One-fifth of charity leaders have reported difficulties in claiming gift aid, according to new research by Charity Finance Group (CFG).
CFG surveyed 100 charity professionals including finance directors, finance officers, senior charity leaders, trustees and gift aid officers on their experience of the gift aid scheme.
Published today, its report says that gift aid remains a vital source of income for charities, but many are still missing out on potential claims.
Separately, research published last week by the Charities Aid Foundation (CAF) shows that the public is aware of how important gift aid is to charities but that it is still underused by many people.
‘Old and difficult’ process
CFG’s survey finds that 20% of charity leaders have found claiming gift aid “difficult” or “very difficult” while 14% have found it “either somewhat” or “very difficult” to register to claim it.
Respondents shared their frustration with HMRC’s web portal, saying that the claiming process should be modernised and improved.
One respondent said: “It feels like a very old and difficult process – very manual and so many steps. I wish there was a universal guide and processes to follow.”
Most respondents argued that “clearer, more easily understood rules would help them claim, with some rules creating a barrier”.
One charity director commented: “[We need] more clarity around memberships and where gift aid can be claimed on subscriptions.
“The 25% benefit limit is so hard to monitor that we don’t bother to claim on membership subscriptions.”
Looking at internal barriers, most respondents said adopting better processes and having better coordination across the organisation would help them claim gift aid more easily, while two-fifths recognised that better internal data collection and output would help.
Awareness among the general public
Seven in 10 charity leaders said they would like to see more done to increase gift aid awareness among the general public.
Most reported that it is not always easy to talk to donors about it when encouraging them to sign a declaration form.
One trustee of a small charity said: “We find getting people to sign up for gift aid extremely difficult and paper-based.
“Due to the difficulties with the task, we haven’t claimed for a couple of years and are now trying to sort this out.”
Another respondent from a small organisation said: “It’s a useful source of income but getting folks to sign up can be tricky, especially when many of our members are pensioners. Do they pay enough tax?”
The majority of respondents would support the idea of a government-backed public awareness campaign for gift aid, with one-fifth saying it would also help if charities raised awareness among the public and volunteers.
Dionne Sturdy-Clow, gift aid project officer at CFG, said: “For UK charities small and large, every pound really does count.
“Maximising income is even more vital in 2024, with the cost-of-living crisis continuing to impact charities. Many are seeing their income reduce whilst demand on their services is increasing.
“By ticking the box and applying gift aid to donations, donors are making a tangible difference in the lives of countless people. And it doesn’t cost them a penny extra – it's money from the government.”
Some donors ‘don’t always remember’ to use gift aid
A separate survey conducted by YouGov on behalf of CAF found that 77% of 5,180 adults surveyed in the UK recognised that charities rely on gift aid.
Meanwhile, 80% of the respondents agreed that people should be encouraged to donate with gift aid when they are eligible.
According to CAF’s long-running UK Giving research, this year, 51% of donors said they always used gift aid on donations.
However, 26% reported only “sometimes” using gift aid on their donations due to not always having the option to do so or not being able to do it when donating cash.
And 11% argued “it’s too much effort” while 24% said they “don’t always remember” to do it.
CAF’s managing director Mark Greer said: “Gift aid is extremely valuable to donors and the charities they want to support and it’s clear the public recognise this.
“But we know it’s underused by donors and can be complicated for charities to claim. When an eligible taxpayer donates and forgets to tick the box, the charity misses out.
“Charities are under pressure with demand for their services continuing to increase. Modernising the system to automate gift aid would be a vital step forward at a time when we need to boost charitable giving across the UK.”
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