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Tax efficient giving awareness levels surprising and disappointing

Finance | Celina Ribeiro | 21 Apr 2009

5m more people could be encouraged to give tax effectively, but awareness remains “shockingly low” among young people, according the Charities Aid Foundation.

CAF has admitted it was surprised by how low awareness of tax efficient giving is, as it released a report showing that just two thirds of the adult population know they can donate to charity in a tax effective manner.

Less than a quarter of young people are aware that they are able to give tax effectively, a figure which Richard Harrison (pictured), director of research at CAF, said was “shockingly low” and a “missed opportunity”. “It is far below what we would like to see,” he said.

Unprompted, just 1 per cent of all surveyed listed legacies as a tax effective giving mechanism, while fewer than one in ten named payroll giving. Gift aid fared better, with nearly a third of the public identifying the scheme as an efficient way to give.

“Gift aid is pretty healthy”, said Harrison, but added that the organisation was “very surprised and a bit worried” about the level of awareness around payroll giving and legacies.

While awareness was higher among people in higher tax brackets (90 per cent said they knew about tax effective giving), the survey found that the processes involved in giving tax efficiently acted as a deterrent.

The proportion of higher earning individuals who would consider claiming 20 per cent back on donations made to charity at the end of the financial year more than halved once the specifics of the process were explained.

Campaign call

Nevertheless, Harrison estimated that a further 5m people could be brought in to tax effective giving if they were made aware of the schemes.

CAF has called on the sector and government to work together to develop campaigns to educate donors about tax efficient giving and indicated that any campaign could involve television and viral online marketing.

It has also reiterated previous calls for the reintroduction of opt-out approach to gift aid, noting that while the scheme brought the sector £900m last year, a further £752m went unclaimed.

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Directory: Charities Aid Foundation
Who's Who: Celina Ribeiro