Sports and community groups are slow to become approved and use tax relief for donations to stretch funding.
The recent opening of the Aviva Stadium underlines the improvement in Ireland’s sporting infrastructure over the last 20 years. Those of a certain age remember when the country did not possess a 50 metre swimming pool, Croke Park was a crumbling dinosaur and nearer to home, when Pearse Park, Hyde Park, and Pairc Sean MacDiarmada provided few creature comforts for the paying spectator.
The one thing that the development of these facilities had in common was that they were part funded by the Government under the National Lottery Sports Capital Programme. Hard times lead to hard measures and this programme was one of the first to be cut.
It is not only the major sporting facilities that have felt the chill wind of recession but the local clubs have suffered too. In 2008 a total of over €3.365 million was granted to clubs and organisations in the local counties with Leitrim receiving €260,000, Longford €397,000, Offaly €1,265,000, Roscommon €409,000, and Westmeath €1,317,000. Every parish has felt the absence of this source of funding in 2009 and 2010.
So with the Sports Capital Programme currently closed how can sporting clubs and organisations fundraise to continue the development of their facilities?
Matt Hanley of Russell Brennan Keane advises club committees to consider whether there is another way in which the Exchequer can part-fund their development through a scheme called tax relief for donations to certain sports bodies. “Clubs have always been resourceful in raising funds with draws, lotteries and all sorts of events but this avenue has largely remained untouched. It may be down to a perception that it’s difficult to set up and operate but this shouldn’t be the case. A similar scheme is in place that is used by churches and registered charities.
“The types of projects that can benefit from this scheme include construction and refurbishment of sports buildings, the purchase of land for sporting purposes and the improvement of playing pitches. The scheme may also apply where clubs have already taken out loans for such projects,” added Matt. There is a minimum contribution level of €250 in order to qualify for tax relief on a donation. The tax treatment of the donation will depend on whether the individual is self employed or a PAYE tax payer.
Matt explains, “A self employed tax payer receives tax relief on their donation at their marginal tax rate so that if they make a qualifying donation of €250 to their club and they are higher rate tax payers, the net cost to them is €147.50 since they can claim relief on the donation in their income tax return .
The process is a little different for PAYE tax payers. “The club can receive a refund of Income Tax on top of the €250 donation. The amount of the refund depends on the rate of tax that the donor pays but where the individual pays PAYE at the 41per cent rate, then it should be possible for the club to get a refund of €173.73.”
Matt adds a note of caution:“Clubs should not delay if they are considering this as the Government will be reviewing all means of increasing the tax take in December’s budget and this scheme may not survive the axe.”