Fundraising: Gift Aid donations on the up, but growth is slowing

Georgina Lock

Some 10 million people now use Gift Aid when donating to charity, bringing £2.8bn into the sector in 2004/05.

A new report from the Charities Aid Foundation, Analysis of Giving Through Gift Aid, examines trends in the use of Gift Aid since 2000, the year that the tax relief was extended to all donations by UK taxpayers.

It shows that the value of Gift Aided donations has grown by an average of 11 per cent each year since it was set up in 1990, but its growth in the last financial year slumped to just 3 per cent.

The highest annual increase in the use of the scheme - 15 per cent - occurred in 2002/03 and was attributed to charities investing in better donor information systems and clearing a backlog of Gift Aid claims.

About one-third of all charitable donations were made through Gift Aid last year. Despite the overall rise in the number of people using the scheme, the average amount donated is in decline, suggesting that more smaller donations are now being Gift Aided.

The report also showed that women, young people and lower-level donors are more likely to use tax-efficient methods when they make donations.

Cathy Pharoah, research director at CAF and co-author of the report, said: "We estimate that a further one-third of existing giving could be converted to Gift Aid. To make all giving tax-efficient is a major challenge for the sector because much fundraising is still done in ways that do not easily lend themselves to conversion."

The Institute of Fundraising welcomed the growth in take-up of the scheme, but added that more still needed to be achieved. From the spring, the institute will be working to provide smaller charities with extra support on tax-effective giving, including a helpline, mentoring and training.

However, the report's authors estimate that only a further third of donors could be converted to Gift Aid because the final third are not UK taxpayers.

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