In July’s blog, we summarised the proposals of the three main groups pushing for reform of the Gift Aid system, and promised to keep you updated on their progress.
This week, the newest of these groups reported its findings at a central London launch event. JustGiving contributed to the research and so we joined an audience of leading sector figures including Nick Hurd, Charities Minister and John Low, Chief Executive of the Charities Aid Foundation (CAF).
Digital Giving : Modernising Gift Aid, a report commissioned by CAF and compiled by leading think tank ResPublica, draws on consultations with charity and private sector representatives, a breadth of research on donor and fundraiser behaviour, and an evaluation of the best ideas of previous studies, to make several practical proposals aimed at simplifying Gift Aid administration and reducing the estimated £750m that goes unclaimed each year by charities.
They recommended changes to:
- Claim submission. Charities would be able to submit Gift Aid claims to HMRC online rather than using paper claims, which each cost HMRC £5 to process. The group’s ultimate goal would be to allow HMRC to access Gift Aid information directly, without the involvement of the charity.
- Government policy. Two new groups would be established – a Digital Giving Unit (within the Office for Civil Society) and a Digital Giving Steering Group (composed of sector representatives and government officials). They would work closely with the charity sector in developing innovative methods of fundraising, and with HMRC to implement specific policy ideas.
- Eligibility conditions. Changes would include allowing Gift Aid to be reclaimed on donations made by SMS. A 2009 CAF/Institute of Fundraising study calculated that text donations could be worth nearly £100m a year by 2014. Meanwhile DEC was able to reclaim Gift Aid on only 5% of text donations received for its Haiti Earthquake Appeal, because of the current difficulty in obtaining signed declarations from text donors.
- Transitional relief. Perhaps most controversially, the group proposed not renewing the current scheme of transitional relief (brought in to soften the blow for charities of the 2008 drop in basic income tax to 20%, and scheduled to finish next April). The savings made when the scheme comes to an end would be use to modernise the Gift Aid system.
The group predicts that, with its five-year timeline for modernisation, by 2020 the vast majority of donations would be made electronically and tax-efficiently, via online or mobile channels.
The full report holds a wealth of interesting insight and discussion so it’s well worth a read. If you can’t manage the whole thing, you can read the much shorter executive summary here.
So how would these reforms affect your charity?
Do you have any criticisms of the report?
How would you change the Gift Aid system – or would you leave everything as it is?
Let us know by leaving a comment below.