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Digital Giving: Modernising Gift Aid; Taking Civil Society into the Digital Age

Publication Details

ResPublica’s report Digital Giving – Modernising Gift Aid; Taking Civil Society into the Digital Age unveils a series of measures designed to boost charitable giving and overhaul the current Gift Aid system to make it easier for charities to claim millions of pounds they and taxpayers who donate are currently missing out on – such as Gift Aid relief on Text donations.

The report wholeheartedly supports the principle of Gift Aid, but concludes that the current system is outdated, resulting in around £750m going unclaimed each year, according to research by the Charities Aid Foundation.

The report is highly critical of the bureaucratic and administrative burdens that the current Gift Aid system places on both HMRC and individual charities, saying that the total cost to the taxpayer of processing each claim is £5.

It says that the high administrative costs have created a perverse disincentive for the Treasury to encourage more donors to use Gift Aid, but for charities the situation is worse still. It argues that both Government and charities must embrace innovation and technology in order to get maximum value out of Gift Aid.

It recommends that the Government allow charities to file their Gift Aid claims online rather than on paper, through the post, as they currently have to do and argues that it is an anomaly in this day and age that charities cannot claim Gift Aid online, and so claim more money for themselves and save more money for taxpayers. It challenges HMRC to overcome its inertia and introduce this simple change that would save money.

A system has been devised by the authors of the report in conjunction with a world-leading mobile phone payment company that would enable Gift Aid to be claimed online.

Charities would access the database online and enter the relevant information into it. The database could produce the forms needed to claim ‘Digital Gift Aid’ and could even be mined directly by HMRC at a fraction of the cost of the current paper-based system.

Moving online would allow a range of other digital payments to be Gift Aided. One such is text message donations, currently unable to have Gift Aid claimed on them. Making taxpayers’ text donations more tax efficient would be worth a potential £15.4m to charities by 2014. Commentators only recently suggested that Gift Aiding text messages would be impossible.

The report urges the HMRC to smooth the path to Digital Gift Aid by accepting mobile telephone numbers and personal emails as proof of identification. It argues that these are acceptable forms of ID for websites like Paypal, Ebay and even the Government’s own Gateway site, but not Gift Aid.

The 92-page report was commissioned by the Charities Aid Foundation, to coincide with the 20th anniversary of the scheme’s introduction and against the toughest economic climate for the sector in 70 years. And it sets out a range of measures aimed at boosting donations.

The report concludes by arguing that even the modest changes outlined in the report could attract a significant number of donors, benefitting charities by hundreds of millions of extra income.

It says that the up front and running costs of the new system coupled with the costs in an increase in number of donor would actually save taxpayers twice over, as it recommends not renewing the transitional relief for Gift Aid, which saves the Treasury £300 million over three years and yet would enable taxpayers to claim more tax relief on more of their donations.

The main policy recommendations of Digital Giving – Modernising Gift Aid; Taking Civil Society into the Digital Age include:

  • A new online system to allow charities to submit Gift Aid claims electronically.
  • The establishment of a Digital Giving Steering Group, chaired by the Minister for Civil Society, to coordinate the activities of a new Digital Giving Unit and the Treasury’s own Gift Aid Team.
  • The Digital Giving Steering Group to work with representatives from civil society and the mobile and technology industries to oversee the development of Digital Gift Aid and to ensure that in the future, Gift Aid keeps up with rapid innovations in social media, technology and giving. To start with the system would make all text donations – potentially worth £96m per year by 2014 – tax efficient
  • HMRC to encourage all Gift Aid claims to be submitted on line.
  • An end to the Gift Aid transitional relief when it expires in 2011, which would save the exchequer approximately £300m over a three year cycle,
  • To ask the de-regulation task force of The Minister for Civil Society, Nick Hurd, headed by Lord Hodgson, to mitigate the audit trail for small donations; to simplify guidance on Gift Aid and the guidelines governing what benefits charities can offer to donors in return for donations, and to examine whether the current administrative costs for HMRC in operating the self-assessment donation system could and should be better spent redirected towards modernisation and bringing the system online.
  • Asheem Singh

    Asheem Singh was deputy director of ResPublica and the Head of ResPublica’s Civil Society and Social Innovation Unit from December 2009-April 2011. Originally from the North East of England, he was the David Blank scholar in Law at St Catherine’s...

    Asheem Singh
  • Samuel Middleton

    Samuel Middleton was researcher at ResPublica from its foundation in 2009 until May 2011. His interests lie in strategic communications, technology and the convergence of web and mobile, group psychology and social enterprise. He co-authored the report “Digital Giving” with...

    Samuel Middleton