A great time to give
Norman Lebrecht on how the Gordon Brown is about to create a Third Way of paying for the arts
THIS may not be the first place you would come looking for tax advice, but a couple of tips that have come my way could be worth a fortune to the performing arts, if they play their cards right.
In last November’s pre-Budget report, the Chancellor, Gordon Brown, announced a number of measures, to take effect this spring, that will help national charities stricken with Lottery blight. Among them were two concessions for givers, great and small.
The £250 starting limit for donations through the Gift Aid scheme is to be abolished; every penny you give will now qualify for tax relief. In addition, anyone donating shares to charity can not only claim relief for the shares against their own income tax, but the charity will escape Capital Gains Tax (CGT) of up to 40 per cent on the increased value of the shares when it comes to sell them.
Still with me? You should be, for these squiggly adjustments to the small print of taxation amount to the biggest shift in financing the arts since Maynard Keynes established the principle of state funding back in 1945.
In purely cash terms, the measures will produce an instant boost to the value of private contributions. The £20 cheque your mother-in-law sent to the museum appeal could be worth a lot more to them.
Far more significant, though, is the concession on quoted shares and securities, which amounts to nothing less than a double tax break. If, like so many of our younger readers, you have recently become an Internet millionaire and are worried about next year’s tax bill, fear no more. Simply give a wad of listed shares to a recognised arts cause – Hallé, Royal Ballet, Hayward Gallery – and every £100 given will be worth around £130 to the charity. A higher-rate taxpayer can then reclaim about £22 (don’t ask me to show you the workings).
There is no warmer feeling than the glow of giving freely, unless it is the sensation of beating the taxman. Nor has there ever been a better time to give, thanks to these exemptions.
I have run the Brown breaks past two respected firms of accountants and got much the same response. Both agreed that, the stock market willing, £200,000 given in quoted shares to a registered charity – which category includes most arts organisations – could be worth a million to the recipient.
Investors have awoken early to the opportunity; one accountant I consulted is advising clients to put fast-rising shares in a private charitable trust or give them directly to a charitable organisation.
That’s enough free financial advice. It’s the cultural consequences of these tax changes that concern us, and they are going to be profound. Gordon Brown, wittingly or not, will in his coming Budget fundamentally alter the relationship between arts and the state in Britain by opening a genuine Third Way of paying for the arts.
What Keynes had in mind was an Arts Council that would mop up the costs of a small nucleus of state companies, while giving pats on the head to new shoots and amateur enthusiasms. His vision was undone by its own success – the flowering of crack ensembles up and down the land and the soaring costs of achieving and maintaining world-class standards.
The Arts Council, which paid 87.5 per cent of Covent Garden’s bills in the early 1960s, now covers barely a third of its Budget. Nowhere in Western Europe do the arts have to find so much of their income from non-state sources. Neither side in the British compromise supports the status quo. The arts never get the money they need and the politicians begrudge the little they give.
Corporate sponsorship, the Thatcherite panacea, has also come unstuck. Corporations have shareholders who demand value for money and directors who are increasingly end-orientated. “What is your audience profile?” an orchestra might be asked. “Middle-class, middle-aged,” would be the truthful reply, with the largest segment aged 45 to 59. “Sorry, folks,” says the sponsor, “we need to reach the 18-24s and are switching our sponsorship to rock concerts.”
It is not only arts that were failed by sponsorship. The England cricket team has lost its long-term sponsor. Lord McLaurin, its chairman, has warned that the team may not find another until it can win a Test. Big-brand money comes with strings attached, and those who accept it are expected to procure positive media exposure.
Picnics at Glyndebourne and a box at the Royal Opera House can attract City blue-chips, but they are fair-weather friends who vanish in a bad-bonus year, leaving the best seats in the house embarrassingly unsold. The corporate solution was never more than a patina for most of the arts, whatever apologists like Colin Tweedy of the Association for Business Sponsorship of the Arts might pretend.
Which leaves the private donor who, in recent years, has become increasingly prominent and frustrated. Affluence has created a class of citizens with disposable wealth who are often friendly towards the arts but are deterred by cumbersome tax procedures.
In the United States, anyone giving to charity can set the sum against tax and receive full relief. Give $1,000 to the Met and it will cost a top-rate tax-payer only $500, easy as that. In Britain, give a grand in cash to the Tate and the Tate can claim back about £300 in tax relief while the donor feels no gain.
Despite the in-built deterrents, it was private individuals who coughed up most of the £100 million for rebuilding the Royal Opera House, more than the state and corporate sector combined. Under Brown’s new rules, their way to giving shares and securities is simplified and made more satisfying.
Within its limitations his move breaks down half a century of Treasury stone-walling and creates the conditions for a funding revolution. From April, the most significant element in arts support will be not the state, but the individual.
The incentive is there for you, me or the dot.com mogul next door to walk into any theatre in the land and offer to sponsor the next work by Bintley, Birtwistle, Alan Bennett or whoever takes our fancy. And the beauty of it is that the glorious gesture will cost us, in personal spending money, for less than its real value.
Unless Gordon Brown gets cold feet before Budget day, the state of play in British arts will have been liberalised beyond the wildest reveries of free marketeers. These are Tory clothes, nicked by New Labour because no Tory chancellor ever dared to wear them.
So whither now the welfare state? Its role in the arts will surely diminish as the state’s £250 million pales in relation to private giving. The Arts Council, whose chairman Gerry Robinson and chief executive Peter Hewitt lobbied powerfully for the tax breaks, has effectively signed its own epitaph.
There may be some need for public funding at grassroots level, but the lions of British arts can shake off their tax shackles and turn to their pride. The road to American-style prosperity is now open, if only we can see it.
