Inyathelo: The South African Institute for Advancement welcomes the relaxation of tax legislation for philanthropists and other grantmakers whose donations and personal giving makes such a significant contribution towards sustainable social change in South Africa. In his budget speech yesterday, Finance Minister Pravin Gordhan acknowledged that the current regulations are “unduly restrictive”.
Over the past two years, the Private Philanthropy Circle, a network of local philanthropic foundations and individual philanthropists that is co-ordinated by Inyathelo, has engaged with Treasury and the South African Revenue Services to promote improved tax benefits for those who commit their personal resources towards actively developing our country - be it through advocacy, the arts, education, healthcare, or the provision of basic services.
The Income Tax Act currently requires philanthropic foundations to distribute 75 per cent of the money they generate within a year. This requirement means that Foundations and charitable Trusts are unable to consolidate their capital, making it difficult for these grantmakers to sustain themselves and provide ongoing funds for the public benefit organisations they support.
Inyathelo also welcomes Minister Gordhan’s announcement that funders who invest through a venture capital company that provides support and financial assistance to micro-enterprises, can also claim a tax deduction on their investment. In addition, it is planned that grants received by small and medium sized enterprises will be tax exempt, regardless of the source of funds.
Individual giving is now the biggest source of donor money in South Africa and we applaud Minister Gordhan’s acknowledgement of the important role that philanthropists and other grantmakers play in providing innovative solutions to our many socio-economic challenges.