CHARITY TAX U-TURN A LESSON IN POOR CONSULTATION

Photo: The Telegraph

There are few advantages to having an incompetent government however one is the learning they frequently provide not just in politics but in business and in life in general (as often highlighted in this blog).

The latest lesson provided by the UK’s government follows today’s announcement of a U-turn on the so-called ‘Charity Tax’ which had been announced in the last budget. This lesson is one which will reduce resource wastage while providing significantly improved decision-making and strategy through simply being better informed.

‘Consultation’ – it is a well-used word. It describes an action which, when undertaken well, informs us and allows us to make sound decisions based on quality data. It can be as simple as asking your friends what they would like to drink before going to the bar. It can be as complex as understanding the rule book, the competition and the science before designing next season’s Formula One car. In both instances the outcomes will undoubtedly be of far higher quality if the information required is gathered before embarking on the task rather than after. In both instances foresight informs sound decisions where hindsight tells you where you went wrong.

No organisation or group whether business, government or friends at the local will devise high quality strategy without being sufficiently well-informed on relevant topics whether they be markets, competitors, public opinion or whether your friend wants whisky or vodka.

In its last budget, the UK Government announced a cap on the tax-relief for philanthropic donations. The government saw this as closing a tax loop-hole but, unfortunately for them, neither the British public nor the affected charities saw it this way. It did not take very long before the (populist) intention of collecting more tax revenue from millionaires was rebranded by public, charities and media alike as a tax on charity and the term ‘Charity Tax’ was born.

It was never going to be a popular measure and, bowing to public pressure, the government agreed to consult. The result of that consultation is today’s U-turn announcement with Chancellor of the Exchequer George Osborne saying; “it is clear from our conversations with charities that any kind of cap could damage donations, so we’ve listened.”

But here’s a thought George, next time why not consult with those likely to be affected before making the announcement, prior to drafting policy, doing the sums and telling the nation in your budget speech?

This is today’s lesson for business (and others) courtesy of HM Government: The best time to consult on direction, new policy, product launches, customer wants and needs and…….pretty much everything else except reaction, is before committing.

In business terms we need to know whether a new product is wanted or needed, how much people will pay, what, where and who the competition are, etc, etc, etc. Get it wrong and it can be a very expensive process, if not financially almost certainly in wasted time (which will have a value whether costed or not).

In the Third Sector, without consulting fully and properly with (for example) volunteers before taking decisions can have disastrous effects as a workforce paid in-kind by their passion, turn their backs and walk away. All for the sake acting proactively and asking in advance in place of reacting and asking different questions after making an uninformed or ill-informed decision. It is the difference between; “what do you enjoy about volunteering and helping us out?” and “why did you stop coming along to help?” It is basic; it is Consultation 101.

If you are developing a new strategy (or revising an existing one), devising a new policy or making any choices, the time to consult is before you make the important decisions at a time when gathering intelligence and collecting data will help to inform your decision-making process; the better the consultation, the less the likelihood of getting decisions wrong.

Cut corners when consulting or avoid it altogether and the end result is the same whether government, business or trip to the bar; decisions based on narrow opinion, guess-work and little else.

There is a well-worn phrase which describes this perfectly – “look before you leap!”

Or, as I frequently remind clients; there is no such thing as a stupid question. The stupid thing is not asking the questions to which you need answers at the time you need them in order to inform your decisions.

Who’s going to tell George?

© Jim Cowan, Cowan Global Limited, May 2012

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