The budget has extended the relief available to higher rate tax payers who give to charity. They can now backdate Gift Aid to the previous tax year and from 2004 will be able to nominate a charity to receive any repayment of tax they are due from the Inland Revenue. Gift Aid will also receive the added bonus of being advertised free of charge on tax return forms.
Promotion of Gift Aid is desperately needed because all these giving incentives are of no use if they're not being used. Gift Aid, introduced in the Budget in 2000, has the potential to earn charities a lot of extra money each year but many are still missing out. The Charities Aid Foundation estimated that organisations lose £250 million a year in unclaimed Gift Aid. We worry about people not giving as much as they do in the US, but at the same time the sector isn't getting the full value out of what is being offered.
Part of the problem is that donors just aren't aware of Gift Aid. Financial advisers are not always willing to promote tax-effective giving to their clients because they are concerned about being seen to be doling out moral advice. As a result, donors are not filling in the form.
Charities themselves need to be better educated about the tax breaks available and make sure their staff are fully informed. It can be difficult for organisations with mainly volunteer fundraisers to make sure everyone understands the importance of getting donors to do the paperwork.
It's also vital that Gift Aid forms ask for all the necessary information.
Some charities remain hesitant about attaching Gift Aid forms to appeals because they fear the extra form filling may put off donors. But if givers understand that a tiny amount of extra information can result in more money for the charity, they're unlikely to be deterred.
Organisations may be disappointed with the absense of VAT relief in last week's budget and the hike in National Insurance, but they must focus on the challenge of making the most of schemes that are already there.