Small Charitable Donations and Childcare Payments Bill

Written evidence submitted by the Charities Aid Foundation (CAF) (SCDB 01)

Small Charitable Donations and Childcare Payments Bill

About the Charities Aid Foundation (CAF)

0.1.1The Charities Aid Foundation (CAF) is a registered charity that promotes charitable giving and provides financial services and social finance to not-for-profit organisations. We help donors – including individuals, major donors and companies – to give more effectively whilst providing financial and fundraising solutions for charities in the UK and internationally, helping good causes to manage their resources more effectively. We also have a strong track record in research, policy and advocacy, working across a range of issues to ensure the best possible funding environment for charities.

0.1.2 CAF was one of the leading voices in the call for a new charitable tax relief to replace the system of covenants, which led to the introduction of Gift Aid in 1990. We have since continued to be closely involved with all aspects of policy and legislation governing Gift Aid, including driving much of the work around giving and ensuring that Gift Aid reform meets the needs of digital donors.

0.1.3 Each year, CAF claims a significant amount of Gift Aid on behalf of our major donors and regular giving customers. In 2015/16 we claimed £33.8min Gift Aid in respect of our major donors, reducing the administrative burden on charities, making it easier for people to manage their donations and increasing the amount available to be donated.


0.2 CAF broadly welcomes the measures proposed within the Small Charities Donations and Childcare Payments Bill, and is pleased that the Government is taking action that seeks to increase the efficiency and effectiveness of giving. The Gift Aid Small Donations Scheme (GASDS) was introduced following positive engagement with the charity sector, although usage of the scheme since being implemented has been disappointingly low. We hope that some of the changes proposed within this Bill can help to increase usage of the scheme and subsequently increase the amount of money available to charities to spend on their charitable missions. We have brief comments on some of the measures contained within the Bill, which will be outlined below.

Clause 1 – Meaning of "eligible charity"

0.3 CAF supports the removal of requirements included in the Small Charitable Donations Act 2012 that restrict the ability of some charities to benefit from the scheme, the removal of which will mean that more charities will be able to access the GASDS. We note that some concerns have been raised about whether this requirement increases the potential for fraudulent activity; however, the Charity Commission is a strong regulator and we believe that the Commission’s powers – recently enhanced – means that it is well-placed to clamp down on any abuse that does occur. The relatively small risk of any misuse is far outweighed by the benefits of increasing access to the GASDS and sending the message that more charities are eligible to benefit from it, and this will be particularly beneficial for newly-formed charities who will benefit from the additional income as they seek to ensure their sustainability.

Clause 2- Meaning of "small donation"

0.4 We welcome the new definition of a "small donation," which means that contactless payments are now eligible for top-up under the GASDS. This is important as donors (and consumers) gradually shift away form cash to newer methods of contribution. However, there remains scope for further discussion to ensure that more donations are eligible for GASDS, including those made via online or phone payments, as well as those verified by ‘chip-and-PIN.’ This is equally true of donation methods that might now be seen as dated, such as those made using cheques. We believe that the Bill is a positive measure in the interim, but would encourage the continuation of work to explore how donations made via these routes can also be eligible under the GASDS. Whilst we understand that some have argued that these types of donations should not be eligible under the GASDS, we reiterate that donors who give generously cannot be expected to know the intricacies of the different tax incentives and exemptions applicable to charities. We can, however, say with certainty that donors want to maximise the impact of their donation, and assessing how more methods of donating can be made compatible with the GASDS can only help to meet that public demand.


0.5.1 CAF believes that this Bill is a positive step, and we hope that it will lead to a substantial increase in usage of the GASDS, both in terms of charities accessing the scheme and the amount of funding distributed from it. However, perpetual changes to the ways in which donations are made mean that even the existing definition may be in need of reform in the next few years. This includes the development of new payment (and potentially donation) methods such as Bitcoin. The Government (and opposition parties) have been willing to have extensive dialogue with charities about the need for the reform of Gift Aid, and we hope that this open conversation can continue as the needs of charities and donors continue to develop in the years ahead.

0.5.2 We also agree with the sentiment that more needs to be done to promote the GASDS to smaller charities. Whilst we welcome outreach activity that has been carried out since the scheme was introduced, we would urge the Government to continue and indeed increase the scope of this to ensure that more charities are able to access the benefits of this scheme. The Government estimates that the measures contained within the Bill could generate an extra £15m for charities; given that the GASDS has failed so far to meet its targets, we hope that the Government is able to ensure that this Bill dramatically increases usage of the scheme.

October 2016


Prepared 17th October 2016