Public Reading Stage

NCVO Policy team, NCVO: NCVO understands that HMRC wish to reduce fraud risks by requiring charities to have a track record of successful Gift Aid claims.

However, some charities will not yet have built up 3 years of Gift Aid claims. For example, due to difficulty in collecting and storing declarations for certain types of donations (e.g. collecting tins). This is exactly the logic for creating the new Small Donations Scheme, but as the Bill stands, those charities will be unable to access the Scheme – at least for a number of years. Other charities that will be affected are those that are relatively new.

We would invite consideration of this issue and support an amendment to this clause to make provision for these charities. For example, to enable them to register for Gift Aid and begin claiming a lower amount under the Small Donations Scheme each year until their 3 year track record has been built up.
125 days ago Report this comment

CAF Policy Team, Charities Aid Foundation: CAF appreciates that HMRC are keen to mimimise the risk of fraud through the small donations scheme. However, stipulating that charities must have a three year track record of using Gift Aid will act as a barrier to entry for many small organisations and potentially make it difficult to get momentum behind take-up of the new scheme. Charities that may have been excited about the opportunity afforded by the small donations scheme will be discouraged if they find that there is a three year lag time before they can take advantage of it.

CAF would welcome consideration of alternative methods of minimising fraud that will allow charities to participate in the scheme from day one. This could be through reduced allowances for organisations without sufficient Gift Aid track record, that increase to the full amount over a set period of time (say 3 years).
123 days ago Report this comment

CFG policy team, CFG: It is important that this scheme is not seen as an easy target for fraud and we accept that compliance with Gift Aid is a clear way of highlighting risk. However, many charities that would greatly benefit from the scheme, many of which have been in existence for some time, are not registered with HMRC.

We know that a large number of the approximate 100,000 charities registered with HMRC are excepted charities taht don't have to register with the Charity Commission. There are therefore a huge number of charities between £5,000 and £100,000 in income registered with the Charity Commission (approx 120,000) many of which are unlikely to be registered with HMRC (even more under £5000 in income). These organisations will not be incentivised by this scheme to register with HMRC and will see these criteria as a huge barrier. Start-up organisations will also be unable to access the scheme; this would be a missed opportunity to encourage start-ups to register with HMRC.

It is important that these concerns are taken on board and that some way is found for organisations to access the scheme at an earlier stage such as being able to claim a lower amount for the first three years. This would have the added impact of introducing more charities to the Gift Aid scheme.
123 days ago Report this comment

Policy Team, Institute of Fundraising: This clause limits the scheme to organisations that have successfully claimed Gift Aid for at least three years. This will exclude many small charities from participating in the scheme as they may not have eligible standard Gift Aid declarations in order to have made claims in the last three years, or were put off registering due to the perceived complexity of the scheme. In addition, it excludes new charities from participating in the scheme for at least three years after start-up.

This condition is a significant barrier to participation for the thousands of charities who have not previously registered for Gift Aid. This will exclude those organisations that had the potential to benefit most from the scheme where an additional £1,250 would make a significant difference to their income.

We recommend that this requirement should be removed and alternative anti-fraud measures considered. We endorse the suggestions above from NCVO and CFG of a potential probationary period where a lower amount can be claimed to reduce potential incentive to fraud.
118 days ago Report this comment

Natasha Parker, Consultant and charity trustee: I agree with the comments above from the Institute of Fundraising and others. Requiring 3 years of normal Gift Aid will be a big barrier to small charities. I know a number who were expecting to benefit from this when it was announced in the budget and now find that they are not able to. They either don't have Gift Aid income or are volunteer run and put off by the 60+ pages of instructions on how Gift Aid operates.

This is going to exclude the small charities for which £1250 is a lot of money and it will just benefit the larger ones who won't even notice the additional £1250. This should be amended as it doesn't seem to meet the policy intention of the scheme.
117 days ago Report this comment

David J Israel, Member of Institue of Fundraising, long time fundraiser: My colleagues above have clearly articulated the challenge in this clause. I would support the staged introduction of Gift Aid for charities which have previously not claimed. This will cause extra work for charities but the return could make a real difference.

It would also bring these charities into closer contact with HMRC allowing a better, and more productive relationship, to grow between them.
117 days ago Report this comment

David Tyler, Chief Executive of Community Matters, the National Federation of Community Organisations: The process proposed seems highly complex and one that many small organisations may be put-off from using, potentially making the initiative the exclusive preserve of larger charities. In addition, the restriction on eligible organisations (ie those with a good track record of claiming gift aid), in our view unfairly excludes new organisations or those that are considering gift aid for the first time
111 days ago Report this comment

Cath Lee, CEO, Small Charities Coalition: Small Charities Coalition thinks the eligibility criteria are a disproportionate response to risk management. We think a reasonable level of control was introduced by the fit and proper persons test and the normal auditing and regulation of Gift Aid, but recognise the additional concerns around this scheme.

The requirements as they are laid out significantly disadvantage small charities, in particular new charities, those without dedicated or knowledgeable people for the administration of gift aid, those who would not have enough eligible donations to make a claim in each tax year.

The eligibility criteria could act as a disincentive to those charities reluctant to participate in the Gift Aid system.

There is generally low awareness of the Gift Aid scheme and small charities tend to be slower to become aware of and adopt any new initiative. These eligibility criteria will exacerbate the length of time it will take for small charities in the sector to benefit from the what appeared, when announced in 2011 to be a very positive initiative. The effect is likely to be fewer numbers of small charities participating in the scheme than intended.

These clauses, in particular appear to run counter to the original policy objectives of increasing income into the sector, particularly for small charities and particularly for those types of donations for which it is not practical to apply gift aid.

We support exploration of the ideas put forward by others around a ‘probabtionary’ period.
110 days ago Report this comment

Alan Gosschalk, charity fundraiser: Again I agree with the IoF line
106 days ago Report this comment

James Jopling, Charity fundraiser: I agree with the position of the IOF and also the concerns raised by Cath Lee from the small charities coalition.
106 days ago Report this comment

Kirsten Hogg, Camphill Scotland: Camphill Scotland believes that the requirement to have claimed Gift Aid for 3 of the last 7 years is unduly restrictive. While it is clear that charities will need to be registered for Gift Aid to be eligible for this scheme, it seems unfair to exclude charities who have only registered for the scheme within three years. This is particularly the case for small charities, who may not have previously registered for Gift Aid as they mainly received small donations, and would have to wait three years to benefit from the scheme.
106 days ago Report this comment

Stef Cormack, Member of public (and charity senior manager): Again I agree with the comments from the Institute of Fundraising
105 days ago Report this comment

Louise Wright, Charity CEO: Again I agree with the comments from the Institute of Fundraising
105 days ago Report this comment

John Turner, Charity Chair and Fundraiser: Once again a scheme designed to help charities who cannot normally benefit from Gift Aid requires them to have claimed Gift Aid! Surely registration with the Charity Commission, and compliance with charity law and accounting practices, should be enough.
105 days ago Report this comment

Hospital Broadcasting Association: HBA objects to the eligibility criteria that require a charity to have made a Gift Aid claim in the last three years, and at least 3 claims in the last 7 years. HBA believes that these criteria unfairly penalise both newly-formed charities and those which, because of the nature of donations that are eligible for Gift Aid, have been unable to make Gift Aid claims. HMRC states that the Small Donations Scheme being introduced by this Bill is supposed to be seen as distinct from "traditional" Gift Aid, but then goes on to seemingly link the two schemes as if they form a continuum of reclaim mechanisms. Furthermore, in the Impact Assessment, the success criteria are based on the percentage uptake of the scheme by charities already claiming Gift Aid, rather than on the percentage of all charities.

Just because a small charity does not make Gift Aid claims does not mean that its claims under the Small Donations Scheme should be considered illegitimate. HMRC's approach of doing just this is discriminatory and disproportionate; see HBA's comments about Clause 1(4) above for detailed statistics. Even if the additional amount claimable under the Small Donations Scheme now makes it worth the administrative burden on our members to register with HMRC, and if there were no matching criteria as proposed in Clause 1(4), they would not be able to claim for 3 more years, despite being in existence for decades and complying fully with all the applicable requirements of charity law.

Most of HBA's member charities are registered with the Charity Commission for England and Wales, or OSCR, and thus are already subject to a degree of external scrutiny. In the case of all Scottish charities, and those English and Welsh charities with an income in excess of £25,000, annual accounts must be prepared, independently examined and submitted to the regulator. In fact the governing documents of most our members in England and Wales require external examination of the accounts irrespective of the level of income, as this is seen as best practice.

If there were appropriate joined-up working between the charity regulators and HMRC, as proposed by Lord Hodgson in his recent review of the Charities Act 2006, it would be possible for HMRC to use the compliance record of charities with the reporting requirements of charity law, perhaps together with a random sampling of annual accounts to assess the legitimacy of claims under the Small Donations Scheme.

HBA suggests that the linking of eligibility to claim under the Small Donations Scheme to claims under the Gift Aid scheme be replaced by a requirement based on compliance with existing charity reporting and accounting requirements. Where accounts are already submitted to the charity regulator, HMRC should be able to obtain copies from that regulator to enable any necessary counter-fraud checks to be performed without further burdening the charities. Where the accounts are not submitted to the charity regulator, the accounts could simply be submitted to HMRC along with the claim; as all charities are legally obliged to produce accounts irrespective of any requirement to submit them to the regulator, the burden this would impose on the charities would be minimal. Of course, the accounts would need to include details of the fundraising events at which donations subject to a claim under the Small Donations Scheme were received but, again, HBA would expect the annual reports and accounts and small local charities to include such information as a matter of course, so this would not create any significant additional burden on the charity. Not only would the above measures create little or no additional burden on charities, they would provide HMRC with a more robust means to detect fraudulent claims and enable more charities to benefit from the Small Donations Scheme to the maximum extent.
105 days ago Report this comment

The Scout Association: TSA agrees with the Institute of Fundraising, Charities Aid Foundation and NCVO. Some Scout Groups have been put off claiming Gift Aid (and as such will not have built up the requisite three years) due to the difficulties and administrative burden that has been in place. They would therefore be excluded from using this scheme as a result of the exact problems and burdens that this Bill is seeking to reduce.

Scouting is growing year on year. This clause would also affect any new Group setting up, where additional funds from Gift Aid on small donations and collections would be incredibly useful in the early years of a new Group running activities in its local area for young people. This clause should be removed so new Groups and small charities are not prevented from claiming Gift Aid on these donations in their first three years.
104 days ago Report this comment