The Gift Aid Small Donations Scheme

The Gift Aid Small Donations Scheme

Stephanie Siddall | 13 July 2016

Encouraging and enabling organisations – particularly smaller ones - to diversify their income is more important than ever.

Recent research shows that the majority of organisations are experiencing increasing demand for their services, while the latest analysis of sector finances shows that smaller charities have seen considerable falls in income in recent years, primarily from government sources and donations from individuals. 

The Gift Aid Small Donations Scheme (GASDS), launched in 2011, introduced a ‘Gift-Aid style’ payment to be claimed on up to £5000 worth of small cash donations per charity (per tax year) without the need for donors to fill in a Gift Aid declaration. The scheme was widely welcomed by charities at the time, anticipating that it would be of particular benefit to the smallest organisations, encouraging them to fundraise and diversify their income. Unfortunately, the scheme has not lived up to initial expectations, with statistics showing that only £27 million has been claimed, significantly less than the original estimations that the scheme would be worth £135 million by 2014/15 - – that’s an underspending of over 70%. 

But the Gift Aid Small Donations Scheme is a great idea, and clearly has a lot of potential to maximise the value of small donations for the organisations that need it most - so why is there such low take up? Earlier this year, along with NCVO and CFG, we surveyed over 300 charities to try and better understand their experiences of the scheme and why it is not being used more widely. Those who had heard about the scheme (not as many as we had hoped!) told us – among other things - that they found the eligibility criteria overly restrictive, for example because they were registered for Gift Aid but not regularly claiming, and the matching requirement (which says charities must claim £1 in Gift Aid for every £10 claimed under the scheme) a barrier and a burden. 

Last week, we submitted a number of recommendations and reflections to HMRC on how the scheme could be improved. We’re really pleased that we’ve been able to feed into this as we’ve been calling for a review of the scheme over the last few years. We’ve already made some progress by seeing some further support for the scheme announced in the budget last March, raising the amount claimable under the scheme for this financial year from £1,250 to £2000 (on up to £8000 worth of small cash donations per charity, per tax year) – this was something we included in our Manifesto for Fundraising, launched back in 2014 as part of our call for the next government to improve the tax system to better encourage giving. 

Even so, there are clearly some more fundamental issues with the scheme. We hope that our proposed recommendations on how to reform the Scheme, including the entire removal of the matching requirement and relaxation of the Gift Aid history requirement, will help to widen its accessibility, particularly among smaller charities, and we’ll work with Government to promote the Scheme as widely as possible. 

Stephanie Siddall, Policy Manager, Institute of Fundraising


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