That ol' tax chestnut
Yet another bashing for charities enters my inbox this morning courtesy of the Third Sector Daily Bulletin. 'Failure to claim Gift Aid cost sector £1bn in 2007' screams the headline - can it be true? Are we throwing away a further 11.5% of the sector's total voluntary income?
Read the story closer and all is not as it appears. The annual Take TaxAction report is based on information published by HM Revenue & Customs and the Department for Work and Pensions and then put together by Unbiased.co.uk. The website gets its figure of £1.04bn by combining £700m 'failure to use Gift Aid' and £337m payroll giving.
This is the same Unbiased.co.uk who claimed in December that the sector failed to claim £808m last year (differing from CAF's estimate of £700m) particularly because "Payroll giving is an administrative burden for companies". On the ball there then!
In truth the sector is getting better, particularly in claiming Gift Aid. I'm with the IoF's Megan Pacey on this, the HMRC figures actually show Gift Aid claims are increasing, and considering that up to a third of all donations from individuals might not be eligible for Gift Aid reclaim, charities are actually making good progress.
When was the last time you saw a piece of DM without a Gift Aid declaration, or made an online donation without a Gift Aid prompt?
There is always room for improvement in whatever we do and tax-efficient fundraising is no exception, but this type of 'analysis' that needs to produce bigger and bigger short-comings to guarantee headlines proves little and helps even less.
Kevin Kibble
Comments
I wonder how much this perception of Gift Aid shortfall results from very small charities not understanding what is involved. I talked my theatre club into a solus Gift Aid mailing to all its members last year, and they are still squirming with delight at the £4K Inland Revenue cheque that resulted. For years they had believed that Gift Aid didn't apply to memberships, even though the club is a registered charity.
Posted by: Barry Evans | January 16, 2008 05:26 PM
When small charities are run exclusively by volunteers there will always be an information gap. Whoever audited the charity accounts should also have flagged up Gift Aid as being available. It is the responsibility of trustees to make themselves aware of relevant legislation, its impact and to ask the right questions of their advisors - that doesn't mean its easy.
A great result though!
Posted by: Kevin Kibble | January 17, 2008 01:57 PM
I agree with Barry Evans on this. Unfortunately even big charities don't understand this properly and run into huge problems when HMRC audits them.
I believe that Charities Commission should require charities to submit their total individual donations and the amount recovered through Gift Aid as part of their annual return. In this way the sector would know the real values of Gift Aid recovered and have real targets to aim for.
At the end of the day the object should be to recover as much of this 'free' money from HMRC as possible, particularly as it can be accumulated over the last 6 years.
Posted by: Barry Gower | January 23, 2008 12:01 PM