Dreamers, visionaries or sharp business people? Carbon Catablog embarks on its second in a series of interviews with not-for-profit carbon offset providers.
Last week we interviewed Russell Simon from Carbonfund USA, who explained, “We’re a nonprofit because what we do is very clearly a public good.” With 93% of Carbonfund’s revenues going straight to its projects, and with accounting books wide open, Russell posed some good arguments for the non-profit designation. But tax benefits are restricted to U.S. residents.
Now over to the U.K. with Phil Wolski, the fundraising head at PURE. One of 6 UK-based non profit providers, their website’s slogan reads, “PURE is committed to meeting the proposed new UK Government standards for carbon offsetting.” Wolski offers some valuable information on PURE, and we especially like their scheme of connecting people to offsets through payroll giving. Please note, we’ve edited his answers, but more detail can be found on PURE’s website.
Put on your smoking jacket and pull our your pipe, let’s find out a little more about PURE’s Trustees, Her Majesty’s contribution to making the world carbon neutral, and how PURE is sequestering carbon from folks in the U.K.
Carbon Catablog: As a non-profit, what tax advantages can you bring to individuals and businesses which purchase offsets through you? Please also clarify any restrictions.
Phil Wolski: PURE the Clean Planet Trust is both ‘not for profit’ and a UK registered charity. It is only the latter status that offers tax benefits. There are obviously ‘not for profit’ organisations that are not charities, hence they can offer no tax advantages (although they may have lower than usual expenses).
Although PURE does (but rarely) get donations from overseas, it is a UK focused organisation. This tax benefit explanation hence applies only to UK taxpayers.
When a UK taxpayer donates £1 to PURE and claims Gift Aid; because it is a UK registered charity; it receives another 28p from Her Majesty’s Revenue and Customs (HMRC) representing a rebate of the income tax previously paid by that individual on that amount.
The position is even better if donating via ‘payroll giving’ via an employer’s scheme. Here, tax relief is given by ‘salary sacrifice’; which means that you don’t pay Income Tax or National Insurance (NI) on your donation. Your employer doesn’t pay NI either.
We suggest that businesses should always consult their usual tax adviser…
CC: Aside from the tax benefits, do you think a non-profit organization is a more appropriate structure for a carbon offset provider? If so, why?
PW: PURE deliberately does not own carbon credits (or projects) as we think that is a potential conflict of interest. The Trustees simply go into the carbon market on behalf of its pool of donors, then impartially select the credits/projects most suitable and buy/cancel those credits.
PURE does NOT make any revenue by (for example) buying carbon credits, holding them and then re-selling at a profit.
We are strictly ‘buyers’ acting on behalf of our pool of donors and not ‘sellers’ acting on behalf of project owners. We think that acting only for our donors is a compelling argument for ‘not for profit’.
CC. How would you respond to the criticism that only organizations which seek profit are likely to be run efficiently? Do you think you can compete with for profit providers over the long term?
PW: PURE’s ability to guarantee that for UK taxpaying individuals claiming Gift Aid that more than 100% of your net cost goes to buy/cancel credits is surely more ‘efficient’ than other alternatives?
PURE is totally transparent as regards to its expenses etc. These are capped, and to date the prevailing rate is around 16% (unaudited). It is very difficult to obtain information about the expense ratios of ‘for profit’ offsetters. However, most are likely to have far higher expense ratios and no tax advantages to negate them.
CC: Who are your biggest offset buyers - individuals or companies? Can you disclose any names of people/organizations who offset with you?
PW: Over 80% of PURE’s offsetting volume relates to corporates. Individuals can make donations via www.puretrust.org.uk, but a fast growing sector is payroll giving. The following is a small selection:
B Sky B
Ernst & Young
Financial Times Conferences
Grant Thornton
Hewlett Packard
Halifax/Bank of Scotland
National Grid
Swiss Re
We also have enjoyed support from: Tim Yeo MP, Chairman of the (all party) Environmental Audit Committee who has offset his personal emissions with PURE; and Lord Adair Turner, former Director General of the CBI and an economic adviser to Government on matters of climate change.
CC: Do you have a favourite or most popular project? If so, please explain (see PURE’s list here).
PW: India - crop waste power plant Malavalli Power Plant
- World’s first ‘Gold Standard’ project to have its CERs issued by the UN (you can’t get better than this ‘dual’ standard).
- Generating clean, renewable electricity from crop waste
- Reducing CO2 emissions by around 20,000 tonnes per year.
- Directly creating at least 500 local jobs
- Directly contributing around US $1 million to the rural economy.
- Supplies reliable electricity for around 10,000 people in 47 villages.
The Trustees have supported this project because not only is it delivering guaranteed emissions reductions (audited and verified by the UN), additionally, the Gold Standard… certifies its local community and sustainability benefits.
CC: Please describe your organization’s rationale for becoming a non-profit. Is it a matter of ethics?
PW: PURE originated because of a pent-up demand from individuals and companies that wanted to voluntarily buy/cancel small volumes of Kyoto quality CER credits for offsetting purposes and were frustrated that they could not access the compliance market.
It is not economical for such tiny individual transactions to be handled by participants in the (mandatory) London Carbon Market, yet finding a suitable solution was desirable to meet public aspirations to do something to combat climate change.
It was decided that the only way to avoid conflict of interest was to set up an independent, apolitical, ‘not for profit’ charity that might pool individual donations to help combat climate change by removing ‘licences to pollute’ from the compliance market.
CC: How many tons of carbon did your org help offset in 2007?
PW: This information will soon be published in our audited Report & Accounts. PURE was launched on 29th November 2006 - so our first year has only just concluded. We would prefer not to publish unaudited figures.
CC: Do you have buyers from other continents?
Occasionally, we do get private individuals that donate via our website, but we are basically a UK organisation.
Thanks Phil.
We hope this interview with PURE has been helpful. PURE is one of 6 UK-based non profit providers listed on Carbon Catalog. As part of our mission to provide unbiased and useful information to potential offset purchasers, we invite other non-profit and for-profit organizations to participate in this series.
Please email us, karin (at) carboncatalog (dot) org, if you would like to have your say on Carbon Catalog. We also invite readers to send in their questions, and will do our best to have them answered by the experts. Stay tuned.