Gift Aid Small Donations Scheme needs a rethink to be of real benefit to charities

24th May 2012

Charity Finance Group, the National Council for Voluntary Organisations (NCVO), and the Charities Aid Foundation (CAF) have issued a joint response to an HMRC consultation on the Gift Aid Small Donations Scheme (GASDS). The scheme was originally proposed as a low bureaucracy option for charities to receive a ‘Gift Aid style’ payment on top of small cash donations. While welcoming the scheme’s intention, the response highlights significant concerns with the detail in order for it to be of real benefit to small charities.

Caron Bradshaw, CEO of CFG said, “The basic premise of this scheme has real potential to make a difference for the very smallest of charities. However, as it is currently set out it will be too complicated to have a real impact. Eligibility for the scheme is limited and this will stop those that need it most from using it. We propose a rethink on how to implement GASDS to ensure it is easy to use, achieves its potential, and doesn't further complicate Gift Aid.”

In the response, CFG, NCVO and CAF have called for the more complex aspects set out in the proposals to be dropped, instead favouring a robust but simple application process. This would help to mitigate fraud but also make it easier for charities to understand and access the overall scheme.

The complex rules that will limit the potential of the scheme include:

  • The ‘community buildings’ provision, whereby local groups linked with a parent charity may qualify for their own individual limit of £5000 in donations; this will work better for some types of charities than others.
  • The ‘connected’ charities rules, and the ‘matching’ rule which links the amount that can be claimed through the scheme with that claimed in Gift Aid each year.
  • The exclusion of groups running ‘residential’ premises from the additional limits, disadvantaging many hospices, care homes and other services from benefitting from the scheme.

Bradshaw continued, “There is already substantial regulation to stop organisations registering with HMRC to abuse the system. We believe that these, along with the already low limit of £1250 per charity available under the scheme, should be enough to reduce fraud. We want this scheme to work and to make a difference. If it is to do this then we need to re-consider how it is implemented and are happy to work with HMRC to develop other ways of managing the scheme while keeping it simple.”

Sir Stuart Etherington, CEO of NCVO said; ‘NCVO has welcomed this scheme in principle, but we are concerned about HMRC’s design of the scheme. Even for those of us who spend a lot of time looking at Gift Aid, some of the restrictions are hugely complex to understand, and we fear this will be a barrier to charities taking part in the scheme. We are asking HMRC to reconsider the best way to deliver the scheme, so it will achieve their original objectives of helping charities and reducing bureaucracy.’

CAF Head of Policy, Hannah Terrey, said “We agree with the aim of simplifying tax reliefs on donations, which has led to the introduction of the Small Donations Scheme. However it would be much better to fully modernise the existing Gift Aid system and ensure it is fit for future fundraising and digital giving.

“We also need the Government to drop the Chancellor’s proposed cap on tax relief on charitable donations, which we believe will cost charities up to £500m per year.”


Notes to editors:

1. CFG is the charity that champions best practice in finance management in the voluntary sector. Our training and development programmes enable finance managers to give the essential leadership on finance strategy and management that their charities need. With more than 1,800 members, managing over £19bn, we are uniquely placed to challenge regulation which threatens the effective use of charity funds. For more information, please see

2. CAF is a charity dedicated to getting the best for other charities and their donors. For over 80 years, we have found the most effective and efficient ways to connect donors to the causes that matter to them and for money to get where it’s needed. For charities, we provide not only financial services and advice but also donation processing, freeing them up to concentrate on the real work of making a difference. Making an impact in the charitable sector is what drives us. That's why we have spearheaded many of the changes that make the UK one of the best giving environments in the world.Please see  

3. The National Council for Voluntary Organisations (NCVO) is the umbrella body for the voluntary sector in England, with sister councils in Wales, Scotland and Northern Ireland. NCVO has over 8,300 members, ranging from large national bodies to community groups, volunteer centres, and development agencies working at a local level. With over 280,000 staff and over 13 million volunteers working for our members, we represent and support almost half the voluntary sector workforce.

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