Gift Aid

Gift Aid without the paperwork… worth the risk!

My edition of the textbook, ‘What Works’, has gathered a convincing layer of dust of late.  With a title reference to rhetoric on ‘evidence-based policy’, once a critical companion to ...

My edition of the textbook, ‘What Works’, has gathered a convincing layer of dust of late.  With a title reference to rhetoric on ‘evidence-based policy’, once a critical companion to my studies, the book now has a feeling of an old relic from the past.   Looking at recent proposals, many in the charity sector have asked whether we have lost something in terms of attempting to frame policy decisions within a sound evidence base.  It may sometimes be rhetoric, but surely it helps focus decisions on ‘what works’. Clear policy objectives and direction are difficult to identify among an untidy plethora of charity green and white papers we’ve seen in recent years.  As well as the obscurity of some over-arching ideas (Big Society anyone??), the politics of negotiating within a coalition adds to the confusion.  Likely a significant factor in the awkward contradiction in Government policy that was the Budget’s cap on charitable giving tax relief,  not to mention a messy defence of the decision in the aftermath. So where was the evidence behind the sudden shift in charity’s place from the heart of a beloved civil society, to an outside position, left defending the very concept of charity?  Was this linked to the concurrent review of the charity legal framework (surely the only place for such a debate)? The decision may have been reversed, but we’re left to pick up the pieces.  So if we don’t have evidence-based policy how are decisions being made in the upper echelons of Whitehall and how can we make sure that the risks are considered better in the future? One thing is increasingly apparent.  In an age where the deficit and economic uncertainty loom, the Treasury pulls the strings.  When it comes to spending money, few risks are being taken.  The Bill for the Gift Aid Small Donations Scheme (GASDS) demonstrates this well.  Good in theory, this Bill has huge potential, but it’s swamped by complexity.  The scheme’s tough eligibility criteria, requiring charities to have been registered with HMRC for a minimum of three years, made a Gift Aid claim in 3 of the past 7 years and claimed a given amount of Gift Aid within the year, is just some of the problem. The unnecessarily complex ‘community buildings’ concept, poses a more difficult challenge.  Charities that are part of wider networks, and without individual registration, need to be able to access the scheme fairly.  So churches, scout groups and other such entities will be able to access the same amount as counterparts running under different organisational structures  - so long as they meet exacting criteria of having at least 10 beneficiaries, a minimum of 6 times a year that is.  There is another catch too; they will only be able to make a claim on funds taken during the course of their charitable activity.  One would think the deciding factor should be that funds are directed to the beneficiary group in question… not raised from them. Government’s efforts to achieve fairness with the scheme are absolutely to be welcomed.  But, and there’s always a ‘but’; when considering the number of small charities, community groups and start-ups that could benefit from this scheme that won’t be able to… we can’t help but think this is a missed opportunity. The Government sees opening the scheme further as too high risk.  At the CFG Tax Conference in June, the Economic Secretary, Chloe Smith MP, advised that the intention is not to support those not using Gift Aid, referring instead to a ‘top-up payment’ for those compliant.  Despite undergoing a new ‘Public Reading Stage’ which aims to open the Bill up to a wider audience for comments, the focus of this process, a line by line review, appears to cut off opportunity for the public to question the overall policy in a parliamentary setting. Some concessions have been made as a result of earlier consultation.  The ‘matching’ ratio has changed; a charity can now claim up to twice that claimed in Gift Aid in a given year, previously a straight match.  Linking these two amounts at all directly disadvantages the smallest charities that struggle to get Gift Aid-able donations.  Anything more, the Government tells us, would be too high risk. To put the risk into context, the size of the sector (as defined in the NCVO Almanac), estimated at £37bn, is roughly the same as Tesco.  This observation offers an interesting perspective on the level of risk associated with the sector.  I wonder if Tesco find it as difficult to negotiate a balance between pro-business policy development and risk in dialogue with Government. The GASDS is a scheme designed to benefit a portion of a sector which arguably has a much bigger impact on society than its price tag.  Could a less risk-averse approach here, within the appropriate regulatory framework, be an example of good risk management?   Even worse, what are the potential risks of getting this wrong? With all the good intentions (and there are some very good intentions), the unfortunate fact is that only a proportion of charities are likely to really benefit from the GASDS, and not those that need it most.  In this case evidence wasn’t gathered about what the sector actually needed prior to an announcement being made and progress started on scheme development.  While charities welcomed the budget announcement, our jubilation may have been premature as it soon emerged that the intentions of the sector and Government, were not aligned.  The outcome now is a narrow policy where the risk of potential fraud has been boxed in.   With a three year waiting period to access the GASDS, the hope that this would encourage more charities to register with HMRC to use Gift Aid is unlikely to be met. When we look at this scheme in three to four years, what will we conclude about the impact it has had?  Will it bring in much needed funds and encourage more charities into Gift Aid, or will it cause further confusion, have limited take up and fail to benefit those at a micro level?  I am leaning towards the latter prediction, though would happily be proved wrong. Charities will need to be savvy if they are to take opportunities being presented.  The new Public Reading stage offers chance to comment on those restrictive clauses.  CFG, NCVO and CAF are just some of the organisations to make comments online so far.  If you don’t think the GASDS will work for your charity and you think that it should, say so, present them with the evidence.   Separately we should urge Government to reconsider how they approach risk in policy development; thinking more about the negative impact on civil society when it is forced to overcome such complex restrictions, rather than allowing the regulatory framework to sort the high from low risk applicants to such a scheme.  Together we may need to convince Government that risk taken on us, is risk worth taking.  See our joint response with CAF and NCVO to the to the GASDS consultation here. View our comments on clauses  1.4, 2.1, 7.1, 8.1, and 13.1 of the Public Reading Stage of the bill  here. « Back to all blog posts