Have you ever done or thought about doing any of the following things: –
- donating money to an organisation that raises money for charity
- buying something from a registered charity e.g. tickets for an event
- donating clothes to a shop which is owned by a registered charity
- donating furniture to an outlet that fund-raises for a registered charity
If so, you may have heard about Gift Aid or CAF.
CAF enables those buying from, or donating to, registered charities, to claim the tax back for donations made.
This results in further giving, because tax is credited into the CAF account and it can only be used to give to or buy from a registered charity.
Gift Aid is a way to give more to the charity you’re buying from/donating to. With Gift Aid, instead of the tax being returned to you, it goes to the charity itself.
To Gift Aid or not to Gift Aid!
So why am I asking whether one should Gift Aid or not?
A few years ago, I heard that CAF doesn’t always make payments to charities quickly and there’s a fair bit of admin involved. This can be frustrating for the charity that’s fundraising and for the volunteers who have to manage the extra admin.
The pro is that the giver gets the tax back which he/she can then spend to make further donations to any charity of their choice.
CAF also takes a fee. Here’s what they say:-
As a charity ourselves, we keep our fees to a minimum. We deduct a small contribution of 4% for payments in to your CAF Charity Account, up to the value of £20,000 (calculated annually). For sums over £20,000.01, this fee is reduced to 1%
From what I know, Gift Aid can be done in 2 ways.
- The giver can sign a form to say that they want the charity to receive the tax
- The charity shop issues cards to donors who have signed up to give with gift aid. Shops that are fundraising for registered charities can reclaim 25% from HM Revenue and Customs (HMRC) on the sale of donated goods. This is why some registered charities have introduced Gift Aid cards. It’s as easy as; donate, show your card and leave. They then claim the 25% back.
Gift Aid seems neater, easier, fairer and quicker. It may mean that the giver gives once, rather than, getting the tax back and giving again but is that such a bad thing?