Andrew O'Brien, head of policy and public affairs at the Charity Finance Group, says the Gift Aid Small Donations Scheme has been underutilised.
It’s the new year and most charities will be trying to put their plans in place for the next financial year.
Last year was a difficult year and not just for the much publicised media attention on the sector. It saw the continuance of squeezes in the sector’s funding position with government cuts continuing and greater competition between charities to access limited funds.
Despite the challenging funding environment, there are still opportunities for the charity sector to maximise its income. One of those is opportunities is boosting the income generated through tax reliefs. One tax relief that has been considerably underutilised is the Gift Aid Small Donations Scheme.
In its first two years, the scheme has only generated £27m for charities compared with the £135m that the government estimated it would cost. This is funding that could be going to help charities across the country. We have been fortunate that despite the significant pressures on household incomes since the recession, the public have remained incredibly generous – so the failure of the scheme is not down to lower than expected funds being raised from the general public.
Research that CFG, NCVO and Institute of Fundraising carried out after the first year of the scheme found that there were a number of barriers to making the most of the scheme. These included charities having to claim gift aid for two years before they can use the scheme, a high ‘matching requirement’ and confusion about how the scheme operates.
At the end of last year, HMRC began a call for evidence for charities which you can read here. It is vital that as many charities are possible take part in this call for evidence so that we can build the case for change.
Alongside this call for evidence, CFG, NCVO and Institute of Fundraising are running a fresh survey of charities to give them a chance to feed in their views and build the case for reform. It is short and participants that fill it in before the 31 January will be entered into a prize draw to attend CFG’s Gift Aid Conference in Central London.
The coming year is going to be just as tough as the last. The government rarely gives a chance for policies to be changed. So we cannot afford to miss the opportunity to improve this scheme and boost the fundraising income for thousands of charities.
The scheme in particular is important for small and medium sized charities. Normally, these are organisations that do not participate in consultations and calls for evidence because they lack the capacity. Often the issues being discussed are not considered core to their interests. But not this time. A better scheme will help smaller charities which have found it most challenging adapting to the new financial climate. They need to make their voices heard.
CFG believes that it is time to sort out the Gift Aid Small Donations Scheme so that it reaches it potential. Hopefully, 2016 can be the year we begin to make this scheme work.
To take part in the survey click here.
