The Chief Executive of the Kusuma Trust UK writes to express concern about the impact of capping income tax relief on charitable giving in the UK. The Trust was established in 2008 with a £253 million endowment by philanthropists who chose to set up the Trust in the UK due to its strong regulatory environment and culture of supporting philanthropy. While the tax relief cap would not personally impact the Trust's founders, they believe it would discourage other philanthropists from donating in the UK. The letter suggests alternative approaches the government could take to avoid negatively impacting charitable donations and the wider economy.

1.
Rt Hon George Osborne MP
Chancellor of the Exchequer
HM Treasury
Horse Guards Road
London SW1A 2HQ
26 April 2012
Mezzanine
Level
48-­‐49
St
James’s
Street
London
SW1A
1 JT
United
Kingdom
+44(0)20
7569
1920
www.kusumatrust.org
Dear Chancellor,
I am writing to express my concern about the impact the planned cap on income tax relief
will have on charitable giving in the UK and to offer some constructive alternatives for the
government’s consideration.
I am the Chief Executive of the Kusuma Trust UK, a London-based foundation established in
2008 by philanthropists Anurag Dikshit and Soma Pujari who created the Trust with a £253
million endowment. The main activity of the Kusuma Trust is to support charitable, welfare
and educational activities in India. We also fund local UK charitable work and UK institutions
with the expertise to support charitable programmes in India.
You will have heard from numerous charities and high net-worth individuals over recent
weeks outlining the impact these changes will have on their income and their giving
respectively. Our Founders perspective is rather different.
Anurag Dikshit could have chosen to establish the Trust anywhere in the world. Anurag was
not a UK tax resident at the time that the trust was endowed. Therefore, he was not able to
claim any tax relief on the endowment, so reducing his tax liability was not an issue. Our
Founders chose the UK because of its strong regulatory environment and, crucially, its
culture of supporting philanthropy. This led to the creation of jobs here in the UK, with all
of the benefits that brings to our economy. One example is a grant of almost £1million we
recently awarded to the Open University in the UK.
Despite the fact that a tax relief cap would not have any personal financial impact on Anurag,
he feels strongly that the proposed changes to the system would discourage him and his
peers from donating money in the UK. If he were looking for somewhere to donate his
money in the future, he would look elsewhere; to the rest of Europe, to America or to
India.
This is because philanthropists do not look simply for the system that will bring the most
benefit to themselves; they look for a culture that recognises their value and are committed
to contributing to improvements in the lives of the most disadvantaged people and
communities. Philanthropy often contributes significantly to the UK government’s own
Trustees
–
John
Rhodes
(Chair)
|
Dr
Soma
Pujari
|
Anurag
Dikshit
|
Andrew
Hutton
|
Prashant
Jain
CEO
–
Dr
Balwant
Singh
Company
No.
6753811
Charity
Registration
No.
1126983

2. programmes for international development and community development in the UK. This is
an ideological as well as a practical issue. Either the government supports the philosophy
behind philanthropic giving, or it does not. Either it wants people to give, and to give here in
the UK, or it does not. Assuming the former, the government has a responsibility to do
everything it can to demonstrate that philanthropists are welcome here. Intentionally or not,
the proposals give the opposite impression.
Of course, this point of principle does not take away from the fact that a significant number
of high net-worth individuals will be influenced by the personal financial implications of the
changes, and as you have no doubt heard from numerous other charities and philanthropists,
the impact will be enormous.
If the planned changes go ahead, the implications will extend beyond the direct income of
charities and affect the wider economy, particularly through loss of jobs. We benefit
enormously from the extensive scientific and technological research that is carried out in the
UK, thanks to philanthropists choosing to donate to UK universities and institutions. Any
loss of support for this sector would damage British industry and the UK’s standing as a
world leader.
There are a number of ways in which the government should consider changing the
proposals in order to avoid these negative consequences. The best result would be for all
donations to charity to be exempted from the tax relief cap. Alternatively:
− The cap should be placed at a higher level;
− Individuals should be able to spread their charitable donations across financial years
in order to maximise the exemption;
− There should be provision for systems known in America as Charitable Remainder
Trusts and Charitable Lead Trusts, that allow capital or assets to be pledged to
charity over a long period of time;
− Charities created or funded by international philanthropists should be encouraged.
Just as the UK is a good base for the financial sector, it should be a good base for
philanthropists.
I will be very happy to discuss these issues, or to provide further information. Britain has a
proud history and culture of philanthropy; I urge you to do everything in your power to
ensure this is protected for future generations.
Yours sincerely,
Dr Balwant Singh
Chief Executive
Kusuma Trust UK
cc. David Gauke, MP
House of Commons
SW1A 1AA