The UK needs to foster a culture of philanthropy

Tristram Hunt, the director of the Victoria & Albert Museum, has warned that changes to the UK’s non‑dom tax regime have made fundraising more challenging for the arts, highlighting the need to reward philanthropy in this country.

[The previous non-dom system was replaced last year with a new Foreign Income and Gains regime, which shifted the UK from domicile-based taxation to a system based on tax residence.]

The UK's cultural institutions are not fully state funded and rely on alternative funding sources such as the generosity of patrons and donors.

The impact of tax reform on donor behaviour goes beyond the incentives for giving to charity – more tax means less financial abundance means less generous giving. To keep our museums open and free to visitors, there is a need to foster a culture of philanthropy in the UK.

A knock-on effect of recent non-dom reforms is the perception that the high net worth donors most likely to keep the museum doors open in this country are receiving ever less encouragement from government. 

As the tax environment for international individuals, families and business owners becomes less favourable, this affects their choice of where to live, hold property, and deploy their giving.

UK institutions can still receive donations from overseas either directly or through foundations or donor advised funds, but a tax regime that drives international wealth away will inevitably reduce the access of this country's museums to the donations they depend on.

This perceived failure of appreciation is not the only fundraising challenge faced by institutions.

Museums' need to raise money through private gifts has to be balanced with governance and compliance considerations. Institutions can never lose sight of their legal duties and the expectations on them of the highest ethical standards.

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The call for greater public gratitude towards donors sits alongside growing scrutiny of private sponsorship, provenance of collections, donor influence and museum independence.

Vetting donors no longer involves merely checking the source of funds, if it ever did; it encompasses alignment of values, political exposure, and reputational risk, particularly where gifts are transformational in scale.

Institutions must carefully manage conditions attached to gifts, loan terms, insurance, moral rights, and how to terminate arrangements in future, particularly where objects are from a living family or form part of a business legacy.

Protests over sponsorship in recent years have underscored how quickly reputational risk can materialise as the next controversy unfolds.

As well as these questions of title, risk and control, tax is an unavoidable consideration behind donations and long‑term loans of artworks and luxury assets.

From a donor’s perspective, whether and how they make gifts can be significantly influenced by tax issues and the availability of incentives under schemes such as Acceptance in Lieu, which allows UK inheritance tax to be met with an object such as a work of art instead of being settled with money, or the Cultural Gifts Scheme.

The location of the donor makes a profound difference to this philanthropic landscape, because UK tax incentives only incentivise those with a UK tax liability, and because importing and exporting artworks to and from the UK brings with it a host of complexities which do not arise when the donor and the art are in the UK already.

The UK's culture of philanthropy in the arts shows that our non‑dom tax changes reach far beyond tax in their consequences. 

These changes are causing a reimagining of the relationship between government, private wealth and cultural institutions.

Tristram Hunt's plea for a tone of gratitude towards donors reflects an awareness that philanthropy is highly mobile and increasingly selective.

With global competition for cultural giving, the UK’s ability to attract and retain the support of major donors depends not only on tax policy, but on regulatory clarity, institutional governance, and a coherent narrative across institutions and government that values private generosity as a legitimate and necessary partner to public funding.

For arts institutions, the challenge is to respond to this shifting environment with legal rigour, transparency and sensitivity, to stimulate cultural giving in a post‑non‑dom era.

Clarissa Levi is the art and heritage counsel at the law firm Wedlake Bell