Donors are put off claiming gift aid because they believe there will be a cost to the charity or themselves, and are unwilling to share personal information in case they are contacted with a fundraising ‘ask’, according to new research published today by HM Revenue & Customs.
The research, Gift aid: Understanding donor behaviour, is part of the government’s work, as announced in this year’s Budget, to encourage more donors to use gift aid.
It finds a lack of understanding among donors about how gift aid works, and that this is putting people off claiming the relief.
The National Audit Office estimates that there are donations worth around £2.3bn a year where gift aid is not claimed.
Charities and sector representative bodies have been working with HMRC to improve and simplify the gift aid declaration form.
The research was commissioned as part of the Gift Aid Working Group, set up earlier this year to look at reforming the gift aid declaration and changes to the way intermediaries operate gift aid, in response to the gift aid and digital giving consultation held last summer.
It concludes that decisions about gift aid are often automatic, and the habits of eligible donors who do not claim, and ineligible donors who do, need to be disrupted before their behaviour can change.
“Disrupting this habitual process with up-front ‘priming’ messages highlighting the benefits of gift aid was received positively by participants,” says the research, which is based on interviews with 40 donors and group discussions about different declarations and ways to claim gift aid, including online and via SMS.
It suggests changing the format of the gift aid declaration form to communicate key facts more effectively and make it harder to ignore.
HMRC says the declaration form could be improved by avoiding excess detail or dense formatting, breaking up the information to make it easier to digest and changing the layout so donors pay more attention to the information.
To deter ineligible donors from claiming, charities need to clarify that they need to have paid tax, and second that incorrect claims are the donor’s responsibility, it says, but these messages must be carefully constructed to avoid discouraging eligible donors.
The research finds that participants claimed gift aid if they believed themselves to be eligible, did not feel that claiming would incur any costs to themselves or the charity, and felt the benefits to the charity outweighed the effort of claiming.
As well as being put off it they thought the process would cost them or the charity, and being deterred by sharing information in case they were contacted again for fundraising, donors also showed a reluctance to participate in anything ‘official’, and viewed form-filling as inconvenient, the research says.
In response to the findings, a spokesman for the Charity Tax Group said: “This timely research shows that despite good awareness of gift aid, there is a lack of understanding among donors about how it works in practice, with implications for take-up.
“In particular, the lack of understanding about the link to tax is a concern. Better education on how gift aid works is vital and CTG will continue to work with HMRC and sector partners to achieve this. The findings on the influence of habit disruption and the drivers for claiming or not claiming gift aid are very interesting and we will be analysing them in greater detail.”
Simplifying the model declaration
The CTG has been among the organisations calling for simplification of the gift aid declaration.
Early drafts of the revised model gift aid declaration seen by the gift aid working group show improvements, with a much shorter form and unnecessary references to council tax and VAT removed, the CTG spokesman said.
“It is vital that we create a gift aid declaration that is easy for donors and charities to use and fit for the modern age. At the same time, it must not mislead donors about what their responsibilities are while not being worded in a way that could discourage eligible donors,” he said.
Exchequer Secretary to the Treasury Priti Patel said: “This research shows that there is more that government can do to boost eligible donations which is why we are simplifying the declaration forms to make sure donors understand when they’re eligible so that charities can maximise the financial donations they receive.”
