Hot issue: Should the Government make changes to corporate Gift Aid?

The Gift Aid system was changed in 2000 so that tax relief went to corporate donors. But charities want the system changed so that they can reclaim tax.

YES - Lindsay Boswell, chief executive, Institute of Fundraising

The Gift Aid system was changed substantially in 2000, including the introduction of tax relief on corporate donations. The reasoning behind this was that it would give businesses an incentive to increase their corporate giving. But the opposite has happened.

Research by the Charities Aid Foundation shows that, in the first two years after this change, corporate giving to the sector fell by 21 per cent - a £66m decrease for charities. When asked, as part of our consultation into the Gift Aid review, 87 per cent of our members said they wanted the tax relief to go to charities. It is essential that the administrative burden for charities and companies is kept light.

Of all UK giving, it is corporate donations that lag behind those in many other parts of the world. After the tsunami appeals, the corporate world made a lot of noise about supporting the relief work, yet the vast majority just diverted their charitable giving and gave nothing extra. The incentive for businesses to increase their giving has not proved effective. If the tax relief was given to charities, however, it would make a significant and immediate difference.

NO - Barry Gower, managing director of Gift Aid recovery consultancy Gain

Until such time as the Government sees that charities are making an effort to collect Gift Aid efficiently, I cannot see any justification for making it easier.

Currently, Gift Aid is under-utilised, with Gift Aid recovery from individual donors estimated at less than 30 per cent, resulting in about £850m a year in unclaimed Gift Aid.

This is crazy, because Gift Aid is an amazing opportunity for charities to get more money from the taxman simply by adhering to some very definite rules. HM Revenue & Customs needs to ensure claims are valid, so these regulations must be followed. Gift Aid has been made a lot easier with the introduction of simplified forms and claims procedures. But instead of making an effort and taking an organised approach to get to this 'free' money, the appeal from the sector is for the Government to change corporate Gift Aid.

Clearly, charities are keen for changes to corporate Gift Aid because it's easier for them. But the object of Gift Aid is to get people to give more. And not tackling that is a cop-out.


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