Chief Secretary to the Treasury Paul Boateng recently challenged the voluntary sector to come up with ideas to simplify Gift Aid. One proposal is to shift the tax relief benefit from the charity to the donor. Based on a system used in the US, the donor would receive the 28 per cent tax rebate rather than the organisation. THERESA LLOYD, director, Philanthropy UK - YES
Reliefs on income tax depend on the mechanism. Payroll and share giving benefit donors. It's simple. With Gift Aid the charity reclaims the basic-rate tax and a higher rate taxpayer claims the balance. Some fundraisers and many volunteers cannot explain it. When tax rates change, explanatory notes have to be reprinted. Some £400 million is not being claimed by charities that haven't understood Gift Aid.
Charities have to invest in accounting and training to promote Gift Aid.
Costs, if known, could be a deterrent. Those which have invested may resist change, but fundraising should not be driven by process but marketing, considering the desire of donors for simplicity. Change could lead to short-term unrestricted income reduction.
Charities cite corporate giving as when the rules changed there was unsurprisingly not a commensurate increase in donations. Community affairs budgets remained the same and accountants claimed the tax relief. With an individual it's the same decision-maker.
For donors, giving mechanisms should be tax-neutral and simple. Reforming Gift Aid could in the end lead to more money for charities.
AMANDA DELEW, director, The Giving Campaign - NO
Gift Aid now contributes more than £400 million in extra income to charities each year, and increasingly donors and charities are becoming comfortable with using it, so that figure is only set to rise.
The challenge is for charities to encourage their donors to use Gift Aid and to explain what it means to them in real terms. It's hard to beat the simplicity of Gift Aid at the moment.
If we changed the system now, giving the donors all the tax relief, I doubt if they would increase their own donations by the same amount to cover the tax relief they would receive.
We should learn from the experience of corporate donations, where the change advocated has taken place, but without the hoped for increase in donations, so charities aren't seeing the benefit.
CATHY PHAROAH, research director, Charities Aid Foundation - NO
Definitely not. CAF research has shown quite clearly that donors prefer the tax bonus to go directly to charities and not themselves. While almost half of donors prefer their tax to go to charities, only 14 per cent want the benefit to be set against their own income tax. Only the super rich in the US give a higher percentage of their income than UK donors.
Experience has taught us that switching the tax reliefs to donor income leads to losses for charities. The reform of charitable reliefs for corporate giving in 2000 led to an estimated loss to charities of about £65 million per annum as corporate donors failed to increase their donations. The value of tax reliefs to the sector vastly outweighs the cost of tax reclamation.
The most important change needed to Gift Aid now is for a lighter touch in relation to the audit trail for lower-level gifts. The current regime prohibits many forms of low-value individual giving such as street collections, used by a quarter of all donors, from benefiting from tax reliefs, and this penalises smaller charities most.
MIKE WADE, head of supporter development, Oxfam - NO
As a fundraiser, how would you feel if asked to recruit 530,000 new donors, giving an average of £2 per month? What would it cost? This is how much Gift Aid is worth to Oxfam and what we would need to make up the loss if tax relief went to the donor.
Perhaps more importantly, there is no evidence that this is something donors in the UK want. People give to charities, not for personal benefit, but because they believe they can make a difference. My experience from corporate fundraising confirms that giving tax relief to donors has no positive impact: giving has fallen since this change was made.
Instead, we should look more creatively at changes to Gift Aid and charity taxation generally. VAT remains a massive burden which should be removed or greatly simplified. Allowing Gift Aid against goods donated to charity shops would provide a significant boost. More radically, the admin burden could be slashed by scrapping Gift Aid declarations and allowing tax relief against a percentage of all donations from individuals.
Any chance, Mr Brown?