The Government announced a universal de minimus 4% error rate  and a raft of measures aimed specifically at small charities with under £1m turnover, providing simplification of the process burden, along with training and mentoring, and standardised tools and guidance. On top of this de minimus 4% error rate, charities have up to 60 days after the initial audit visit to rectify any invalid or missing declarations found first time around . For charities who claim up to £2,500 per year, if there is a 4% error rate or less then no repayments will need to be made. This should benefit thousands of smaller organisations 

A self certification scheme has been announced for larger charities but clarification of how this will work is still being sought. There was also an initiative to extend the Tax-effective Giving Initiative to build on the Institute’s vast experience in this area. 

So all in all perhaps its what we expected. None of the big radical changes some might have wished for but wide-ranging change that benefits thousands of donors, charities and the causes that they serve. And although this represents significant progress in the area of Gift Aid I feel there is still much opportunity to increase the amount of monies rightfully claimed by the sector on donations by UK taxpayers. Blackbaud remains firmly committed to furthering that cause by facilitating knowledge and events, promoting the exchange of views with HMRC and providing products and services that both protect and preserve the sector’s income in this area and the reputation of Charities receiving donations from their supporters.

The Institute of Fundraising has published a paper on ‘Gift Aid, the change in Basic Tax and Transitional Relief’ - click here for more details. They are also running a survey to obtain feedback from organisations about tax effective giving. You can take part in the survey by clicking on this link.

Firstly, there is the reduction in income tax and thus, the reduction in the rate of Gift Aid from 28p in the £ to 25p in the £. There appear to be some misconceptions about this though. You are able to claim the full 28p in the £ for any gifts you receive up to and including the 5th April 2008 that are covered by a valid Gift Aid declaration regardless of whether you put this claim in before or after the 6th April 2008. The reduced 25p in the £ rate only applies to gifts received on or after the 6th April 2008. You will not loose out on Gift Aid for gifts prior to this date by delaying submitting a claim.

Secondly, and not to be forgotten, is that as we are coming to the end of the tax year; the not so new Gift Aid scheme is approaching 8 years old. If you have gifts still to claim for that were donated during the 2001-2002 tax year then you need to claim for these on or before 5th April 2008 or you will loose any Gift Aid applicable on these gifts. Of course this cut off date will vary depending on whether you are a Trust or a Company and when your financial year runs from and to.

Finally Gift Aid is receiving the limelight it so rightly deserves and is front page news, but why does it take something that could ultimately affect charities in an adverse fashion before this is the case? We should have been shouting about Gift Aid before this and making the most of its added benefit and income.

There is a huge amount of speculation as to what will be decided, whether it is to fix the rate of Gift Aid and disassociate its connection with the Income Tax Rate altogether, or as the Tories have now proposed, a set percentage of donations to be assumed to come from tax payers without the need for paperwork. How these and other proposals may work in practice is another matter. There were a great many suggestions put forward at the Institute of Fundraising forum in May that were published shortly after the event.

The Institute of Fundraising has kindly given us permission to post their link with respect to this latest ‘Hot Topic’ on our Blog:

http://www.institute-of-fundraising.org.uk/informationaboutfundraising/forfundraisers/hottopics/giftaid.htm 

Please add any suggestions or comments you have about what you would like to see happen with Gift Aid.

This makes it all the more important that suitable systems and processes to effectively manage Gift Aid are not only implemented but also kept up-to-date.  It is already becoming vital that such systems offer the kind of Gift Aid program clarity that will help induce growth. 

Business growth generally is driven through investment in more advanced technology.  Although generally the focus of Gift Aid growth is concentrated upon innovative ways of appealing to the socially conscious public can growth be realised through greater clarity of your existing supporter base?

Gift Aid in it’s current form (post changes to the Finance Act 2000) took 2-3 years to start realising it’s strongest growth.  One reason suggested for this lethargic start was the time required to invest in new systems.

Is there still scope for improvement in the management process of your Gift Aid program and will a more granular analysis of your supporter base lead to even greater Gift Aid success?   

Experience tells us the answer to this is Yes.

So, what possible steps can an organisation take in order to start maximising the return on Gift Aid scheme investment? 

Perhaps a good starting point would be to take full stock of the existing ‘health’ of your Gift Aid and non-Gift Aid supporter base.  By analysing and understanding possible grey areas in the current management of Gift Aid a firm platform can then be established allowing you to confidently claim, develop and grow Gift Aid income for the years to come.   

Looking at the amount of Gift Aid revenue that is left with the Chancellor each year and in light of his recent budget announcement it is clear that improvements in Gift Aid management must be sought, and that this responsibility should not be solely shouldered by Fundraiser’s. 

What a time to launch. Whilst offering encouragement to Charities to claim their Gift Aid entitlement the Chancellor takes £70m - £100m (it depends who you ask!) of claimable Gift Aid out of the system in the recent budget.

I think its time to fight back. Let’s use this blog to share ideas on how to maximise Gift Aid claims and to secure the claims that are made such that HMRC Audits can safely be passed and these hard earned donations can be maximised in terms of fundraising effectiveness. Lets use it to lobby, to argue, to think creatively and to make a real difference.

I’d like to think of the blog as having a really positive role to play. Its easy to feel like victims when Gift Aid can seem complex, HMRC are coming round to audit and even the Chancellor seems against us.

But in the democratic world of the Internet it will be exactly what you want it to be. And that’s even more exciting.

Happy Blogging!

So, what needs to be considered when planning your Gift Aid strategy for the upcoming year?

The most important consideration needs to be the wording within your Gift Aid declaration, or more specifically the date gathered within the wording. The 6th April 2000 is no longer a valid date to claim tax from, on your constituent donations; this must now be changed to 6th April 2001. Check all of your Gift Aid forms to ensure they comply with this date change.

Take advantage of this date though, rather than having wording relating to claiming tax ‘from this date forward’, incorporate the earliest date possible; otherwise, who knows how much Gift Aid you could be missing out on!

Of course, the earliest date you can claim Gift Aid on is dependant on whether your charity is a Trust or a Company. With this in mind there is a new business rule incorporated within The Raiser’s Edge 7.81, which requires you to choose your status and, therefore, only allows you to claim Gift Aid for the finite time allowed by your status. This is set within the Configuration page.

Keep your Gift Aid declarations to the point. Make sure you have a valid tax declaration, the date applicable (within the declaration) and either a tick box or a signature line, if you would rather. If you over-complicate, your donors are less likely to complete the Gift Aid declaration accurately and you will increase your costs in ascertaining your donors’ Gift Aid eligibility. Make it simple!