Officials from the Treasury and HM Revenue & Customs recently met third sector organisations, including the Charities Aid Foundation, the Charity Tax Group and the Institute of Fundraising, to discuss developing a universal Gift Aid database that could be shared by all charities.
HMRC has given its backing for infrastructure bodies to work on a database, but questions remain about how it might work. In theory, it would store the results of a new "universal declaration" – an agreement from a taxpayer that a charity could claim Gift Aid each time that person made a donation. The declaration would be accompanied by a to-be-decided "unique identifier" that would allow charities to check they had the right person. Instead of filling out a new form each time, donors could simply identify themselves and the charity could find them in the database. If donors were not already signed up, the charity could add them to the database.
Ideally, says Rhodri Davies, policy manager at CAF, the charity could merely notify the database that it had received a donation and automatically trigger a repayment. If this were not possible, charities could submit to HMRC a list of unique identifiers, along with the amount being claimed for each.
But the sector would have to fund the development and maintenance of a database, HMRC has said. A new organisation would have to be set up to have responsibility for it.
Helen Donoghue, director of the Charity Tax Group, says that if a universal database proved too complex it should still be possible to develop database software, approved by HMRC, that would store the same information that currently has to be kept in hard copy on Gift Aid forms.
She says such software could work as a precursor to a universal database, or as an alternative to it, or – ideally – as a complementary tool, for charities unwilling to work with the universal database.
Whatever solution is developed, the likelihood is that collecting information would not become simpler. But the benefit to charities would be that they would no longer need to store hundreds of paper forms for up to six years, covering every penny of Gift Aid they have applied for. The question of a central database for all Gift Aid declarations is relevant now, because HMRC has started work on an IT system that would allow charities to claim Gift Aid online; ideally, the database and online claims system could work together. But the methodology for identifying donors is problematical. Davies says it is not clear what information about a donor the database would store. He says no decision has been taken about a "unique identifier" but hopes charities would be able to identify people using just their postcodes and names.
The database would also face many competing demands that might prove difficult to fulfil. Davies says access would have to be easy, so that any charity could enter and find data, but they would not be able to search the whole list of donors.
Donors would have to have some power over their own data. It would have to be possible, for example, for them to make changes if their tax status changed. The database would also need to be secure enough to protect people’s data, and be compatible with HMRC software.
Davies believes the database can be created for less than £1m, and is confident grant funding can be found to cover it from a foundation, a government pot such as the Innovation in Giving fund, or from corporate sponsorship.