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£750m of gift aid unclaimed because of 'antiquated' system

£750m of gift aid unclaimed because of 'antiquated' system

The current gift aid system is so bureaucratic and burdensome that charities leave £750m a year unclaimed, according to a new report.
High administrative costs have created a perverse disincentive for the Treasury to encourage more donors to use gift aid, but the situation is even worse for charities says the new Digital Giving report from ResPublica, commissioned by CAF.

“Gift aid as both a concept and as a means of boosting the income of charities is a unique and invaluable system,” says the report. “But in many ways it remains stuck in the past, operating in much the same way it always has.” The report is highly critical of the bureaucratic and administrative burdens that the current system places on both HMRC and individual charities, saying that the total cost to the taxpayer of processing each claim is £5.

Both government and charities must embrace innovation and technology to get the most out of gift aid, the report argues. It recommends that charities should be able to file their gift aid claims online rather than on paper and through the post. HMRC should ‘overcome its inertia’ says the rport and introduce this simple change.

Authors of the report, together with a world-leading mobile phone payment company have devised a system to enable gift aid to be claimed online. It also recommends that a Digital Giving Steering Group should be set up, chaired by the Minister for Civil Society to co-ordinate the activities of a new Digital Giving Unit and the Treasury’s own gift aid team.

The Institute of Fundraising is concerned that it is taking so long to reform gift aid. In particular it is worried that the consultation around gift aid is moving away from its original brief.

Tax-effective giving project manager at the Institute, Lee Grant, said “It is quite alarming that in 2010 we are discussing new technologies in gift aid in the same breath as ‘the internet’ and ‘SMS donations’; this is hardly revolutionary stuff. However, the fact remains that the sector needs to catch up, and what we have come to expect as ‘the norm’ in the commercial sector is not necessarily being replicated in ours.”

The report is available for download at

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