Football stars, charitable giving and how it can save tax

Donating to charity is a concept that’s spreading through premiership football like a Mexican wave.

Many of us will be familiar with Marcus Rashford’s successful campaign for 1.3m children in England to claim free school meal vouchers, and the £20m he raised to supply meals to the most vulnerable during the Covid pandemic. But that’s the tip of the iceberg…

The collective Common Goal fund was the brainchild of Manchester United midfielder Juan Mata. When he co-founded the fund in 2017, his aim was to persuade fellow pros around the world to donate 1% of their salaries to the fund, which aided 120 charities in 80 countries. 

Other players such as Watford captain Troy Deeney, Manchester City’s Raheem Sterling, and Liverpool’s Mo Salah are also working away at their own charitable initiatives behind the scenes.

And let’s not forget Arsenal’s Mesut Ozil, who donated £80,000 to Muslims at home in Turkey during the Covid crisis, and Crystal Palace’s Wilfried Zaha, who donates 10% of his salary each month to charities in his native Ivory Coast.

Indeed it’s hard to find a sporting celebrity who hasn’t dipped into their resources for charitable causes, whether it’s Michael Phelps or Serena Williams.

Why is this? Is it merely a PR exercise, or a way to feel better about their wealth? Perhaps it’s also part of efficient financial planning?

The tax advantages of charitable giving

Charitable giving is particularly easy in the UK, because donations, whether by elite sportspeople, or elite couch potatoes like the rest of us, are tax free.

Charitable giving can also benefit you, by allowing you to pass your money on to those in need in a way that makes life easier for you too.

Charitable donations, commonly referred to as ‘gifts’ in the vernacular the taxman, and gifts, if set up correctly, can reduce your inheritance tax (IHT) rate on death from 40% to 36%. Even better, gifts to qualifying charities are exempt from IHT, regardless of the value of the gift.

When choosing a charitable recipient for our money, of course we choose a cause particularly close to our hearts. You can’t get more cardiovascular than the British Heart Foundation, but other popular choices are MacMillan Cancer Support, the Samaritans, Save the Children, or of course the World Wildlife fund and the RSPCA for our animal lovers.

We actually had a client who asked us to rewrite her Will to ensure her dog’s welfare, as she had no children - what a lovely thought!

In a similar vein, a wealthy businessman in Nashville, Tennessee passed away in November 2020, leaving his $5m fortune in a trust for his border collie, Lulu.

The largest charitable donation to an animal, however, may have been by the heiress Countess Karlotta Leibenstein, who left $80m (£57.8m) to her German shepherd Gunther III when she died in 1992.

That’s a lot of cans of Pedigree Chum.

Here at Bow FS, charitable donations are also part of our culture

And they always have been.

As big fans of U2, we were early supporters of Bono’s Project Red, which launched in 2006 with the idea that of turning companies into a cavalry to fight the AIDS pandemic. 

As a company, we’ve always donated 1% of our turnover to charities. We’ve particularly focused on Age UK recently, and Chris used to deliver meals on their behalf. Now that we’re unable to support them with time, we fund the cost of a driver instead.

In fact, Age UK send us an award for our donations! They particularly thanked us for not stipulating where the money should go. Rather than asking that they buy a minibus or something so specific, we left it to them to spend it as they wished. They are the experts, after all.

Do you think charitable giving might be something for you?

It’s certainly central to what we do here at Bow FS, and in these challenging days, when donations to charity seem to be going down, many of our clients are seeing the benefit of using their money to help those less fortunate than themselves.

It’s a lovely way to help others, and may even save us tax too.

Give us a ring if you’d like to find out more.