians. But worth asking. If it's not him, ask the next most fundamentalist RC politician!

  4. In the matter of expense absolution it is the same guideline. We need to utilize pretty detached classes in light of the fact that you can't give expense exception dependent upon whether an assembly concurs with those at present in force. ,