In 2016 HMRC conducted some research into Gift Aid. They calculated the Gift Aid Tax Gap to be £179m. The Gift Aid Tax Gap being the amount of Gift Aid claimed in error.
We would always recommend that charities take the utmost care to follow the Gift Aid rules, however, perhaps more interestingly the research also found the value of eligible unclaimed Gift Aid to be up to £564m. This means that Gift Aid was not being claimed where is was eligible on 25% of total donations.
Whilst this research is old, how would this compare to the rate of Gift Aid claimed on the donations made to your charity?
Are there actions your charity could take to encourage more donors to make Gift Aid declarations and enable you to recover more Gift Aid?
Earlier this year HMRC’s User Research team undertook a study with a user panel around Gift Aid. The project lead, shared their finding at a recent “CTG Expert Insight session”. The findings included:
• once a person makes a decision to “tick the box” to allow a charity to claim Gift Aid on their donation, they will generally “tick the box” every time thereafter
• most people are comfortable about providing personal information to charities
• many people can’t explain how Gift Aid works, but they understand it benefits the charity
• where a charity displays the Gift Aid logo it helps legitimize the charity in the eyes of the donor, promoting trust
• most donations are made online
• social media can increase donations e.g. when one person posts that they have donated to a cause it encourages their friends to do the same.
Actions to consider
Whilst we don’t know if this survey reflects the experience of your charity it does raise some interesting points. Could your Gift Aid recovery be increased? Would it be worth investing time in actions to boost Gift Aid recovery? If so, it might be worth considering the following:
• Run a campaign to highlight Gift Aid, explain the benefit, how it works and how a donor can make a declaration
• Ensure your Gift Aid documentation is up to date and meets all the relevant conditions
• Update your website to provide more information on Gift Aid, consider using the Gift Aid logo on your website
• Review how easy it is for an individual to make a donation to your charity. What are the barriers to an individual making a donation and then completing a Gift Aid donation? Would it be beneficial to set up a PayPal account for giving (or something similar)?
Set out below are some useful links to further information on Gift Aid:
HMRC high level guidance: https://www.gov.uk/claim-gift-aid
HMRC detailed guidance: https://www.gov.uk/government/publications/charities-detailed-guidance-notes/chapter-3-gift-aid