The 2015 Project: Gift Aid – Much Ado About Something

Guest post by Laurent Maumus, Fundraising & Marketing Gift Aid Manager at Cancer Research UK. Laurent is also the Business Process owner of Gift Aid and Chair of an Inter-Charity Gift Aid Forum.

This blog post is part of the 2015 Project – your chance to tell NCVO what our policy priorities should be ahead of the next General Election.

Gift Aid has not always been the hottest topic in the charity sector. Donors and fundraisers alike have often viewed Gift Aid as a self-administering source of extra income, requiring little resource and even less thought.

Recently the tide appears to have turned. Gift Aid has a more prominent role within charities, mostly due to new initiatives such as the government consultation on ‘Digital Giving & Gift Aid’, the ‘Charities Online’ Project and the setting up of the ‘Gift aid Small Donations Scheme’.

Digital Giving consultation

The consultation was a welcome examination of how Gift Aid could be made fit for purpose in a ‘Digital Age’.

This reflects charities innovating more and increasingly developing new ways of raising funds. How to make Gift Aid work in these circumstances seems to have lagged behind resulting in low take-up rates (n.b. JustGiving and sites like it are not included). Charities find much smaller take up through ‘digital channels’ such as text giving, giving via applications and micro-donations.

The Consultation highlighted a number of important areas requiring change. The potential outcome could benefit Gift Aid take-up, provided that:

• it is managed properly
• has clear/manageable stated objectives
• involves charities on all aspects of the changes.

Charities Online serves as a case in point.

The recent National Audit Office (NAO) report on Gift Aid highlighted apparent inefficiencies in the Gift Aid scheme which the Charities Online project should help resolve. Added claim scrutiny combined with a quicker claim process will benefit the integrity of the Gift Aid scheme in the long run. Notwithstanding this, the scheme has caused its share of controversy within many charities. Whilst HMRC has understandably extolled its virtues, charity experience has meant that there have been mixed opinions on the benefits of implementing the changes. This is especially the case for larger charities which have to use the more complex database to database solution for submitting Gift Aid claims.

Lessons learnt

The principal lesson to be learnt is that the charity sector was not sufficiently involved with the changes from the start. The combination of inadequate consultation and a lack of stakeholder engagement meant that the timescale and project requirements were unnecessarily burdensome:

• the impact of the project was never fully measured against what the charity sector could deliver
• the cost of implementation has been far greater than anticipated
• the complexity of the changes and the lack of resource available to charities to provide a smooth transition were not properly taken into account.

Many charities are still coming to terms with the full impact of implementing the new processes and the true costs of charities online are only beginning to emerge. This highlights the need for a full and comprehensive impact assessment when considering future changes.

The Gift Aid Small Donations Scheme (GADS) is a welcome idea.

The government’s predicted take-up of the scheme was ambitious and so far claims made appear low. But the additional income it will provide to charities remains a fantastic opportunity. There are barriers to entry to GADS and the scheme’s complexity has been off-putting for some. The need for greater clarity is tangible as is a serious review of the scheme. Current projections suggest that take-up has been far from the reality. A serious review would therefore be needed if the intended impact of what can be only seen as a welcome idea in its principle but less so in execution. That said, it remains early days and we will have to wait a little longer to see how successful GASDS will be.

2013 – a year of change for Gift Aid.

2013 saw Gift Aid take a more prominent profile in the charity sector mainly as a result of the changes highlighted above. This can only be a benefit for charities going forward. Worryingly, however, the costly exercise of implementing ‘Charities Online’ – for larger charities at least – is a concern. HMRC can learn lessons from how Charities Online was implemented.

The NAO’s GA review raised questions around how HMRC inform policy changes, questioning their ability to impact assess potential changes prior to implementation. Gaps in HMRC reporting & a gap in properly conducted research have meant that HMRC have not always appropriately tailored schemes to enable GA to reach its full potential. The balance between GA promotion & HMRC’s responsibility to the taxpayer is a fine balance, but one that needs great consideration to what is a valuable source of income for the charity sector as a whole. In sum, the scheme should be lauded for the benefits it can bring to charities but better management of the implementation would and will enable Gift Aid to reach its full potential!

Greater efforts need to be made to realistically assess the cost of future changes, better stakeholder involvement is crucial and improved understanding of how Gift Aid can be made more attractive to donors.

If these issues are properly applied to the ‘Digital Giving & Gift Aid’ Consultation, Gift Aid could yet hold play a bigger role in helping charities fulfil their mission.