Maximising Fundraising Impact: Understanding Gift Aid Eligibility

Maximising Fundraising Impact: Understanding Gift Aid Eligibility

Fundraising is an essential aspect of many non-profit organisations' operations, allowing them to secure vital resources and make a meaningful impact in their communities. One valuable tool available to charitable organisations in the UK is Gift Aid. Gift Aid is a government scheme that boosts donations by allowing registered charities and amateur sports clubs to claim additional funds from the tax that donors have already paid by 25%. However, understanding what parts of fundraising are eligible for Gift Aid can be a complex matter. In this blog post, we will explore the key areas where Gift Aid can be claimed, empowering non-profits to make the most of this valuable opportunity.

Individual Donations:

The primary source of Gift Aid is individual donations made by taxpayers. For a donation to be eligible for Gift Aid, it must meet the following criteria:

a) The donor must be a UK taxpayer and have paid enough income or capital gains tax to cover the Gift Aid claimed.

b) The donation must be monetary, not in the form of goods or services.

c) The donation must be made voluntarily and without receiving any material benefit in return.

It is important for non-profits to inform donors about Gift Aid and encourage them to complete a Gift Aid declaration, which authorizes the organization to claim Gift Aid on their behalf. This can be done through various channels, such as donation forms, online platforms, or in-person events.

Sponsored Events

Another fundraising avenue where Gift Aid can be claimed is through sponsored events. Whether it's a charity run, a sponsored walk, or a daring challenge, participants can ask their sponsors to Gift Aid their contributions. The same criteria for individual donations apply, with the additional requirement that the participant must personally meet the costs of participating in the event. For example, if a participant pays an entry fee to join a marathon, they can claim Gift Aid on the amount they raise through sponsorships.

Auctions and Raffles

Fundraising events often include auctions and raffles, where attendees have the opportunity to bid on items or purchase tickets for the chance to win prizes. While the funds raised through these activities are not eligible for Gift Aid, it's crucial to separate the charitable contribution from the purchase price. For example, if an auction item has an estimated value of £100, but the winning bid is £200, the Gift Aid can be claimed on the £100 charitable contribution portion.

Membership Fees

Some non-profit organisations offer membership programs that provide various benefits to individuals who contribute a specified fee. While membership fees are generally ineligible for Gift Aid, there are exceptions. If the membership fee qualifies as a voluntary donation, meaning the fee amount exceeds the value of the benefits received, the surplus can be eligible for Gift Aid. Non-profits should clearly communicate this distinction to their members to encourage additional support.

Sale of Goods and Services

Revenue generated through the sale of goods and services, such as merchandise or tickets to events, does not qualify for Gift Aid. However, organizations may choose to offer an option for individuals to make an additional voluntary donation during the purchase process. These additional donations can be eligible for Gift Aid, provided they meet the necessary criteria mentioned earlier.

Gift aid small donations scheme (GASDS)

GASDS is a top up on small cash donations introduced in 2013. Charities and Community Amateur Sports Clubs can claim a top up payment of 25% on cash donations of £30 or less without the need for a Gift Aid declaration – this includes things like bucket collections, offering plates and collecting tins.

Still a bit fuzzy about what you can claim gift aid for? Let’s set out what you CAN'T claim it for:

1. Non-UK taxpayers

2. Donations from companies or organisations

3. Donations with benefits or rewards (it counts as a purchase instead)

4. Donations exceeding the value of benefits

5. Some donations that come with specific conditions

6. Donations not accompanied by a Gift Aid declaration (unless small cash donations)

Gift Aid is a powerful tool for boosting fundraising efforts in the UK. However, it's essential to understand the limitations and conditions that apply. Non-UK taxpayers, donations from companies, donations with benefits, donations exceeding the value of benefits, donations with specific conditions, and donations without a Gift Aid declaration are some of the situations where Gift Aid cannot be claimed. By familiarising yourself with these guidelines, you can ensure that your fundraising activities comply with the regulations and make the most of the opportunities provided by Gift Aid.