Charities call for tax law changes

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Jasmine Whitbread said charities are facing a drop in income, particularly from corporate donors, at a time when they are experiencing increased demand for their services.

The Government could deliver £500 million a year to charities by exempting them from VAT, she said.

And more income could be provided by changing the rules of gift aid - which tops up donations from UK income tax payers by 25% - so that donors are required to opt out of the scheme, rather than opt in as at present.

Figures from the Charity Commission suggest that a quarter of charities are experiencing a drop in donations, while one in 12 are making redundancies, reported BBC Radio 4's Today programme. Corporate donations, which reached a record £1.4 billion last year, are expected to fall due to the difficult economic circumstances.

Ms Whitbread told Today: "Income is down already and, more importantly, we can see that it is going to be down for all charities next year and possibly longer.

"So we are going to have to plan on less money just at the time when people are asking for more support from charities like Save the Children dealing with people at the bottom who would otherwise be in poverty in this country and around the world.

"What we are seeing on the corporate side is that where we have existing relationships, these are holding good - maybe the amount of money coming through is going to be down a little bit, but services in kind and volunteering from existing partners is good.

"What is going to be difficult is that corporates are not going out looking for new partnerships. That will affect charities."

She added: "Charities have got together and gone to Government and we have been talking about what could be done."