A report by the Charity Finance Group has revealed that a fifth of charities would have to make staff redundant if Gift Aid didn’t exist – and yet around £560 million of Gift Aid goes unclaimed by charities either because of a lack of awareness of how it can be claimed, or due to difficulties in registering and claiming.
At a time when many charities are struggling with a challenging fundraising environment and soaring costs, that is a shocking revelation. In response, the CFG has come up with a list of recommendations for both government and the charitable sector to try and ensure that that the £560 million funding gap can be closed.
The report says that some charities find the registration and claiming processes for Gift Aid complex and time-consuming, with administration challenges and grasping complex tax rules cited as major problems. One fifth of charities said that they found claiming Gift Aid difficult, according to the research.
At the same time, a lack of public awareness about Gift Aid means that opportunities to boost giving are often missed, especially in the context of the Gift and Small Donations Scheme (GASDS), which allows for simplified Gift Aid procedures on smaller donations. Under the scheme, claims can be made on cash donations of £30 or less without the need for a Gift Aid declaration, including bucket and tin collections.
It is clear that many charities shy away from asking donors to add Gift Aid to their donations, even though this could also benefit the donor, who can claim some of the donation back on their tax return if they are a higher rate taxpayer - so it really is a win:win. There is also a lack of clarity around the rules on claiming Gift Aid on subscriptions.
One of the main conclusions in the report is that charities need more support to help them maximise their income via Gift Aid. It particularly highlighted the role of auditors in supporting charities to claim – and we would encourage organisations to reach out to us if there are areas they might like more professional support.
Gift Aid is an excellent way of boosting fundraising on income streams which charities already have, and it is a no-brainer to be making the most of the scheme.
It is an important part of the charity sector’s sustainability – so if you need some support in making the most of it.