Gift Aid is one of the simplest and most effective ways of making your donations go even further – every gift you receive can be worth more to you at no extra cost to the donor or your organisation. A gift on top of a gift.
The £1.28 billion Gift Aid afforded charities in 2016-17 is hugely beneficial to the sector; contributing to unrestricted income that is ever-more difficult to raise and increasing the sector’s ability to deliver services and meet the needs of beneficiaries and causes.
More than the practical benefits, Gift Aid represents the long-standing principle of not taxing money donated to good causes. It offers a tacit acknowledgement that public benefit will be delivered more quickly and more effectively by providing charities with the maximum resources and assets possible to carry out their work, rather than Government priorities dictating the application of that same money. It is the best and most effective way of translating the public purse to public good.
As such, Gift Aid acts as a recognition of the role and worth of charities in society. Seeing Government recognise and affirm the value of the charity sector by structuring tax policy in a way that enables those organisations to do more good is an important marker for businesses, high net-worth individuals, and the general public about the role and status of charities in the UK.
And, if that wasn’t enough, it also helps to promote and encourage giving.
It seems like Gift Aid is ticking all the boxes, so why aren’t people ticking Gift Aid’s box?
Excellent fundraising is fundraising that inspires people and organisations to give, and provides the resources in order that those organisations fulfil their objectives. HMRC recently released a now much-touted figure that around £560 million of Gift Aid goes unclaimed in the sector. For fundraising organisations, this is money that could and should be going towards good causes.
While committing the time to claiming Gift Aid can seem daunting or tedious (especially for volunteer-run organisations), understanding the process and limits of where you can claim can go a long way to streamlining the experience. And the online claim means that you can essentially fundraise from the comfort of your own desk.
The fundamentals for claiming Gift Aid are that donors need to pay income (or capital gains) tax, and the donations need to be voluntary and not payment for an item/event admission, and not where a benefit of more than 25% of the donation value is given to the donor. However, there are nuances here that should be considered.
Tips and tricks to get the most out of Gift Aid
- Gift Aid can be claimed on individual and sponsorship donations, but not on those activities where an entry fee has been charged or where people have entered a competition.
- If you arrange a ‘donation only’ event where people can attend regardless of what they decide to give, then all donations qualify.
- Membership subscriptions qualify provided they don’t entitle the member to any services or facilities for their personal use.
- Donations given to a school for non-uniform days, sponsored events, building appeals and equipment appeals will usually qualify as long as they are not linked to the provision of any benefit to a student related to a donor.
- After you reimburse a volunteer for (reasonable) expenses they have had to pay because of their work, they can choose to keep the money or pay part or all of it back to the charity as a Gift Aid payment.
- A Gift Aid declaration can be made orally, but a written record of the declaration must be sent the donor before the claim is submitted. Many are unaware of this based on an assumption that declarations require signatures, which they don’t.
- Record keeping is key - capture donations in a standard Excel spreadsheet and then simply copy and paste the data into the online claim. Make sure to look at the format of the HMRC Gift Aid reclaim spreadsheet before you start recording data to avoid extra work later on.
- Remember that you have at least 4 years to claim so you have the time to be thorough - HMRC will pay you interest for the time they have had the Gift Aid money.
Charities should embed excellent fundraising throughout their organisation, and Gift Aid should be a part of this. Educate your donors, fundraisers and volunteers so they understand the rules, and have the systems in place to ensure they can act on them. This will make your organisation better-placed at every point of contact to encourage donors to tick the box or fill out a declaration form. Sometimes excellence isn’t about innovation or exceptional talent, but instead can be achieved by doing day-to-day tasks conscientiously.
Find out more about CFG's Gift Aid Awareness Day #tickthebox campaign
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