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Are you prepared for simplified Gift Aid?

Simplifying the Gift Aid system will bring in more money, more quickly, but charities must ensure they are well prepared for the changes, says Daniel Fluskey


This might just be the year when Gift Aid is really brought into the 21st Century. Following George Osborne’s Budget announcement to consult and to “look at how to make it easier to claim Gift Aid through a wide range of digital giving channels”, a number of changes are already underway. The Institute of Fundraising (IoF) is keen to make sure that charities benefit as much as possible from Gift Aid, and is playing a prominent role in ensuring that changes truly reflect the needs and aspirations of fundraisers.
Gift Aid was introduced in 1990 by the then chancellor John Major, and was intended for cash donations only. Although the £600 threshold on cash gifts was successively reduced, it wasn’t until 2000 when the minimum donation limit was removed entirely and the policy substantially revised.

Today, charities can claim Gift Aid from the donations that UK taxpayers make – giving them an extra 25p for every £1 given. Higher rate taxpayers can claim an additional 37.5p for every £1.

That tax relief is now a vital revenue source and an important element in any charity’s fundraising strategy, bringing in over £1bn of what is effectively free money.


Online filing

The future for Gift Aid is clearly focused on modernisation. The chancellor’s plan to improve and introduce new ways of giving money through Gift Aid has huge potential to streamline the systems and bring in more money. By simplifying the claims process and moving to online claims, payments to charities will speed up and, crucially, it will be easier for people to give.

However, it would be wrong to underestimate the work and preparation that charities need to do to make the transition to online claims. It’s also clear that some charities will take longer to make the change than others. That’s why the institute has joined other sector leaders in a call for charities to review their systems now, ahead of the 30 September 2013 deadline set by HMRC.

Our advice to members is clear: get in contact with HMRC with any problems you encounter in making the changes.


Small donations

Further financial help for charities has arrived in the form of the Gift Aid Small Donations Scheme (GASDS). Since April, charities and community amateur sports clubs have been able to claim top-up payments under the scheme. This means that they can claim Gift Aid-style payments on small cash donations. It’s too early to say just how well the scheme is working, but the economic secretary to the Treasury, Sajid Javid, has promised to review it in three years’ time to make sure that it’s working properly.

The idea is that the new scheme sweeps away the paperwork burden on charities by removing the requirement for Gift Aid declarations from donors on small cash gifts of under £20. This should mean that they can claim up to £5,000 a year to boost their incomes.


The future is digital

Following the chancellor’s autumn statement, we are now firmly committed to having a consultation on how to make the administration of Gift Aid easier. As part of this, we want to explore how we can more easily use the different digital channels to give. Not only will this open new ways for people to donate, but it will also attract a younger profile to giving, which is traditionally harder for charities to reach.

IoF digital communications manager Susan Luxford agrees: “As digital use continues to increase with the rise in mobile technology, it is imperative that any organisation places digital as a priority in their activities. It’s a positive sign that the chancellor is focusing on this too, enabling charities to streamline their Gift Aid processes and maximise its potential as an income source.”
We expect the government to consult on its proposals for Gift Aid in the summer, and we’ll be working closely with members on our response about how to make the systems work better for them. In the meantime we’ll be waiting for members’ feedback about how the changes are affecting them. Although so far it’s been very quiet – let’s hope this means that the changes are working well.


Daniel Fluskey is head of policy & research at the Institute of Fundraising

This article first appeared in The Fundraiser magazine, Issue 30, June 2013

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