The announcement in the Queen’s Speech that there would be new legislation to claim top-up payments broadly equivalent to gift aid, received a fairly mixed response. Writing on the Guardian’s Voluntary Sector Network, NAVCA’s CEO Joe Irvin called on sector leaders to be more positive and supportive of good news such as this.
Whilst I am prepared to accept that this is not bad news for the sector – and in the current environment, anything which isn’t bad is probably quite good. But I cannot get more positive than that and my own reaction was that it was ‘practically irrelevant’.
The Small Donations Bill will allow charities to claim up to £1,250 on donations a year, where individual donations are less than £20. Of course that amount can make a difference to the lives of people in need and for charities that operate on a shoestring (by far the majority of registered charities). But it is peanuts compared with the impact on the sector of the cap on tax relief for charitable donations.
Joe suggests “it's strange that there has been a less than full-throated welcome from sector leaders in the media”. I contend it’s nothing of the sort. It’s an absolutely appropriate response from people looking at the big picture.
How can we welcome the crumbs from the table of the Chancellor when he’s just announced his intention to take away a much larger piece of cake?
Joe, rightly, points out that most charities are small and they will particularly benefit from this new legislation. Perhaps, but they will also benefit from the grants made by charitable trusts and foundations which rely on substantial donations from benefactors. And of course it is only registered charities that will be able to benefit from the small donations legislation. Whereas community groups which are not registered charities (but whose activities are charitable) would be able to receive funding from many grant makers. So for the hundreds of thousands of community groups who are not registered charities, there’s no benefit to be had here.
And not all registered charities will find they can simply claim the top up either. The details of the consultation the government is currently running on the proposals show that any charity using the scheme would have to have a record of claiming Gift Aid for the last three years. That is bound to exclude a significant number of charities and I would be amazed if there were not more smaller charities who fell foul of this requirement than larger organisations. And if that wasn’t enough, we mustn’t forget that the amount of Gift Aid that goes unclaimed each year is massive - regularly estimated to be in excess of £700m per year.
The more you look into it, the more holes there are in this ‘good news’ story. If you’re not a registered charity, haven’t been claiming Gift Aid for the last 3 years, don’t rely on grants from charitable trusts and a £1,250 windfall won’t help you maintain your activities, then there really is nothing to see here.
I have no problem with the principle of welcoming good news when we get it. But this announcement is so close to being irrelevant as makes no difference and that’s before taking into account the hugely damaging impact of the tax cap on donations. I’m still waiting for the good news here…but I’ll be sure to welcome it as soon as I see it.