At the moment, the Charities Aid Foundation says it will cost £500m. This has been extrapolated by Oxford Economics to a negative cost to society of £1.5bn.

But I’m not sure these calculations are based on solid assumptions.

Before I go ahead, I’d just like to say that in my personal opinion the tax cap is a bad idea, that the Give it Back George campaign is spot on, and that with a bit of luck David Cameron will indeed bin this whole policy as swiftly as possible. But that said, let’s get our numbers right.

CAF’s figure was extrapolated from the fact that David Gauke said the government expected to save £50m to £100m from charitable tax reliefs through the cap.

Their estimates are based on the idea that for every £1 given in tax relief to a major donor, the sector receives £5.

But for every £100 given, a major donor gets £31.25 in tax relief.

So for every £1 a major donor receives in relief, a charity receives £3.20. In most cases this is accompanied by another 80p in Gift Aid.

This means the absolute maximum amount the sector could lose, if Gauke is right, is £400m.

But this bill could be reduced a lot further, depending on certain factors.

For one, CAF’s calculations assume Gauke didn’t include Gift Aid in the revenue the Treasury would gain. This makes a big difference, because including Gift Aid, the government actually gives £56.25 in tax relief for every £100 given by a top rate donor. If Gauke’s calculations do involve Gift Aid (and it’s impossible to know whether they do or not) a £100m saving to government could cost charities the comparatively modest sum of £222m.

Furthermore, will people stop giving, or will they carry on? After all, if philanthropists continue to give but can’t claim tax relief, a gain of £100m to the exchequer wouldn’t cost charities a penny.

People will give less, of course – if the cost of something goes up, people do less of it – but we can’t assume that everyone will stop giving a penny over 25 per cent of their income.

If we use the most optimistic assumptions, the government’s total revenue from the cap could be as low as £50m, including Gift Aid. If half of that came from philanthropists who continued to give despite losing tax relief, the total revenue lost to charities could be less than £60m.

The worse case scenario, as mentioned above, is £400m. The truth is probably somewhere in the middle.

I’d also quibble with the idea, put forward by Oxford Economics, which says the social cost to the country is £1.5bn.

This is a calculation based on the fact that every £1 given to charity produces £3 of social benefit, and is based on CAF’s original figure of £500m.

If the actual loss to the sector is closer to £200m, the social cost is likely to be around £600m.

But Oxford Economics’ calculation also assumes that no one does anything socially useful with the £200m charities lose out on. If we assume that each £1 retained by the government and by philanthropists is spent to produce at least £1 of social benefit, then we’re actually looking at a total loss of £400m of social benefit, not £1.5bn.

Of course, it would still be better if the country didn’t lose £400m of social benefit, and if we stuck with the principle that money given away for the public benefit should not be taxed. But the actual loss to the charity sector might well be less than we feared.

There must be mixed emotions at Samaritans today – the day of the funeral of Claire Squires. Had she lived, her contribution to the charity from her London Marathon run would probably have been a few thousand pounds. Since her death, it has received a windfall of more than a million pounds in the space of a week. Living with good fortune that flows from tragedy is never entirely comfortable. Other charities must envy Samaritans – yet not envy them.

The windfall amounts to about a tenth of Samaritans’ annual income, and comes in that most desirable form – unrestricted funds. There must have been a gnawing temptation to start buying photocopiers and mending the roof. But that was wisely resisted and the money has gone into a special fund that will be spent in consultation with the bereaved family.

Another heartening aspect was the decision by Justgiving not to levy its usual fee on the donations made through Claire’s web page. Donors were urging them to do this, but they could have kept quiet and taken their cut of the windfall. Instead they quickly decided not to do so – a smart PR move as well as an act of generosity.

Fundraisers would love to define and bottle the motivations of this extraordinary episode. But surely it’s something that can’t be engineered or manipulated. It’s just one of those terrible things life throws out, from which some good can perhaps be salvaged.

The first complaint is about the use that charities put their money to. Should you really get tax relief for giving money to the opera, or Eton, rather than paying for essential services provided by the state? Shouldn’t we have one law for charities doing important stuff – helping the disadvantaged – and another for people doing frivolous nice-to-haves – the donkey sanctuaries and whatever?

The second is related, and concerns value for money. It suggests that we should have some sort of measure of how effective a charity is before it gets a tax break.

The trouble with the first argument is one of degree. Where do you draw the line? At the moment we’ve drawn it in one place, after much long debate, and it’s led to the public benefit laws. These were long, complicated and difficult, and don’t work very well.

