Calls for Gift Aid revamp as charitable donations fall

Charity groups are calling for a modernisation of Gift Aid and Payroll Giving schemes after a report revealed a 20 per cent drop in donations last year. 

Under the Back Britain's Charities campaign, organisations such as the National Council for Voluntary Organisations (NCVO) and the Charities Aid Foundation (CAF) want to simplify the schemes for individuals, charities and businesses to maximise every pound given to charity.

The fall in donations has also been exacerbated by cuts in public spending, rising utility costs and an increasing demand for services.

The report by UK Giving found that charitable donations fell by 20 per cent during 2011/12, equating to a £1.7 billion loss for organisations in cash terms.

For the first time since the survey began, the number of donations through Gift Aid also dropped in 2011.

Currently, Gift Aid allows charities to recover 25p from HMRC for every £1 donated, while Payroll Giving deducts donations directly from an individual's gross salary with the benefit of tax relief. The latter, which costs the person giving £5 for a £10 donation to charity, is used by only 2 per cent of employees.

As well as promoting tax efficient ways of giving to charity, the campaign also wants to ensure smaller charities can take advantage of the new Gift Aid Small Donations Scheme (GASDS) when it is introduced on 6 April 2013.

The GASDS will remove administrative burdens surrounding Gift Aid style payments, allowing eligible charities and community amateur sport clubs to claim top-up payments on small donations up to £20 to a maximum of £5,000 of donations during the tax year.

Stephen Howard, chief executive of Business in the Community said: "This campaign is vital in the current climate and will raise awareness of the critical need to raise more cash donations for charities."

"We also know that UK businesses are supporting community and charitable organisations in ways other than cash donations, such as long-term skilled employee volunteering, and I welcome the campaign's call on business to support charities in this way."