Posted on 29th July 2011
High street banks could help to increase philanthropy by £1bn a year, if charity bank accounts become widely available. The first major feasibility study of the integration of charity bank accounts into high street banking shows a strong appetite for such a service.
The study, Charity Bank Accounts: The Opportunity for UK Retail Banks, published by the Philanthropy Review , that offers a fresh look at supporting society through better giving, and Accenture, found that over one fifth of donors and 18% of affluent and high net worth individuals would open a charity bank account. Over half said they would increase the amount they give to charity.
Charity bank accounts would be like savings accounts that make it easier for customers to make tax-effective, planned gifts to charity. The bank statements would provide donors with a simple audit trail of their charitable giving to reclaim tax, if applicable.
A similar idea in the USA has proved successful. Schwab Charitable, one of the largest providers of charity accounts, saw a 23% increase in donations to charities in the last financial year.
Over 150,000 tax-effective charity accounts already exist in the UK with specialist providers, such as C. Hoare and Co, Coutts and Co. and the Charities Aid Foundation. Over £190m is given to charity each year through these accounts. Maya Prabhu, senior philanthropy advisor at Coutts, says their accounts have proved popular with clients who want to ringfence money for charities and have one statement of their charitable giving at the end of the year. However, she says: “For this idea to work, we need one back office system that banks can use to administer donations to charities. I’m encouraged by the momentum for collaboration between banks and charities highlighted in this report.”
The study estimates that if 430,000 affluent/high net worth individuals opened an account and gave an average of £2,400 in gifts to charity the £1bn mark would be exceeded.
The Philanthropy Review was set up in December 2010 to investigate whether philanthropic giving could be boosted by different initiatives. Its feasibility study is also based on interviews with major high street banks and other financial institutions. Responses have been positive with banks suggesting that charity bank accounts should be simple to understand and administer. They should also fit in with the banks’ existing CSR strategies.
Lord Janvrin, deputy chairman, HSBC Private Bank, said: “I believe that assisting customers with making donations through their bank accounts will deliver real change in facilitating philanthropic giving and as a bank that considers philanthropy as one of its key responsibilities I look forward to exploring this topic further with my colleagues.”
The study includes next steps for banks, the charity sector and government. These include:
- Banks agreeing to conduct an options study
- Charities developing a value proposition to partner with banks
- Government confirming the tax implications for charity bank accounts
To take this idea forward, the Philanthropy Review is convening a working party which will meet for the first time in the autumn.
John Low CBE, chief executive of the Charities Aid Foundation (CAF) added: “CAF is confident that the ‘charity bank account’ can play an important part in growing a culture of giving in the UK. We know from our own experience of providing over 80,000 individual donors accounts, the value these have in enabling committed and planned giving. This report provides an excellent foundation for taking this transformative idea into the mainstream. We look forward to continuing to work with the Philanthropy Review and others to make this happen.”