To then try drawing another line, in another place, to separate charities into A and B streams, sounds hideously complicated, especially because we get into value judgements pretty quickly. You can put animal charities, for example, in the secondary modern stream and “relief of poverty” charities in the grammar school stream. But what about the PDSA, which argues it relieves poverty by taking care of animals? What about the RSPCA, which is providing services the state would otherwise have to provide?

What about education charities? People feel Eton and the Royal Opera House shouldn’t count. But obviously a school for special needs children shouldn’t be restricted. And what about the Royal Opera House’s programme to teach music to disadvantaged children?

After all, let’s not forget the state does spend money on the arts – it gave the Arts Council alone more than £600m of taxpayers’ money last year. Surely the argument that arts charities don’t deserve tax breaks only works once we’ve stopped spending any actual tax on the arts directly.

The question with the second argument is one of measurement. Who decides what efficiency looks like? How efficient is efficient? Are we going to rely on an SROI measure? Are we going to apply it to every charity in the UK? What’s the basis for comparison? It seems pretty fruitless comparing cats with cancer and cancer with ex-cons.

It sounds, in short, like the kind of activity which would generate an awful lot of heat, but not much light.

In any case, it doesn’t really matter. All you’ve got to prove, in efficiency terms, is that most charities use tax money more efficiently than most government agencies. And that seems to me to be setting the bar pretty low. Almost anything is more efficient than a government department.

It would be nice, in short, if we could reward the most effective people, doing the most important stuff. But someone’s got to decide who that is, and how it’s measured. I know a few people who’d like to volunteer for the job of deciding that. But oddly enough, they all seem to think their own cause is best.

What was really interesting was his view of the sector – one that was predicated on the idea that social enterprises and charities should be delivering more services.

O’Donohoe’s starting point is one that the majority of workers in the sector, I think, would agree with: the charity sector is better than other sectors at supporting vulnerable and disadvantaged people. If you accept that premise, it leads to several conclusions which make sense, but don’t necessarily make charity workers very happy.

First is that to provide that support, you need someone to pay you to do it, and the majority of that, inevitably, will come from government. Government wants to provide that cash in the form of contracts.

If you want to compete with private sector organisations for that income, you need the same resources they have: a hefty balance sheet and plenty of working capital. In short, you need sector organisations with the sort of scale so they can bully Serco.

It’s hard to grow in scale through any of the existing funding methods: grants, donations, or building your working capital. Nor can you do it just through loans and bonds, which load too much risk on the charity. You need a lot of money quickly, and you need to repay it only if you’re successful.

This type of “risk capital” is traditionally provided for the private sector through selling shares – equity. But since social enterprises cannot usually take equity, there needs to be a set of alternatives. However, developing these is complicated, and needs a full-scale finance market. And Big Society Capital exists to facilitate this.

All of this makes sense. The trouble is it leads us into a place many people don’t like.

One reason people don’t like it is that once you get into the financial legerdemain a complex financial market implies, you can easily find that a lot of cash makes its way into the pockets of consultants and bankers. After all, the Merlin banks, who’ve put £200m into BSC, are going to make a four to five per cent return on their money. A lot of money men are going to draw handsome salaries, too, for setting up social finance funds.

In addition, once the sector itself starts to focus on finance, scale and winning contracts, it could well lose sight of the grass roots, and the people it’s trying to help.

In particular, if you try to get large, you lose your connection with the community, and you have a series of large, Tesco-like charities, blundering around stamping on the people they’re supposed to help.

Beyond that, this process actually ends up turning vulnerable people into commodities. Rather than helping those who need help, you end up focusing on which of them provide the best return.

All of these are pretty worrying and reasonably plausible eventualities. If the world of social finance loses its way, any of them could happen.

But the current system certainly isn’t working. Charities are being forced to work at slave-labour prices for private contractors, or living hand-to-mouth on local authority grants. Brilliant ideas which help vulnerable people in one town never get transferred to another, and too few people are even working to identify what the best ideas really are.

All of this suggests that the thing to do is not to dismiss social finance as a tool the sector doesn’t need, but to use it and keep a watchful eye to ensure that it continues to get used in a way which helps vulnerable and disadvantaged people.

Secondly, that limit is taken to include Gift Aid. So if you earn less than £200,000, and give £40,001, and the charity claims Gift Aid on that, you’ll be capped.In addition, the donor is likely to be extremely limited in the amount of tax he can personally reclaim, because Gift Aid is subtracted from the amount a donor can claim back, and furthermore, it gets deducted before the donor gets anything.

