Simplifying Gift Aid will reduce the burden on charities and donors alike, but imposing extra conditions could counteract the benefits, says Caroline Drummond
Over the summer months, those of us involved in fundraising policy have been looking at Gift Aid and thinking about the proposals that were set out in the recent government consultation.
Gift Aid is one of the main ways that the government supports the charitable sector, and it provides vital extra income on eligible donations – last year, charities received over £1bn through the scheme. Being so important for fundraisers and charities, getting Gift Aid working better has long been a priority for the institute. We want the tax system to support fundraising in the best way it can, and one of our aims is to see Gift Aid claimed on every single donation given by a taxpayer.
The beauty of simplicity
When looking at either improving the existing system for Gift Aid or thinking about new changes, a key success factor is simplicity. As we say in our consultation response, “If the government wants to see its ambition realised – more people donating and Gift Aid claimed on as many donations as possible – then one factor needs to run as a golden thread through its policies, processes, and systems: keep Gift Aid simple.”
The main part of the consultation looks at what the government can do to promote Gift Aid, how intermediaries can be allowed a greater role in claiming and processing Gift Aid, whether a universal Gift Aid declaration database is an idea worthy of consideration and whether the model declaration can be shortened.
Having a shorter declaration would certainly be good for fundraisers. The current model declaration is 91 words in length, and includes cumbersome references to community and amateur sports clubs, VAT, and Council Tax. The wording takes up valuable space on printed donation forms, and displaying such a long statement doesn’t work well for digital donations (especially if donating on a mobile). If we can shorten the declaration and make it easier for charities to use (and for donors to understand), then that would be a welcome change.
This year, donations to JustGiving through mobile phones and tablets overtook donations made through desktop computers for the London Marathon. As smartphones become a more constant and habitual method for conducting our daily business, it’s logical to expect that donations through this type of technology will grow.
The government has recognised that it can be harder to claim Gift Aid through digital donations, and is looking to see whether intermediaries could play a greater role in Gift Aid.
Essentially, the proposals suggest that a donor could give a Gift Aid declaration to an intermediary (e.g. a donation site) and then all the donations made through that site could be Gift Aided, rather than the current practice, which is for the donor to give a declaration each time they give to a new charity. This could be beneficial, particularly when it comes to smaller ad hoc donations. However, conditions proposed alongside this change, which require donors to re-submit a declaration to an intermediary on an annual basis as well as re-confirm on each donation, could stifle any benefit that the change might bring.
Exploring the field
As well as looking at the proposals in the consultation, working with our members over the past couple of months has helped us to think about how else Gift Aid could be developed. Simplification of the rules around donations from spouses¬- such a headache to deal with! - would be very welcome, as would extending carry back for Gift Aid to four years so that it can be claimed against an individual’s past income tax. Furthermore, the idea of an opt-out system for Gift Aid is one that should be explored to see whether it would bring significant benefits.
So, there is a lot going on. Through this consultation, we hope we can move Gift Aid along. It really does provide vital income to the sector – and we’d love to get it working better for charities and donors.
Caroline Drummond is policy officer at the Institute of Fundraising
This article first appeared in The Fundraiser magazine, Issue 34, October 2013