Each year I do the Gift Aid for a playsite for disabled children on the edge of the Cotswolds. My mother set it up on her farm before she died, and it is now run by a small group of volunteers. I started doing the Gift Aid before the current treasurer took over, and to make life easy I have continued.
When the Gift Aid Small Donations Scheme (GASDS) started, I thought it would be a good opportunity to see whether the system was simple enough to hand it back. I chickened out last year; but this year I thought I would pluck up courage and have a go. The playsite ought to be the perfect target for a scheme designed to make life simpler for small charities. We are run entirely by volunteers. If we get £1000 of income that is eligible for Gift Aid, we are doing well. Our donations are mostly small (around £10).
So I found the relevant HMRC pages and launched in to see how it might work, and whether it might make life easier. If you are short of time, I’ll cut to the chase. There are numerous barriers for small charities who wish to take advantage of the scheme.
The first thing that HMRC asks is whether, as an organisation, we are eligible. Yes, we are a charity. Yes, we have claimed Gift Aid before. However, I will confess that I am not sure whether we have made a successful gift aid claim in two of the last four years (barrier one). I would say yes, but the last spreadsheet I can find is from 2011. I am not the treasurer, but I could ask them if that was the only barrier.
Next, HMRC want to know if there has been a gap of two or more years and if we have incurred any penalties. I would say no to both of those, but again I couldn’t swear to it, and the blurb makes clear that we could be fined if we make an ineligible claim (barrier two and three). However, assuming that I asked the treasurer and she said we were good to go, we would also have to have done Gift Aid before (barrier four, although this does not apply to us).
In front of me I have a pile of forms with all the donations filled in. Here are my next two problems. Donations must be under £20 and must be in cash. Yes, cash. The guidance is very clear that donations made by cheque, credit card, text or bank transfer do not count. As clear as this is, the forms I have do not make it at all clear how the money has been paid. I am sure some will be in cash, but I am also sure some won’t: and I don’t know the difference (barrier five).
There is a second problem. Some people are altogether too bloody generous and have given more than £20. Maybe they gave it in cash – but I don’t know. So those donations will have to be treated differently and an ordinary Gift Aid claim made (barrier six).
For the sake of this blog let’s assume all my donations qualify. They were all £20 or less and all in cash.
My next problem is the treasurer is too efficient in a different way. Any donation which has a Gift Aid declaration with it cannot be processed under GASDS. All the forms I have in front of me have Gift Aid declarations attached, because the treasurer has created a single form which captures name and address as well as the Gift Aid declaration. Indeed, the guidance says that if the charity has an existing ongoing Gift Aid declaration from an individual, the donation is ineligible. So now I should go and ask the treasurer to double check the existing Gift Aid declarations from previous years for anybody who has made a donation, even where there is no declaration with it (barriers seven and eight).
There is another potential problem (assuming all these donations were in cash, less than £20 and without a Gift Aid declaration from an eligible organisation). No benefits can be received for any donation under GASDS. None. Standard donations allow a benefit of up to 25 per cent of the value. Should I check the Gift Aid rules to see what constitutes a benefit? That newsletter, the label bin, that annual party we hold on the playsite with cake, the bottle of champagne (just kidding … so that’s barrier nine).
So were I to clear all these hurdles I can successfully claim under GASDS. Right? Wrong! To be able to claim under the scheme, my charity must also have made a normal Gift Aid claim in the SAME financial year, as the year for which I am making a claim under GASDS. So I have to make two claims in the same year anyway to claim for small donations. The good news is that I can claim up to ten times the amount in small donations, of the amount I have made a normal Gift Aid claim for. So if my Gift Aid claim is for £200, I can claim £2000 in small donations. But if I had just £6000 in cash I can’t claim it all under GASDS, as the limit is £5000 (barrier ten)
The other fall-out of this rule is also worth pointing out. If there are no Gift Aid claim donations, a charity cannot claim under GASDS (barrier 11).
So basically GASDS is great for organisations who get cash donations of less than £20, for which they don’t have a declaration now or in previous years, who are making a Gift Aid claim anyway, who deliver no benefits, and for which donations don’t exceed £5000. I guess GASDS would be good for any charity running a street collection with lots of cash donations – up to £5000 in value (and who made a normal Gift Aid claim of at least £500).
I was under the mistaken belief that GASDS was to encourage more organisations to benefit from Gift Aid, and reduce the burden of bureaucracy for volunteers in small charities. Sadly, HMRC has made sure that claiming Gift Aid is about as complicated as it could be. No wonder the take-up has been just £7m or 5 per cent of government predictions – and I wonder how much it costs HMRC and charities to do the administration.
Having looked at GASDS, my course of action is easy. I will make a Gift Aid claim as in previous years. All I need to do now is grapple with claiming Gift Aid online. Just a few easy steps, according to the HMRC guidance…