For simplicity’s sake, let’s look at a donor who earns exactly £2m. If he gives £800,000 to charity, the charity can claim £200,000 in Gift Aid. For tax cap purposes, he is considered to have given £1m to charity.

Under the new rule, he is only allowed to claim tax back on £500,000, a quarter of his income. Next year, a donor would pay £225,000 tax on that, so that is all he can reclaim.

Because the charity has claimed £200,000 in Gift Aid already, the donor is only entitled to claim back another £25,000, because Gift Aid is subtracted from the amount the donor can claim back.

If he gave much more than that, he would not have paid enough tax to cover Gift Aid. HMRC appears to have no clue, at present, what would happen in that scenario.

Let’s look at how this compares to the current situation.

This year, if you earn £2m, and give £800,000 to charity, you get £300,000 tax relief, and the charity gets £200,000. The cost to you is £500,000, and the charity gets £1m.

If next year, you want your gift to cost you the same:

You give £580,000. You’ll be able to claim back £80,000 tax, and the charity will get £145,000 The cost to you is still £500,000, same as last year, but the charity gets £725,000 instead of £1m. Each pound you donate costs you 38 per cent more.

If next year, you want the charity to receive the same:

You give £800,000, like last year, but instead of getting back £300,000, you’ll get back £25,000. The cost to you is £775,000 instead of £500,000, and the charity still gets £1m. Your donation costs 55 per cent more.

(In the interests of full disclosure, the change above isn’t all caused by the tax cap. The highest rate of tax has changed from 50 per cent to 45 per cent, so your cost of giving would have gone up a bit anyway.)

Let’s look at what would happen if the price of giving went up in the same way for an ordinary guy earning the average wage who wants to sponsor a mate to run a marathon:

This year, if you give £10, the charity can claim Gift Aid. Total receipt for the charity: £12.50. Next year, you give the same £10. Now, the government says, the charity won’t get that Gift Aid, plus it will charge the charity another 94 pence. You still give £10, and the charity gets £9.06. You decide you want the charity still to get £12.50. You now have to give £15.50 for the charity to get £12.50.

In this scenario, would you give a bit less, or would you decide not to bother giving in the first place? I know what I’d do.

Also, if I was the marathon runner, I wouldn’t bother running. If I was the charity, I’d shut down the marathon fundraising department.

I dare say it’ll be the same for many major donors.

A fair number of people will not just give less, but not bother at all. There are a lot of other things to spend cash on, and there will be a Labour government along in a few years which will scrap this measure.

In the meantime, a few people will think to themselves, forget this generosity lark – I’ll buy myself a yacht.

This new idea – George Osborne’s only mention of charity in the Budget – means that you can’t claim tax relief on more than a quarter of your income, or £50,000, whichever is higher, and will obviously make it much more expensive to give very large amounts to charity.HMRC has been spectacularly short on detail, so I decided to check how it would work. If someone earned £200,000 and gave £100,000 to charity, would he be capped? How much would he lose? Would it make a difference if the charity claimed Gift Aid?

Some people think the cap kicks in at a donation of just under £100,000 plus Gift Aid. Some seem to think it kicks in around £40,000 plus Gift Aid. Which is right? Is either?

The answer seems to be that they don’t know. Haven’t the faintest idea. Or at least, if anyone inside HMRC does know, their press office can’t find that person.

The Charity Tax Group now tell me they have the word from HMRC: the relief cap first kicks in when you give £40,000 under Gift Aid, and earn less than £200,000. I still wouldn’t put too much money on that being the right answer.

It may seem extraordinary that the government could announce a limit on charitable giving without knowing how it might work. Especially when it has the potential to do enormous damage to some of the country’s largest charities.

But in truth, it’s par for the course. Almost every year, the government announces a new bit of vexatious legislation designed at stopping tax avoidance which makes life more difficult for charities. Substantial donor legislation. The fit and proper persons test. Now this tax relief cap.

It’s always announced in a hurry, rarely thought through, and usually child’s play to avoid if you’re dodgy, but really hard to cope with if you’re honest.

Rarely is it easy to work out exactly why government has introduced a new anti-avoidance measure, because they cook them up at the last minute and never tell anyone about them, but the best guess, in this case, is it’s not really targeted at charities at all. It’s aimed at two other reliefs – loss relief and qualifying loan interest relief – which were also included in the Budget, and Gift Aid has been caught in the crossfire.

One clue that this is the case is that HMRC does have good worked examples of how the legislation will affect these reliefs, and it seems to be coming as a bit of a shock that donations work differently.

