Charity tax relief cap under fire as philanthropists warn of funding crisis The changes to tax relief on charitable giving were laid out in the Budget as part of measures to increase tax revenue from the wealthiest, with the Treasury claiming it was shutting loopholes which allowed aggressive tax avoidance and could see money put into "bogus" charities simply to enrich the donor. But they are now being criticised for reducing the amount of money wealthy philanthropists can give to charities and good causes, including the arts, medical research, church groups and schools by capping tax relief at £50,000. The 46 signatories to today's letter include three members of the Sainsbury supermarket dynasty, each of whom controls their own charitable fund, and Gordon Roddick, the widower of Antia Roddick, the Body Shop founder. Between them the 46 have personal fortunes which total well over £1 billion, and make grants and donations worth well over £100 million each year. They warn that the "confusing and dispiriting" proposal will cut the amount people are able to give through tax relief, and also discourage people to start giving. In the letter they say: "The current proposal will undermine the motivation to give generously, and will deprive charities of much-needed funds." Their intervention and that of a series of other major figures this weekend significantly increases pressure for the plan to be scrapped in its entirety. Both Jeremy Hunt, the Culture Secretary, and Michael Gove, the Education Secretary, are under pressure to intervene directly to overturn the plans as both donors and charities in the sectors their departments administer say the scheme could have disastrous consequences, which one charity head said could take up to 20 years to become fully apparent. Vince Cable, the Business Secretary, has already made clear his unhappiness at the impact on universities who are trying to secure large endowments to cut their reliance on central Government funding. Among those intervening in the row last night were some with close links to Prince Charles, who has taken a personal interest in encouraging the wealthy to support charities and especially cultural institutions. Philip Spedding, the director of Arts & Business, an organisation of which the Prince is president, warned that the proposed cap on tax relief would force philanthropists to limit or stop their donations, placing many of the country's leading arts organisations at risk. "I find it astonishing, it suggests there is no joined up thinking in the Government," Mr Spedding said. It sends a message that giving out major gifts is somehow suspect and dodgy. His intervention will raise concern in Whitehall that the Prince could become involved in the row, although he does not publicly comment on government policy. Clarence House declined to comment last night, but Mr Spedding said: "I would be surprised if the Prince didn't share everyone's concerns about the developments because he's someone who cares very passionately about culture and encouraging people to give. I can imagine he would find it worrying. Sir John Ritblat, chairman of the Wallace Collection in London, who also supports the British Library, the Tate and the Royal Academy of Music, and who has links to the Prince, said: "Many of us are breaking our necks to help so many organisations, and we don't want to be branded as tax dodgers. This will discourage people from giving. I've got several substantial matters in which I'm involved and I will be seriously reconsidering. Major arts organisations are particularly upset by the changes because of the emphasis Mr Hunt had personally put on encouraging philanthropic giving. He declared 2011 "a year of corporate philanthropy" after the Government cut its funding for the arts by a third, and recently announced plans for an £80 million match-funding scheme, Dr Michael Dixon, the director of the Natural History Museum and chairman of the National Museum Directors" Conference said: "This is particularly unfortunate at a time when member institutions are actively engaged in responding to the current Government's encouragement of a push for a greater contribution from philanthropy in running the nation's great cultural institutions." Sir Vernon Ellis, the former international chairman of the consultancy firm Accenture and chairman of the English National Opera and the British Council, said: "For my own giving, I will not be able to make as much contributions. It will be much tougher and I will have to think very carefully about each donation. Under the new proposals, I certainly would not have been to give the several million pounds towards the restoration of the London Coliseum. Good causes will suffer and some important projects in our cultural institutions will not take place, which will be a shame for the country. The impact on the academy schools programme, to which the Government is deeply committed, also emerged as a central area of contention last night. Academies depend heavily on charitable donations to run a range of activities from extra tuition to breakfast clubs and sports teams. Sir David Garrard, chairman of the Garrard Education Trust and who personally donated more than £2 million to create Bexley Business Academy, called the proposal "outrageous and preposterous." "It can only lead to the diminution of the amount recovered by charities and the damage it will do education, and charities in general, is incalculable," he