Darling, you didn’t change the Corporate Gift Aid status…

One last thought (for the time being) about the recent Budget decisions on Gift Aid, that seems to get quietly ignored each year, is the failure of the Government to do anything about Corporate Gift Aid. In the past, (pre-2000), when companies gave donations to charities, the charity could claim back the tax on that gift, just as they did with individuals who made Deeds of Covenants with the charity.

All that changed with the introduction of Gift Aid in 2000. The Government scrapped the tax on company donations going to charities and instead allowed the companies to claim it back for themselves. The rationale, it appears, was that the companies would give higher donations, that after they claimed back the tax would mean it cost them less. For example, if they gave £128, they could claim back the tax, which would have been £28, so the charity got £128 and the company only forked out £100. Fine, if companies and individuals thought that way. Reality: they don’t!

So when asked why they hadn’t changed anything about corporate donations and Gift Aid, following last year’s Gift Aid consultation, it would appear the Treasury officials will only respond by saying, “It remains under review”. It’s easy to keep quiet about something you, the Government, introduced that went totally pear-shaped, isn’t it Mr Darling?

The Chancellor did giveth…but it still cost many charities!

Following on from my previous blog about the reduction in Gift Aid from 28p to 25p for every £1 donated, the Chancellor, Alistair Darling (don’t you love that name?) made a surprise move in his recent Budget. The rate of Gift Aid, which was based on income tax at a rate of 22p in the £1, is not going to change for charities for the next three financial years, as a way to lessen the blow to income when the tax rate falls to 20p in the £1.

He also announced some tweaking of the system to make it easier for charities to collect and claim their Gift Aid. However, he failed to go along with the majority opinion, which was to change radically the way that Gift Aid is calculated, from the current system based on individuals having to declare they want the charities to claim the Gift Aid, to a system where it is given by the HMRC based on the proportion of a charity’s donors who are tax payers. This would have greatly reduced the time and money it costs charities to administrate Gift Aid. Still, I suppose we mustn’t grumble!

The thing that has really annoyed so many charities, is that there was no warning that he was going to keep Gift Aid at the same level for another 3 years. As a result, hundreds of charities have been getting all their donation literature re-printed, at considerable cost to some organisations, in line with the lower Gift Aid rate we were due to move to. Now they have piles of unusable literature, because the facts and figures are incorrect.

Sometimes a surprise can backfire and in this case I doubt the Chancellor will be offering to compensate the waste of time and materials his unexpected announcement has caused.

Poor investment in legacy marketing?

According to a report in Third Sector magazine (9 Jan 08), charities are under investing in their legacy marketing. Think Tank, nfpSynergy surveyed 54 charities and found that 75% of them spent less than £200k p.a. on promoting the idea of leaving a gift in your Will to charity. These charities averaged £14m a year each in legacy income.

However, in reality, these must all be “big boys” in the charity world, as the majority of charities will be spending little or nothing on legacy marketing. With numbers like this being quoted, it simply makes small charities believe that legacy fundraising is only for those with megabucks to spend on legacy marketing.

This is sad, as it means the share of the cake will probably be disproportionate, if the big boys are getting heard and seen, whilst the small charities never get their message across.

Ironically, I believe it is the small, local charities who stand a better chance of being successful at receiving gifts in Wills, as they are (literally) more close to the hearts and minds of the people around them in their locality. These local people get to see what the charity achieves, maybe even experience their good work first hand. At the least, they may know someone who has benefited from their local charity’s endeavours.

Also, it is a myth that legacy marketing has to cost megabucks to produce. Local and regional charities can use their local knowledge and contacts to their advantage, through gifts and services in kind, sponsorship and tapping in to networks. They can also advertise their need for no cost at all, by utilising their existing communications, such as newsletters, websites and charity shops.

OK, the small fry might not average £14m a year legacy income, but I bet the ROI could be better than that of the big boys. My last charity, a local hospice, significantly increased its legacy income over 5-8 years and saw a ROI of 1:1000. Now that’s something all small charities ought to seriously consider!

If you’d like help or guidance on how to start effectively marketing legacies to your supporters, please get in touch. Contact details can be found on my “About” page of this blog.

Remember: Small is Bountiful!