Charities could gain £735m a year in extra Gift Aid claims if the government made it easier for people to sign up to the tax-effective giving scheme while making digital donations, according to calculations by the Charities Aid Foundation.
The government said in the Budget yesterday that it would consult on proposals to make it easier to claim Gift Aid through a wide range of digital giving channels, including options for enabling donors to complete a single Gift Aid declaration to cover all their donations through a specific channel.
CAF estimates that reform could bring charities an extra £735m a year by increasing public awareness of Gift Aid and making it easier for people who give through online platforms, such as social media and mobile devices, to sign up to the scheme.
Richard Harrison, director of research at CAF, said Gift Aid was not claimed on £5.7bn of the £13.1bn of donations made in 2008/09, based on figures from the NCVO’s UK Civil Society Almanac 2010.
He said that taking into account the amount that would be eligible for Gift Aid and adjusting it to include factors such as increased awareness of Gift Aid and additional methods for tax-efficient giving, a further £735m of income could be available to the sector.
But Harrison said the figure was a cautious estimate. "It is our estimate of how much more Gift Aid would be available if it was easier to claim," he said.
Cathy Pharoah, professor of charity funding at Cass Business School, said it was "always difficult to estimate how much such changes could be worth".
She said she had estimated that somewhere between £177m and £350m could be available to the sector if the Gift Aid scheme was modernised.
Her calculation is based on the most recent figure for total donations from the UK Giving 2012 survey, by CAF and the National Council for Voluntary Organisations – £9.3bn – and uses figures from the US that show between 7.6 and 15 per cent of donations are made online.
"Simplification of the Gift Aid process for online giving is one of the missing links in the modernisation of giving through online techniques, and is greatly to be welcomed," Pharoah said.