Gift aid and digital giving consultation launches

Sajid Javid, Economic Secretary to the Treasury

Gift aid and digital giving consultation launches1

Finance | Niki May Young | 3 Jul 2013

A consultation for “radical” reform of gift aid rules has been launched today by the Treasury.

Announcing the consultation, which will run until 20 September, Economic Secretary to the Treasury Sajid Javid (pictured) said: “The government has already introduced radical changes to encourage donations, but we can do more. I am determined to build a gift aid system fit for the 21st century, so that more money goes to charitable causes. Quite simply, I want to see gift aid claimed on as many donations as possible. I look forward to hearing ideas from the charitable sector so that we can look towards the future success of gift aid.”

Charity Finance Group welcomed the consultation. Its chief executive Caron Bradshaw advised: “Gift aid is an extremely important source of support to charities, and a vital incentive to encourage giving. However there have always been challenges with uptake and bureaucracy. As we grow and develop our sector and new fundraising channels develop, the gift aid scheme needs to grow with us. This also sends a positive message from HM Treasury that they recognise and value the contribution of the sector.”

Gift aid, first introduced over 20 years ago, provided over £1bn additional funding to the sector last year. But up-take sits at around 80,000 charities, just 44 per cent of the number of charities registered in England and Wales.

In recent months HMRC has introduced Charities Online, a soon-to-be compulsory gift aid claiming service that is supposed to modernise the process. But the system is under intense scrutiny as critics have highlighted numerous flaws and continue to feed back their concerns to HMRC. So far 12,000 charities have registered with the service, just 15 per cent of those who claim, and at a feedback session with the sector last month, the Charity Tax Group raised concerns that many small charities in particular may simply “not bother”.

The gift aid small donations scheme introduced in April aims to provide small charities with up to £1,250 of gift aid on small change donations, but it too has been burdened by criticism over its complexity.

In May, Breast Cancer Campaign called for a change to gift aid for workplace giving. Mia Rosenblatt, head of policy and campaigns at Breast Cancer Campaign, said: “We are pleased to see today that the government has now expanded the remit of the gift aid and digital giving consultation, to seek views on how more generally access to gift aid could be improved. Gift aid is essential to the work of charities and it is important that charities, such as Breast Cancer Campaign, are able to maximise the potential of this scheme.” 

Gift aid proposals

The consultation advises that because gift aid is a tax relief “it will always involve a certain amount of information passing between the donor, the charity and HMRC” through the gift aid declaration, but suggests ways this can be adapted for spontaneous giving.

It outlines measures to give non-charitable intermediaries, such as online fundraising platforms like JustGiving or retail outlets offering an added donation a greater role in operating gift aid.

It also proposes a single gift aid declaration per donor through a particular intermediary, removing the necessity for the donor to sign a declaration for each donation.

The consultation follows announcements in 2012’s Autumn statement and in 2013’s Budget that the government would look into ways to improve its current gift aid systems.


Barry Gower
Gain - Gift Aid Consultants
3 Jul 2013

What is interesting is that the existing rules and regulations of Gift Aid allow for most of the proposals suggested to be implemented right now with no real changes, just by using a little innovation and creativity.

It is possible for example to have a universal Gift Aid Declaration which only requires the donor to make a single declaration and then this can be used for any donation to any charity. It is also possible to donate non cash items such as discount vouchers utilising Gift Aid. With a little creative thinking it is also possible to allow 'raffle' type activities to enjoy Gift Aid. And by utilising some innovative applications it is possible to make a Gift Aidable donation without giving any personal information.

So why are the powers that be still spending time and effort on consultation when these things can all be done right here and now and with HMRC approval? Perhaps this is part of the same problems identified by Mark Astarita, chair of the Institute of Fundraising when he referred to "charity leaders were hypocritical in their aversion to supporting the techniques and individuals which fund their work" and " Too many of our leaders don't get it, don't care enough about it, don't shout about it and frankly see us as nothing more than a necessary evil." If the the leaders of the charities and the charity sector were to take a serious look at these proposals, I believe it would go a long way to recovering some of the estimated £800 million in annual lost Gift Aid, which because it can be back-claimed for 4 years equates to over £4 Billion. The glove is on the ground - who is going to pick it up?


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