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?