Call by leading voluntary sector bodies for simpler Gift Aid system

28th September 2007

Leading voluntary sector umbrella bodies are today calling for a simpler Gift Aid system and process, in order to improve the effectiveness of the existing relief which is available to charities. It is proposed that, while the substance of the Gift Aid tax relief remains welcome, its administration is reformed in favour of a simpler process that is based on all the donations received by a charity.

The group proposes that an appropriate tax reclaim rate be agreed by consultation between the Government and the sector to determine the amount of Gift Aid a charity can claim, based on its level of voluntary income as reported in its accounts. Such a tax reclaim rate would take into account the tax paying status of the cross section of the general public who give to charity.

The leading umbrella bodies consider that such a system would retain the principles of existing tax laws but remove the administratively burdensome Gift Aid declarations, complex accounting and costly and bureaucratic audits. It would be simple for the public and efficient for charities. It would help charities of all sizes but would particularly help smaller charities.

Gift Aid is the most widely used mechanism for tax-effective giving, accounting for approximately 90 per cent of all tax-efficient giving in the UK. Recent figures suggest that over £820million per annum (HMRC 2006) is given back to UK charities in Gift Aid tax relief. The bodies involved in the sector's review of Gift Aid comprise the Association of Chief Executives of Voluntary Organisations ('acevo'), the Charity Finance Directors' Group ('CFDG'), the Charity Tax Group ('CTG'), the Church of England ('CofE'), the Institute of Fundraising ('Institute') and the National Council of Voluntary Organisations ('NCVO').

Stephen Bubb, Chief Executive of acevo, comments:
"acevo welcomes the consultation and believes this is an opportunity for government and the sector to fundamentally review the objectives of Gift Aid and how the greatest value can be delivered to the beneficiaries of charities."

Keith Hickey, Chief Executive of CFDG, comments:
"This consultation is welcomed by the sector; Gift Aid has given a tremendous boost to the sector but has become bogged down in bureaucracy. We do hope that having had the vision to undertake this review of Gift Aid the Government has the vision to implement the ideas that we, as umbrella bodies in the sector, following extensive consultation with our members, are suggesting to shake off the bureaucracy and meet the Government's aim of increasing Gift Aid revenues."

Helen Donoghue, Director of CTG, comments:
"CTG supports initiatives that will make the Gift Aid system even more successful than it has been so far. The proposed simplified system will result in better take up of Gift Aid especially among small and medium-sized charities. Consultations with our members indicate that many such charities have been put off by the administrative bureaucracy in the existing scheme."

Jackie Bliss, Finance Director of the National Church Institutions (CofE), comments:
"Enabling the thousands of churches, of various denominations, to claim Gift Aid based on their accounts will remove a huge weight of administration from many volunteer treasurers and Gift Aid administrators. It will also ensure churches receive the full amount of Gift Aid relief which the law intends them to have."

Lindsay Boswell, Chief Executive of the Institute, comments:
"Government is always calling on the sector to speak with one voice - in so doing; we are spelling out the key way in which our sector could benefit from a reformed Gift Aid system. A simple Gift Aid system is key to successful fundraising, and this response reflects our members' views."

Stuart Etherington, Chief Executive of NCVO, comments:
"The current Gift Aid arrangements are too often a burden for small charities and also lead to many charities not making the most of smaller donations. This proposal will not only simplify the process, but should ensure that Gift Aid revenues increase."


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