Share

Gift Aid Small Donations Scheme 'too complex to have real impact'

Caron Bradshaw, CEO, CFG
News

Gift Aid Small Donations Scheme 'too complex to have real impact'1

Finance | Niki May Young | 25 May 2012

The Gift Aid Small Donations Scheme (GASDS) is welcome, but will only be effective if it is made less complex according to a coalition of charity sector umbrella bodies in their response to the consultation on the measure.

Charity Finance Group (CFG), Charities Aid Foundation (CAF) and the National Council for Voluntary Organisations  (NCVO) submitted its joint response on the scheme which is designed to provide small charities, who would find it difficult to collect the donor details necessary to claim full gift aid, to receive up to £1,250 on cash donations up to £5,000. 

The groups welcomed the "supportive move" to create the scheme but warned that it is "extremely complex and difficult to understand, even among those familiar with gift aid".

Caron Bradshaw, chief executive of CFG (pictured) said: "The basic premise of this scheme has real potential to make a difference for the very smallest of charities. However, as it is currently set out it will be too complicated to have a real impact.

"Eligibility for the scheme is limited and this will stop those that need it most from using it. We propose a rethink on how to implement GASDS to ensure it is easy to use, achieves its potential, and doesn't further complicate gift aid."

Not a tax relief measure

The fact that GASDS differs from gift aid, in that the former is a public expenditure, rather than a tax relief measure should be made very clear to charities, the group warned. This status means that the scheme will be "subject to future changes in political priorities and public spending decisions". As a measure of distinction they suggested changing the name so that it sufficiently differs from gift aid.

Despite the difference in status the scheme as it stands is "tangled with anti-fraud model more appropriate to the tax system", and fraud could be better mitigated using a robust application process, they advised. 

Further, Bradshaw said that: "There is already substantial regulation to stop organsiations registering with the HMRC to abuse the system. We believe that these, along with the already low limit of £1,250 per charity available under the scheme should be enough to reduce fraud."

The group also voiced concerns over the scheme's potential to detract from wider gift aid reforms, including online gift aim claims and simplification of the current system. 

The GASDS is set to be introduced in England in 2013 and is subject to consultation with devolved administrations for its application in Scotland, Wales and Northern Ireland. The scheme aims to allow small charities and community amateur sports clubs (CASC) a top-up payment on small cash donations. Not all small charities will qualify, however.

Restrictions include:

  • The charity or CASC must have been registered with the HMRC for at least three consecutive tax years
  • The charity or CASC must have successfully made a gift aid claim in at least three of the last seven tax years
  • Under the scheme local groups are categorized based on the type of building that they occupy. A core allowance of £1,250 is extended to an additional £1,250 in each community premises. But charities conducting work from residential properties, for instance working remotely at care homes, do not qualify for this extension
  • Charitable activities must take place in the buildings with at least 10 beneficiaries on at least six occassions per year

The consultation, which launched on 27 March closes for comments today.


 

Barry Gower
Director
Gain Gift Aid Recovery Consultants
25 May 2012

It is somewhat disappointing that although the Gift Aid on Small Donations Scheme has (quite rightly) elicited a generally negative response that it is too difficult and complex, I have not really seen any alternative proposal except for the advice that there need to be a major re-think. This will inevitably mean delays which in turn will mean that charities will lose out for another year and possibly longer.

So here are some positive suggestions.

• Draw up some income levels or bands which will differentiate the various levels at which charities will claim this money.
• Use the approach that has been successfully implemented with Self Assessment and put the onus on the charity to be responsible for creating their own claim and being able to substantiate.
• Use a similar registration system to that employed previously under SA Giving so that more detailed questions, such as connected charity status and previous fundraising and Gift Aid history can be asked and recorded.
• Let HMRC use their established systems of measuring and tracking trends to highlight any obvious deviant claims.
• Make the core claim, on the basic £5,000 relatively straight forward, but any charity, or group of charities wish to use the ‘top up’ will need to jump through the much more onerous hoops as envisaged in the Consultation Paper.

This is a suggested initial approach and is presented as a first step in developing a solution to what is a very exciting and innovative submission on behalf of the Government. Over and above everything else, despite the fact that it is not ‘Gift Aid’ in the pure sense, it has the look and feel of Gift Aid and may just achieve what Gift Aid has not really be able to do so far and that is a much deeper up-take in the sector as a whole, as well as a small but possibly meaningful cash injection to smaller charities.

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

Get involved or risk bad charity policies, fundraisers told

30 Jan 2015

Fundraisers need to be more involved in policy-making or risk the government “losing the plot” when...

Unicef launches record £2bn appeal to combat 'new generation' of crises

30 Jan 2015

Unicef has launched its biggest ever appeal to raise funds for "growing numbers" of children experiencing...

CFG policy head questions 'worrying' comments by Bubb over 'too many charities'

30 Jan 2015

The new policy head at the Charity Finance Group, Andrew O’Brien, yesterday labelled as "worrying" comments...

Shawcross reappointed as chair of the Charity Commission

29 Jan 2015

Francis Maude, minister for the Cabinet Office, has reappointed William Shawcross as chair of Charity...

Commission shows ‘real improvement’ but many concerns remain, says Public Accounts Committee

29 Jan 2015

The Charity Commission has been praised by Margaret Hodge, chair of the Public Accounts Committee, for...

Commission to investigate charitable school over private benefit from leisure centre and dating agency

29 Jan 2015

The Charity Commission is set to open a statutory inquiry into Durand Education Trust, a charity connected...

NGO domain pages will launch in May

28 Jan 2015

The Public Interest Registry will make the .ngo generic top-level domain name generally available from...

Comparison website for special needs services launched by charity consortium

23 Jan 2015

A coalition of social care charities has launched a TripAdvisor-style website, designed to help families...

CRUK debuts contactless giving through shop windows

21 Jan 2015

Cancer Research UK has announced a collaboration with outdoor media owner Clear Channel to bring contactless...

Join the discussion

 Twitter button

@CSFinance