George Osborne did say he’d work with philanthropists to ensure genuine giving wasn’t affected, and it seems hopeful that in the long run, the government will thrash out a compromise so that charities won’t be hurt too much by this.

But undoubtedly it will take a huge amount of work, waste a lot of time, and potentially damage philanthropy in the UK.

The conference was hosted in partnership with Social Enterprise Scotland, and it appeared as if around half the delegates were from north of the border. As a result, the whole thing seemed to have a slightly different vibe from previous years, as well as different faces.There were no Westminster ministers attending, SEUK chief exec Peter Holbrook said during his opening address, and it was a lot warmer than last year’s freezing event at the O2 in London. Delegates seemed pretty pleased about both of those facts.

Meanwhile Laurie Russell, chair of SES, asked the audience’s native Scots to applaud their English and international guests. They duly did, which took me a bit by surprise, because despite many visits, I’ve never previously had a round of applause in Glasgow for being English. I don’t expect another one any time soon.

Scotland, we were told by Russell, is probably the best place in the world to be a social enterprise. After lunch, the first minister of Scotland, Alex Salmond, underlined that by delivering a knowledgeable and entertaining speech on, basically, why he personally likes the sector an awful lot. There was a general sense that the social entrepreneurs of Scotland were pretty happy with their politicians. “Our problem isn’t our government,” one told me. “It’s the DWP and its stupid ideas.”

And that was as polite as anyone got about the Work Programme, one of the conference’s most frequent topics of conversation, which looks to be about as popular in Scotland as the poll tax. The policies coming out of Westminster, in fact, seem pretty poorly viewed on both sides of the border. The Social Value Act got a good review. The jury was out on Big Society Capital. But other than that, there was a general feeling that the government had tried some things, didn’t really get what was needed, and had now lost much of its initial enthusiasm for the sector.

One delegate suggested the government had imposed a cap on Gift Aid in the Budget last week “because the sector was complaining so much about the health bill, and they wanted to focus its attention on complaining about something else.” I don’t actually think that’s the case – I think it’s a knee-jerk reaction to a tax dodge which has little to do with charities – but the reaction indicates the low esteem in which the coalition is held.

In contrast, Salmond was applauded as he told everyone he wanted to “continue to provide the most supportive environment in the world for social enterprise”, and announced a programme to attract more international social enterprises. I suspect that a few people south of the border may be eyeing those international organisations enviously in the next couple of years.

How will this affect charities?

The first thing to say is that it only applies in a limited number of cases, but those will be the ones involving the biggest donations.Let’s say a guy earns just over £200,000. Come next April, he’ll theoretically pay just under £90,000 in income tax.

Anyway, he wants to give money to charity. He decides to give £100,000.

Under the tax rules that will exist from next April, the charity is entitled to claim Gift Aid on this: £25,000. He is entitled to claim a further £31,250 in higher rate relief.

So far, so good. Total tax relief £56,250. The charity receives a very generous £125,000.

Under the new rules, he loses more than £6,000 of that. And if he wanted to claim any other tax reliefs that year, he can forget it.

For a much larger donor, who’d sold his company for £20m and wanted to put all of that into a trust, and donate the tax, too, the situation is far worse. He and the charity could lose £4m or £5m. Or he might just decide not to bother.

So in short, this legislation has the effect of discouraging extremely large one-off gifts to charity. Not ideal.

The government’s said it wants to encourage more philanthropy, and it introduced the 10 per cent relief on inheritance tax especially to encourage very large gifts in wills. But with the chancellor’s new wheeze in place there’s now significantly less chance of that sort of large-scale philanthropy happening here while donors are alive.

So what now?

Well, an ideal solution – and the one the sector will lobby for – would be for relief on charitable donations to be excluded altogether from this scheme.

Failing that, excluding Gift Aid from tax relief calculations, and including only higher rate relief, wouldn’t discourage philanthropy too much.

It’s a sad fact that today we’re talking about “not discouraging philanthropy too much” being a victory.

But perhaps that’s not wholly unexpected, from a government that’s generally failed to put its money where its mouth is with regard to the voluntary sector.

See our round-up of stories on the 2012 Budget

It was soon obvious that it was surprisingly hard to find a good match between my skills and the needs of small charities.One woman said she wanted to develop a fundraising strategy. But it quickly became clear I’d no more idea about fundraising than she did.

A second said she wanted to build her social media profile. However it was obvious that others at the event knew much more than me.

A third said she’d like to meet more celebrities. All I could do was shrug hopelessly and say “Hmm. So would I.”

