Budget potential for £71 million Gift Aid loss
Howard Lake | 23 March 2007 | News
Charities could lose out on up to £71 million as a result of the drop in basic rate income tax from 22 to 20 per cent.
The Charities Aid Foundation (CAF) said that charities currently reclaim around £625 million in Gift Aid, and estimated this will fall to £554 million. A statement from CAF said: “While this will create additional income for the public, charities will have to call on their donors to help make up the shortfall.”
However, the Chancellor also revealed that the Government would consult with charities on measures to increase take-up of Gift Aid and will conduct an awareness-raising campaign.
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The Government also wants to carry out an awareness-raising campaign for Gift Aid among universities and to investigate other incentives for giving to help increase donations to the higher education sector.
A more positive move is the additional £80 million the Government has pledged to promote community action which will be made available to provide core funding to grass-roots community organisations. This money will be run by the Office of the Third Sector and be made available through third sector partners, such as community foundations, at local level.
NCVO said it welcomed the new fund. Policy officer Mubeen Bhutta said: “NCVO has been making the case for more funding to be available for small community organisations. In our responses to the Third Sector Review we pressed for a small grnats programme to support local groups’ voice and advocacy work and look forward to further details on how this fund can make this a reality.”
The Institute of Fundraising also voiced its support for the fund and said it was pleased to see the Chancellor’s ongoing commitment to tax-effective giving. “However, the reduction in income tax is also likely to result in a decrease of the number of pennies in the pound that Gift Aid can potentially add to the coffers of charities,” said director of policy and campaigns Megan Pacey.
The Chancellor also announced that Futurebuilders will be open from spring 2008 to support all public service delivery undertaken by the whole third sector.
There is also due to be a second consultation on unclaimed assets in the spring.
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.