The government has introduced a bill to make changes to the Gift Aid Small Donations Scheme, including removing requirements that prevent newly formed charities from making claims.
The Small Charitable Donations and Childcare Payments Bill, introduced in the House of Commons yesterday, proposes changes to the scheme such as the removal of the two-year rule, under which charities must have been registered for at least the past two years before accessing the scheme.
But the Charity Finance Group said the changes were a missed opportunity for widespread reform of the scheme and the government was "locking in future failure".
The GASDS, which was introduced in 2013, allows charities to claim Gift Aid-like relief on up to £8,000 worth of small cash donations each year without having to submit paperwork for each individual claim.
It has long been criticised by charity bodies for being too difficult for small charities to access and for low levels of take-up, particularly among the smaller charities it is primarily intended to help.
The bill proposes scrapping the two-year rule and the requirement that charities must have made successful Gift Aid claims in at least two of the previous four years, enabling newly formed charities to access the scheme.
Under the proposals, the same changes would also apply to community amateur sports clubs.
The bill also proposes to allow small donations made by contactless payment to be eligible under the scheme from 6 April next year.
But the bill does not propose any changes to the matching requirement, which dictates that a charity or CASC must make successful Gift Aid claims worth at least 10 per cent of the amount of small donations for which GASDS claims are made in the same tax year.
Andrew O’Brien, head of policy and engagement at the CFG, said some of the proposed changes were positive but overall they fell short of what was needed.
"The bill is a massive missed opportunity," he said. "If the scheme is to hit the targets that were originally intended, it needs widespread reform."
He said the scheme had fallen considerably short of the amounts the government originally expected would be claimed by charities and the planned amendments did not go far enough.
"It looks like it is locking in future failure," he said.
O’Brien called for changes such as allowing cheques or online donations to be included under the scheme, and said he was disappointed that there were no changes to the matching requirement, which puts some small charities off from making claims.
He said a relaxation of the rules around the length of time a charity needed to be in existence was welcome but such changes would not give the scheme the significant boost it needed.
The addition of contactless payments to the scheme was useful for the future, he said, but the overwhelming majority of small charities would not be in a position to accept such donations at this stage.
A spokesman for the Institute of Fundraising said the GASDS was an excellent idea but was not working effectively.
"We have previously raised concerns and called for reform to make sure that more charities are able to benefit, in particular around the matching requirement, the types of donations covered and raising awareness of the scheme more widely within the sector," he said.
"We hope that this bill is a chance to improve the scheme and plan to engage closely as it makes its way through parliament."
A spokesman for the Charity Tax Group said he broadly welcomed the relaxation of the requirements around the length of time an organisation had to be in existence before making a claim and the addition of contactless payments, but said it was necessary to see the details of the proposals before making a final judgment.
According to the parliament website, the bill will have its second reading in the House of Commons on 11 October, which will be the first opportunity for MPs to debate the measures it contains.