Tory plan to enrich sector with bonfire of Gift Aid bureaucracy

Eighty per cent of donations from individuals should automatically qualify for Gift Aid without the need for charities and donors to fill in any paperwork, Conservative MP Iain Duncan Smith's Social Justice Policy Group has recommended.

The radical proposal, which would bring extra millions of pounds into the voluntary sector, is contained in Breakthrough Britain, a paper published by the group's third sector working party yesterday. The report is designed to influence future Tory policy on charities.

Many charities don't take advantage of Gift Aid because of the scheme's cost and complexity. The proposal is designed to make it easier for charities, particularly small organisations tackling poverty in Britain, to make the most of the tax break.

According to the latest government estimates, take-up of Gift Aid currently stands at £828m - a third of what charities could claim back.

"A certain percentage, perhaps 80 per cent, of all individual donations should be assumed to come from taxpayers," Orlando Fraser, the chairman of the working party, who is also patron of the Frank Longford Charitable Trust, writes in the report. "This percentage of all individual donations would qualify for Gift Aid without the paperwork currently needed to 'opt in'."

The working party also recommends setting up a website to accredit the work of and encourage donations to small poverty-fighting charities. Membership of this 'trustmarking' website would also allow small charities to benefit from double the normal rate of Gift Aid.

According to Cameron Watt, vice-chair of the working party and deputy director of Duncan Smith's Centre for Social Justice, 'small charities' would probably mean those with annual incomes of less than £1m.

"We haven't set a final figure, but perhaps it would be something like less than £1m," he said.

A new legal status for small organisations interested in delivering public services is also recommended. 'Community Growth Trust' status would earn small organisations that succeed in delivering projects on a small scale the right to expert help so they could expand their services.

"When planning services, statutory commissioning bodies would have to consult with, and invite tenders from, local Community Growth Trusts," said Watt. "Statutory providers of investment capital such as Futurebuilders would be expected to presume in favour of applications from CGTs wherever possible."

The report places heavy emphasis on the role of volunteering in combating poverty in Britain. For example, it recommends that disaffected youths receive benefits such as cinema vouchers in exchange for doing charity work.

However, well known volunteering charities such as CSV, Volunteering England and 'v' should no longer receive government funding unless they do more to increase volunteering levels among socially-excluded groups and poverty-fighting charities, the group says.

Other recommendations include turning the minister for the third sector into a Cabinet-level role and revising Charity Commission guidance so that large and medium-sized charities no longer hold what the group sees as "excessive" reserves.

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