Why Gift Aid matters (and it’s about more than just money)

by Stephen Tall on December 22, 2009

Yesterday, at the end of a post sticking up for the Taxpayers’ Alliance‘s eligibility to be counted as a charitable organisation, I took the TPA to task for failing to make it easy for supporters to make the most of their gift by not including an option to Gift Aid any donation they chose to make.

A couple of people commented in response that I was a bit harsh on the TPA, arguing that it’s still possible for donors to submit a Gift Aid declaration to the charity (for the charity to reclaim its Gift Aid), and for the donors to include the donation on their tax-returns (for the donor to claim their own higher-rate tax relief if eligible).

True enough, but not good enough.

Here are three reasons why I think the Taxpayers’ Alliance are wrong not to make it easy for their donors to submit a Gift Aid declaration:

1) The TPA is losing out

Okay, so let’s start with the cash. Say, I choose to give £100 to the Taxpayers’ Alliance: if I Gift Aid that donation, the TPA receives £125. Let’s say 500 people choose to make a donation of £100, they will receive £50,000 in cash. If each of those donations is Gift Aided, TPA will receive an additional £12,500. That’s a pretty sizeable chunk of cash to forego just because you don’t advertise your charitable status.

2) The TPA’s supporters are losing out

Now let’s move onto the cash your donors are missing out on. If your supporters are higher-rate taxpayers, they will be eligible to make a personal reclaim on any donation they make to a charitable cause. So, if I make a donation of £100, the Taxpayers’ Alliance receives £125 – but if I’m a higher-rate taxpayer I can claim back £25 from the Inland Revenue via my tax return. This means a donation that yields £125 to the charity has in fact cost me only £75.

By not advertising the fact that they are eligible for Gift Aid, the TPA has cost their higher-rate donors 25% of their charitable donation.

If I were a higher-rate taxpaying donor to the TPA I’d be pretty irritated by their failure to understand how I, as a supporter, can maximise my charitable giving for mutual benefit. Which leads onto my third reason …

3) The TPA is incurring reputational risk

Charitable institutions like the Taxpayers’ Alliance risk reputational risk by failing to make the most of Gift Aid for themselves, and failing to make it easy for their donors to make the most of it. This is about more than just the money they are foregoing in Gift Aid relief; it’s about the donors who decide not to make a repeat gift when they realise their first gift was not maximised, or those who choose not to give at all.

Though I make donations to causes which aren’t eligible for Gift Aid, I do not make donations to charities which are eligible and fail to take advantage of Gift Aid. And I know I am not alone. Why not? Quite simply, I view those charities which fail to claim Gift Aid when they can as inefficient and failing – and why would I choose to give my money to a charity like that?

Of course, not everyone thinks like me, and many will reckon I’m being fussy and pedantic. But it matters to me – so, as a potential donor, it should matter to the charities I might support as well.

And just as Gift Aid is about more than just money, so it’s important that your online giving page (i) works, and (ii) is quick and easy – not necessarily because you will attract your biggest gifts via online giving, but because your offline donors are likely to visit that page before writing a cheque, or filling out by hand a direct debit form.

As donors become more sophisticated – thinking hard about the causes they support, and how they can leverage the maximum from their gift – it becomes even more important that charities respond to this increased personal due diligence.

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One comment

New post: Why Gift Aid matters (and it's about more than just money) http://bit.ly/64Kcuo

by Stephen Tall on December 22, 2009 at 11:54 am. Reply #

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