The government minister responsible for charity tax has said he is taking steps to prevent online fundraising platforms from claiming their fees from the Gift Aid on donations.
Robert Jenrick, the Exchequer Secretary to the Treasury, said he wanted to see an end to the practice in which some online platforms, including JustGiving, take a slice of Gift Aid to cover their fees rather than taking money directly from donations.
Platforms operating in this way typically claim the Gift Aid on eligible donations on the charity’s behalf then deduct their fee from the Gift Aid.
But Jenrick told The Sun newspaper: "This is not the intention of Gift Aid, which is to provide more money for good causes and to support charities.
"I want this practice to stop and, if it doesn’t, we will take action at the next opportunity. I have instructed HM Revenue & Customs to prepare steps to bring this to an end if required."
Daniel Fluskey, head of policy and research at the Institute of Fundraising, warned that any changes needed to be considered carefully to prevent a negative impact on donations.
"Donation platforms have developed different models of charging and receiving commission, and there have recently been regulatory changes from the Fundraising Regulator on the transparency of fees for donors," he said.
"Of course, we want to see as much money going to good causes as possible, but we need to ensure that potential changes – including banning a charge on Gift Aid – don’t negatively affect the whole system of giving through platforms."
JustGiving, which was named in the Sun’s story, charges a 5 per cent fee on the donation and Gift Aid combined, but has recently added a function that allows donors to voluntarily pay the fee on top of their donations.
The Fundraising Regulator updated the Code of Fundraising Practice last month to include online fundraising platforms, which it said needed to be more transparent in explaining their fee systems to donors.
Jenrick’s comments come days after the Labour MP Neil Coyle tabled an amendment to the Counter-Terrorism and Border Security Bill, which is working its way through parliament, that would make it illegal for fundraising platforms to make a profit from fundraising campaigns set up in response to terrorism attacks.
The Sun alleged that JustGiving had received £16,700 of the £334,908 in total donations raised for victims of last year’s London Bridge terror attack and £277,000 from the £5.5m raised for victims of the Manchester Arena attack.
But Fluskey said: "There’s no doubt that without donation platforms less money would have been raised in the wake of recent attacks, so we need to tread carefully in bringing in changes as well as looking at any potential unintended consequences that could limit the amount that can be raised in the future."
The proposed amendment says that, where the fundraising campaign is wholly or substantially to support people affected by acts of terrorism, organisations providing services would not be able to charge more than the cost of providing those services, such as credit card transaction fees.
In the explanatory statement to the bill, Coyle says the clause would affect "organisations such as online donation platforms", but the text of the amendment does not specifically mention online fundraising platforms, suggesting it could affect traditional fundraising agencies as well.