But one common theme came up where I could help: a lot of people knew they needed to raise their profile, but weren’t quite sure where to start.

Now I reckon the place to start with this is a simple one: work out who you want to talk to.

This seems obvious, but it’s often forgotten. Decide each group you need to reach – donors, for example, or beneficiaries, or volunteers – and then work out what you want to say to them. Ideally, see if you can sum it up, in your own mind, in one or at most two short sentences. Remember it, and ask yourself if what you’re doing is helping you achieve it.

Once you know who you want to talk to, and what you want to say, ask yourself where your audience are. Decide what places do they go, and what media they use. Then go there.

And remember, if you want to involve the media, you need news. The single most common reason journalists ignore a press release is because it’s irrelevant to their readers, and the second most common reason is because nothing new is happening. The third is because it’s not very interesting.

Come to think of it, that more or less covers every reason why journalists ignore a press release. If it’s new, interesting and relevant to our readers, it’s our job to write about it.

To sum up: to get in the papers, you need to do something.

Threatening closure is good for this. When I worked in local news, I happily wrote a story about a funding crisis at the local animal sanctuary three times a year.

Failing that, stage an event. Open a campaign. Dress up a supporter in a silly costume and send them out to fundraise.

Or why not write an open letter lambasting a local politician? Your local media love criticising the council, and it’s usually like shooting fish in a barrel.

Also, papers love pictures, so arrange some strong shots. Try to be original, too, because journalists hate pictures of middle-aged men in suits standing in a row. By God we hate those.

If you want to bypass the press, and speak directly to potential volunteers or donors, think about how you’ll structure what to say to them. Something like this might work:

Who you are.

What you do.

What you have already achieved.

What you want from them.

What they will get out of it.

What you will do with it.

How they can give it.

Try to phrase this using big, easy-to-follow numbers and simple stories, preferably featuring a cute child or puppy. Do not overcomplicate things, because people hate nothing more than being confused.

If you’re still not confident, access the expertise that’s available for free on the street. One way to do this is to go anywhere outside and in a town. Shortly, you’ll get chugged.

Chuggers have got finely honed pitches. Take some notes on their process, refuse to give them any money, and go on your way.

If you’re still not sure, try it and see if it works. Try one side of the street using one flyer, for example, and the other side using another. Where do you get better results?

Above all, promote yourself shamelessly. Talk to everyone. Repeatedly.

If you are reading this, you’re probably British, so there’s around a 90 per cent chance you hate this idea.

Sadly, that’s what works. People will listen to charities. But not if you don’t talk to them first.

The aim of the event is to put charities that need advice in touch with eager volunteers who are skilled in PR, comms, or journalism.Intrigued, I decided to attend, and roped in my colleague Dave to come along too.

Beforehand, we were asked to supply a short biog that would be given to the charities, and we were furnished with a brief description of what the charities do and what they were looking for help with.

Being a bit of a geek, I decided to check out the websites of the charities on the list before attending so I knew a bit more about what they did and could help with any website-related queries.

At the Media Trust’s headquarters last night, we were offered a glass of wine, given a sheet to keep track of who we spoke to and told what would happen. The media people among us were asked to take a seat next to someone from a charity and we’d chat for five minutes until a bell rang, at which point we’d take the next seat along next to another charity person. And so it continued until we’d done the full round. After each one we had to write a ‘Yes’ or a ‘No’ next to their name if we wanted to speak to them again, while they did the same about us. At the end, the Media Trust gathered together our papers and promised to be in touch with contact details if the ones I’d said yes to would like to see me again too.

What struck me as I moved around, was how inadequate five minutes felt with some people, and how interminably long it felt with others. Which I guess was the point – I was never going to be able to help all the charities present, given the myriad of skills they were looking for. From help with social media, to redesigning websites, through business planning to securing celebrity patrons – we weren’t expected to know it all, and most were just grateful that we were trying. I apologised for being honest about some of the websites I’d seen, though the charities seemed to appreciate the research I’d done and for an outsider’s point of view.

After 45 minutes, the round finally came to an end and we handed in our sheets.

I really enjoyed the experience, and think it’s a great service that the Media Trust is offering. It helps would-be volunteers put their skills to good use, and provides charities with access to professionals that they otherwise might not have the money to pay for.  Once initial feelings of embarrassment and nervousness are overcome, it’s  also more personal than searching for volunteering posts over the net.

I’ll confess, I’ve optimistically said yes to most of the charities I spoke to as I feel I may be able to help in some very small way;  but it remains to be seen if they felt the same. I’ll keep you posted.