said. Steve Chalke, the founder and chief executive of the Oasis group of academies, said extra-curricular activities and services at its 14 schools would be at risk. Breakfast clubs, after school clubs, community football teams, youth workers and half term and summer holiday events are among the Oasis school activities paid for by charitable donations, and which are seen as crucial to the schools" better results. Steve Chalke, the founder and chief executive of the Oasis group of 14 academy schools, said: "State funding gives you the basics to run schools. What it does not give you is the stuff that David Cameron would refer to as Big Society. It does not give you extended education, it doesn't give you youth clubs or sports teams that build character in young people. These Big Society elements are paid for by the very charitable donations that are under threat. Lord Harris, the Conservative donor who funds 14 academies, and supported David Cameron's leadership campaign, said: "If we give a school £100,000 they will now only get £80,000 - so they will lose a fifth." What the country's major philanthropists and cultural leaders said about the govenment's plans: Philip Spedding, director Arts & Business The core principle of giving is that it is for the greater good of society and philanthropists shouldn't have to pay tax on that. A wealthy philanthropist told me that if the Government don't want me to donate, I won't - it's a gut reaction for philanthropists. Those who are being encouraged to be philanthropists for the first time will be put off. I would not be surprised if the Prince [Charles] didn't share everyone's concerns about the developments because he's someone who cares very passionately about culture and encouraging people to give. Sir David Tang, entrepreneur, chairman of The Prince's Charities Foundation in China and patron of the Positive View Foundation All the people I know in that world do think about tax relief and now they will think 'why am I being taxed for being charitable and generous?. Psychologically, tax relief is an incentive for the donors and this will stop people giving money away. This will have a rippling effect for philanthropists, many of whom will think twice about giving money away. Sir John Ritblat, chairman of the Wallace Collection I think the Treasury are absolutely demented and yes, it might affect how and what I choose to donate. Many of us are breaking our necks to help so many organisations, and we don't want to be branded as tax dodgers. If the Government supports a museum, then we're not going to give funds to those museums, or certainly we'll be more generous to others where Government is not involved. Mark Getty, chairman of the National Gallery and member of Getty dynasty When I make a donation, I'm conscious of the fact that what I'm giving away I won't get back, but like everyone else, I do look at what the tax implications are. This will make a significant difference. It will make our historic supporters less generous and will stop the people who are new to philanthropy from coming in the door. I talk to people who give to the National Gallery all the time and their donations are sacrifices. The Government has just made that even harder for them. There is no question the National Gallery and many other organisations will suffer. Lyn Shears, head, with her husband Trevor, of The Shears Foundation I don't know why we have to be so ashamed of giving in this country. In America they aren't ashamed and many donors there do it to avoid tax. The Government's proposals also make it look as if there is an ulterior motive for giving, which can make some people not trust philanthropists who are giving purely for the satisfaction of helping others. The Government's proposals won't stop us doing what we're doing but we won't be able to do as much. Steve Chalke, chief executive of Oasis academy schools If this proposal isn't challenged and rescinded the impact of this will be felt 10 or 20 years down the road when this government is no longer. This is not good news in any shape or form for anybody running an academy. It might not make a difference to how many maths teachers there are but it will effect the depth and breadth of what can be provided to develop pupils" good moral character. Last year I ran the London Marathon and I raised £2.3 million pounds. If I was running it in the future, that amount would be hugely harder to get because within that there were several big gifts from the kind of people who are going to be penalised by this plan. Rich people think very carefully about what they do with their money. That's why they are rich. Dame Stephanie Shirley, chairman, Ambassadors for Philanthropy These naive proposals have come without consultation with either philanthropists or charities, and without - it would appear - discussion with those ministers with charity, arts and other responsibilities who would immediately realise the implications. Many philanthropists have already informed me that they are putting things on hold and many organisations are telling me that their regular donors are already saying they will not be able to give next year. This will be disastrous. Sir Vernon Ellis, chairman of the English National Opera and the British Council For my own giving, I will not be able to make as much contributions. Under the new proposals, I certainly would not have been to give the several million pounds towards the restoration of the Coliseum.