2013 Change in Tax Codes for Irish Donations Fails to Impact Philanthropic Giving

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Research launched today (10th July 2019) by Philanthropy Ireland shows that the 2013 change in tax codes for the treatment of taxable donations has not had a positive impact on the development of strategic philanthropic giving in Ireland. The Impact of the 2013 Change in the Tax Treatment of Charitable Donations explores the impact of the changes on donor behaviour, the value of charitable donations and identifies changes needed to encourage greater levels of philanthropic activity in Ireland.

Findings of the research shows that the scheme introduced in 2013 has not been effective in mobilising large scale giving philanthropic giving. Donations decreased by 24% from 2010 to 2016 (€119.7 in 2010 to €92.4m in 2016). There was a modest 1.7% increase in value of donations between 2013 and 2016.

The report, undertaken by BDO, includes data from revenue alongside international and domestic research on philanthropy, the not-for-profit sector and the tax treatment of charitable donations. This was combined with stakeholder interviews from across Government departments, state agencies, philanthropic bodies and charitable organisations.

Commenting on the findings, Éilis Murray, CEO of Philanthropy Ireland, said “the research indicates that less than 1% of donations are greater than €5k and a mere 0.3% are greater than €10k. This suggests the current scheme is not effective in mobilising large-scale philanthropic giving, with over 90% of donations characterised as smaller charitable donations. As we seek to develop philanthropy in Ireland for the benefit of society, this is of key concern.”

Of the countries benchmarked in the report, Ireland is the only country that does not provide a tax stimulus that goes directly to the donor. It is also the only country that exclusively uses a grossed-up donation, a blended rate of relief of 31% applying to treatment of donations.

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Key findings from The Impact of the 2013 Change in the Tax Treatment of Charitable Donations

In 2012, the report of the government led Forum on Philanthropy and Fundraising made a series of recommendations for the implementation of measures to support the social sector. One of the proposals related to major gift giving. It was recommended that for donations into designated vehicles, e.g., grant-making trusts, foundations and donor advised funds, relief at the marginal rate should go directly to the donor, within bands of €5K and €1m on individual donations. This proposal was never activated.

Bernard Kirk, Chairman of Philanthropy Ireland, said “It is notable that the only recommendation of the 2012 report not implemented was the one for major gift giving. It is timely that this now be reviewed for activation.”

Philanthropy Ireland is calling for key consideration of the findings by all stakeholders, believing there is a need for changes in policy to better align with international best practice in encouraging higher levels of philanthropic giving and to provide for greater inclusion.

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