YMCA Derbyshire, in partnership with Baby People (empowerment through music and arts) and Derby County Community Trust (engagement through Derby County Football Club) is pioneering a city-wide youth and community service in Derby for local young people.
The three partners are looking to combine their collective expertise within the community to form a social impact fund where youth and community workers are able to work with young people on their journey to fulfil their potential and be contributing members of society. It is envisaged the fund will be created through trusts, and from individuals and local businesses via tax breaks. Our established evidence-based community projects programme will ensure young people aged 14-25 will have positive activities to engage in.
Why are we doing this?
Young people are at risk of gravitating towards gangs and anti-social behaviour when the opportunity to engage positively is withdrawn. Furthermore, the Supporting People housing-related support grant, youth and community services and Connexions services within the city have all but been eradicated and there are fewer funds but more demand than ever for youth services. Research undertaken by YMCA England & Wales into Local Authority expenditure on youth services found that by 2016/17, spend on services in England had reduced by £737m since 2010/11, equivalent to a significant 62% cut.
How will it work?
More than 150 young people from across the city each year will be offered opportunities to help improve local places, form connections and engage in sport, art and community activities, thereby stepping away from negative temptations that can damage our community and their life chances.
How do we know this works?
The three partners, through their evidence-based programmes, have already achieved positive outcomes with their current health and wellbeing services. In addition, YMCA Derbyshire has been the beneficiary of a social impact bond previously, working successfully with young people with multiple barriers to realise their aspirations. This funding enabled our young people to give back through health and wellbeing projects at local schools, nurseries and community projects.
How do I contribute?
As an investor in the lives of local young people, you can make a big difference to both your community and your income as HMRC will provide extra incentives to you in the form of tax relief.
Donations made to registered charities by businesses are treated as tax deductible expenses for a company, as long as they have been paid to the charity within 9 months of the company year-end in which the expense has been recognised. Donations can’t however increase a loss for a company.
A registered charity may reclaim basic rate income tax paid by donors (Gift aid). For a charity to claim Gift Aid, a declaration must be made to state that you are a UK taxpayer, and are not receiving any benefits in return for your donation – such as a raffle ticket or entry to an event. Gift Aid comes at no additional cost to you as an individual, providing you pay income tax at least equal to the Gift Aid amount. When donating to a UK registered or EU registered charity, the donation will be treated as being made ‘net’ of 20% tax. This means If you are a higher, or additional rate tax payer, you will also receive a lower rate of tax on some of your income for that year.
This works by allowing you an additional allowance at each income tax earnings threshold, equal to the total ‘gross’ donation. For instance, if you made a donation of £500, the gross donation which the charity would receive would be £625. If you had £65,000 of total income, you would get an additional £625 being taxed at 20% rather than 40% – saving you an income tax liability of £125. This could be useful planning if you have income of between £100,000 – £125,000. For instance, if you have income of £105,000 and make a donation of £5,000, the gross donation would be £6,250. In addition to the additional £6,250 being taxed at 20% – a £1,250 tax saving, you would also have the benefit of a full personal allowance.
The gross donation reduces the adjusted net income when working out the personal allowance available to be used. This results in a further 40% tax saving on £2,500 – which is the amount of personal allowance previously lost. This is an additional saving of £1,000.
As payroll giving, donations come from pre-tax income, this is particularly beneficial for charities when given by a higher rate tax payer, as although the donation comes at is the same cost to the individual, the charity will receive a higher gross donation as the full 40% or 45% tax is also included, rather than the 20% they are able to claim via Gift Aid.
Your employer is able to set up a payroll giving scheme, which enables you to make regular donations to charity each month, which are then passed on to your chosen charity, before your income is taxed (however, after national insurance). By donating out of income before it is taxed, you will be receiving tax relief for these donations at source, at your top band of income tax. If you earn over £50,000 per year then this is the best way for you to support us tax effectively:
* We have calculated the above table on the basis of an individual that receives only salary and on the basis that the 40 percent higher rate tax band starts after earning £50,000 gross per year (including personal allowance of £12,500) and 45 percent additional rate tax is applicable to those earning over £150,000 gross per year for illustration purposes. Other rates and reliefs may be available dependent upon each individual’s personal circumstances. All data is correct as of July 2019.
If you wish to set up payroll giving for your organisation, you will first need to identify a HMRC-approved payroll giving agency to act on your behalf as distributor of the money deducted from your employees’ salaries. They will provide you with a contract setting out the details of the scheme, along with all the necessary forms to operate the scheme. A full list of approved payroll giving agencies can be found at www.GOV.UK along with further details on how to set up.
There are also payroll providers who offer a scheme where an employee can elect to round down their pay each month and donate the ‘pennies’ to a charity chosen by themselves or their employer. These types of schemes work well for employers with a large number of employees, and encourage higher numbers of payroll giving as the maximum donation per individual each month is 99p.
Donations of property or shares
When donating property or shares to a charity, you will be entitled to income tax relief. You will be able to deduct the market value of the donation from your total income in the tax year in which you make the gift. For an outright gift, you will not have to pay any capital gains tax on a gift to a charity.
Trusts and grant-making bodies
We would also welcome contributions from local trust funds and grant-making bodies. Please contact email@example.com for further details.
One-off or regular giving
Donations should be addressed to YMCA Derbyshire Social Impact Fund. Bank details can be obtained through contacting firstname.lastname@example.org or by clicking on the image below to access our campaign page: