One of the main reasons that the voluntary sector only claims a third of the Gift Aid available is because few people understand it well enough.
This is not widely discussed, but in my experience it is true. When it comes to how tax relief actually works, the charity sector is an ocean of uncertainty, dotted with islands of knowledge in specialist agencies, umbrella bodies and accounting departments.
Many trustees don’t understand it, some chief executives don’t understand it and, most worryingly, a lot of fundraisers – the people who are usually responsible for collecting Gift Aid declarations – certainly don’t understand it and aren’t incentivised to ask people for it. Possibly rightly, too, because when they do ask, it often puts donors off.
A lot of donors certainly don’t understand a word of it. Some of them tick the Gift Aid box; some of them don’t. Most of them then forget every word about it. For them, charity tax relief is a deep darkness.
The sector can improve the situation with better communication tactics.
Lindsay Boswell, chief executive of the Institute of Fundraising, has given one example. He says charities are more effective at collecting Gift Aid if they cut it out of their initial ask altogether, and leave it to a follow-up call when it can be explained properly to donors.
Another tactic, suggested by Theresa Lloyd, a fundraising consultant, is to write to all higher rate donors who are able to reclaim tax relief for themselves, explaining how to go about it. Hopefully, by doing them a favour, this will prompt them to give more in the future and make them more conscious of tax relief.
Another suggestion she makes is to run an information campaign for donors and charity workers alike.
Charities are entitled to point out the benefit of tax relief to themselves and launching a national campaign, funded by third sector organisations, might help explain how the system works.
It is hard to believe that with the best part of £2bn going begging last year, spending a few million on a campaign to improve take up is a losing bet.