Gift Aid Services

How smaller charities fare

• The vast bulk of charitable work across the country is actually carried out by over 200,000 small local voluntary charities, usually with very few paid staff. There are probably as many local micro-organisations again that are not registered. The real value of charitable work done by millions of volunteers is not reflected in any official published statistics, as there are no recognised standards for measuring it or recognising it in financial statements.
  
  The Charity Commission register records about 120,000 small charities with an annual income of between £1,000 and £250,000, with an aggregate gross income of about £3,600m (average £30,000 each). If each of these charities were supported by 25 regular volunteers each offering three hours per week valued at minimum wage rates, this would be notionally valued at an extra £2,400m a year to the UK economy.

• These small charities mainly depend on local one-off donations (eg street collections, house-to-house, events, sponsorship) where it is very difficult to get GADs completed correctly. As a result of fear of this administrative complexity and cost, the majority of small charities do not make any Gift Aid claims at all! And those that do tend only to make claims for easily identifiable income streams like membership and other forms of planned giving. It seems ironic that the small charities that have tried to promote GA to their donors will be hit hardest by the reduction in the basic rate of income tax in 2008 – potentially up to 11% of their GA refunds.
  
  HMRC records show that in 2006-7 62,000 (presumably small) charities reclaimed less than £50,000 each in tax refunds, averaging about £4,000 each. They claim about 30% of the national refund total – a figure that has declined steadily from 37% over the last four years. Yet another example of the big organisations increasing their dominance of charity finance. As probably about half of these small claimant charities are excepted from registration (eg schools, churches), it seems likely that only about a quarter of small registered charities made claims. Gift Aid is clearly not reaching most of the smaller charities.