Small Charitable Donations Bill

Memorandum submitted by National Council for Voluntary Organisations (SCD 10)

I am writing, following my attendance at the Committee’s evidence session on 16 October, to provide some additional information about the coverage of the proposed Small Donations Scheme and to address a question about charities in existence for fewer than three years.

Coverage of the Small Donations Scheme

During the course of the Public Bill Committee’s sessions, different arguments have been made about the potential coverage of the Small Donations Scheme. It may be helpful to parliamentarians to consider the available data further.

Overall s ize of the voluntary sector

The Charity Commission’s data shows that there are around 180,000 ‘main charities’ registered in England and Wales. This includes charity subsidiaries, but excludes certain other organisations:

§ Scottish and Northern Irish charities

§ Charities below the Charity Commission registration threshold of £5,000

§ E xempt organisations ( such as: universities, museums, foundation schools )

§ E xcepted organisations ( such as: churches , guide and scout groups)

§ Community Amateur Sports Clubs

It is important to note that m any of these organisations will be eligible to register for Gift Aid, even though they are not reflected in the Charity Commission’s figure s .

In my evidence to the Committee, I referred to NCVO's Almanac data on UK charities. This shows that there are around 163,000 ‘general charities’ across the UK. This draws on the Charity Commission’s data, with several amendments. In particular, we add Scottish and Northern Irish charities , but count subsidiaries as part of their parent charity . [1]

Importantly, neither the se Charity Commission or NCVO Almanac estimates include excepted and exempt charities. Working with the National Audit Office on a recent study, NCVO has further estimated that there are around 180,000 excepted and 11,000 exempt charities. Including these charities would bring the overall size of the voluntary sector to over 350,000 organisations. [2]

Estimating coverage of the Small Donations Scheme

To estimate th e potential coverage of the Small Donations Scheme, we need to establish how many organisations have claimed Gift Aid for three years (to be eligible for the new Scheme ), relative to the overall size of the voluntary sector.

To scrutinise coverage of the Scheme in this way, we must draw on the limited information in the public domain. This is because HMRC does not release its data in a way that enables direct comparison wit h the Charity Commission’s data.

HMRC’s published data shows around 65,000 organ isa tion s made Gift Aid claims in 2011/12. [3] T here have been a similar number of claims each year since 2006. As the Economic Secretary commented in his evidence (16 October) that 100,000 organisations are ‘on the books’ with HMRC , it indicates that many organisations are not claiming Gift Aid consistently each year.

HMRC has not release d information that would en able us to further examine the different types of organisations claiming Gift Aid . However, as mentioned above , they will include a range of organisations that are not covered by Charity Commission data . For example, i n the Church of England’s evidence to th e Committee ( 16 October ) , they referred to 12,500 C of E parish es using Gift Aid. This indicates that the number of ‘general charities’ accessing Gift Aid will be considerably lower than 65,000.

In NCVO’s comments on the Bill, we have drawn on the best available evidence to date . On 16 October, I estimated that around 1/3 of UK charities ( based on < 65k out of 163k) would potentially be able to benefit from the Scheme. However , taking into account the new evidence gleaned by the Committee ( about the significant number of organisations claiming Gift Aid wh ich are not ‘general charities’), it may be more appropriate to use the National Audit Office estimate fo r size of the voluntary sector as our denominator . Therefore, an alternative estimate would be that around 1/5 ( based on 65k out of 350k) of voluntary organisations will potentially be able to benefit from the Scheme.  

This is significantly different to comments made by the Economic Secretary to the Treasury in his evidence to the Public Bill Committee. On 16 October, he stated:

"According to the Charity Commission there are about 180,000 charities in the UK... There are 100,000 charities that are registered with HMRC in its database, which is more than half of all the charities."

The Economic Secretary’s implication is that the Small Donations Scheme will be quite widely accessible to charities, whereas NCVO and other voluntary sector bodies believe its coverage will be considerably lower, due to restrictions in the Bill , and our analysis outlined above.

Finally, parliamentarians may share our ongoing concern that it is difficult to scrutinise HMRC’s policies without access to more granular information and data that they hold . We would welcome more information being made available where possible.

Charities in existence for less than three years

During my evidence session on 16 October , Pat Glass MP asked about the number of charities that may exist for fewer than three years. I did not have this information readily available, but have now investigated this further.

The Charity Commission data for England and Wales can be analysed to see how long a charity has been registered for. However, it is important to note caveats in relation to the data: that charities are registered and removed from the register for a number of reasons , and include administrative changes , such as re-registering and merging.

Excluding those charities registered for 1 month or less (as these are most likely to be administrative errors) , there are around 4,500 organisations that were registered and removed within 3 years , since the register began in 1965 . This is around 3.5% of the total number of organisations that have been removed from the register , during that time period, in England and Wales.

Conclusion

I hope that parliamentarians will find this information useful.

NCVO and other voluntary sector bodies continue to call for amendments to make the Scheme fairer and more accessible for charities. Specifically:

· Dropping the ‘matching requirement’ which caps the amount a charity can claim at £2 in Small Donations for every £1 of Gift Aid claims.

· Reducing the number of years which a charity needs to have been claiming Gift Aid in order to qualify for this Scheme, currently set at 3 years.

· Simplifying the ‘community buildings’ rules.

We would urge parliamentarians to address these issues during the Report Stage of the Bill , but are grateful for the opportunity we have had to contribute to the work of the Bill Committee so far .

October 2012


[1] For more information on how NCVO’s estimate is developed, please see: http://data.ncvo-vol.org.uk/category/almanac/voluntary-sector/scope

[2] Source: http://www.nao.org.uk/publications/1213/regulating_charities.aspx

[3] Source: http://www.hmrc.gov.uk/stats/charities/table10-4.pdf

Prepared 30th October 2012