In an environment where diversification of income has become ever more important for charities, the gift aid small donations scheme is a brilliant idea, sadly shackled by some unnecessarily complex and stringent rules.
That could be set to change – with your help. The government is holding a call for evidence (PDF, 170KB) to see how the scheme rules could be simplified to improve uptake. This is a real opportunity to reform the scheme so that it benefits the real breadth of charities it was originally intended to. NCVO, CFG and IoF are conducting a survey to gather charities’ views on how the scheme has worked so far.
What’s not to like?
For those new to the scheme, it enables charities to claim gift aid on small cash donations without collecting declarations from each donor. Despite its potential to help voluntary organisations diversify their fundraising, the scheme was 70% underspent in 2014-15.
There was some further support for the scheme announced in the last March Budget, but this only raised the amount claimable under the scheme from next April, rather than address the underlying reasons we think are responsible for the low take-up – the eligibility requirements. We’ve written previously (see our blog post) on the problems these are causing, but briefly:
- For every £10 of small donations on which gift aid is claimed, a charity needs to also claim £1 of gift aid on other donations (ie, with a declaration). This ‘matching requirement’ means charities must also fundraise via the traditional gift aid mechanism, with its attendant administration costs, potentially discouraging users.
- A charity must have been established for at least two years before claiming, meaning new charities are unable to use the scheme to help them fundraise.
- A charity must have made a valid gift aid claim in two of the last four years, meaning charities that don’t or infrequently make gift aid claims are also prevented from applying.
Taken together, we believe these requirements are preventing the sorts of charities that could benefit most from the scheme from accessing it, such as smaller organisations with limited funding streams.
How you can help
We need to be able to tell government what’s stopping charities from making use of the scheme, be that specific rules or poor sector awareness.
Our survey on the scheme takes only ten minutes to complete, and we want to hear from any charity with an interest in the scheme, even if you’ve never used it. In fact if you haven’t used it, whether it’s because your charity isn’t eligible or you simply hadn’t heard of the scheme before, it’s especially important that we hear from you.
The survey will run until 31 January, and feed into our response to the call for evidence.
Michael was our senior policy officer until January 2019, covering issues around charity tax and finance (including social investment) and the impact of the economy on the sector. 
