When you earn money you pay tax on it. If you donate money, then the charity you have made the donation to can claim that tax back from HM Revenue and Customs. Put simply, a donation of £10 from you, is worth £12.82 to the charity – if you sign a Gift Aid declaration form. If you want to know how this works in more detail, visit the Institute of Fundraising's site dedicated to Tax-Effective Giving.
It gets better. If you are fundraising and you get everyone who makes a donation to complete a Gift Aid declaration, or tick the box on your sponsorship form, then all the donated money can be increased in the same way.
Start by asking the charity you are fundraising for if they are registered for Gift Aid. If they are, make sure you have added the declaration to all your forms. Then ask donors/sponsors to complete a Gift Aid declaration, when they commit to making a donation.
Here's a little calculator to help you see how much Gift Aid is worth to you and your good cause
Gift Aid is only for donations
Generally products and services are not eligible for Gift Aid. However, if the person buying them is paying more than the commercial value, then Gift Aid can apply to the extra amount they have paid. You can find out how to apply Gift Aid to this sort of fundrasing from the Tax-Effective Giving site or call the team on 0845 4584586. You can also check out the information on the HM Revenue and Customs site if you are in doubt, or give them a call on 0845 302 0203.
Gift Aid and sponsorship
If you don’t include a gift aid declaration on your sponsorship forms you are really missing a trick. You’ll find them incorporated into all our forms. There are a few occasions when Gift Aid can't be clamed on donations for sponsored events, check out the details on the Tax-Effective Giving site.
Gift Aid and street collections
Though you can claim Gift Aid on donations made during collections it is tricky because you will need to get each donor to complete a declaration, so it may not worth doing for small sums of money. However, you can prepare envelopes with a Gift Aid declaration printed on them so that if someone offers up a banknote, you can ask them to seal it in the envelope and sign the declaration. But people don't usually want to stop and you should be sensitive to this during the collection.
The Tax-Effective Giving website gives lots of really helpful advice on Gift Aid and other forms of tax-effective giving. There are two sections of their website that you may find particularly helpful:
Disclaimer
This know-how sheet is produced by how2fundraise.org, an on-line service provided by The Institute of Fundraising. It is intended to provide general information only and should not be taken as a full statement of the law. Please bear in mind that the Institute does not give professional legal or accounting advice, and while care has been taken with this information, you should consider whether you need to seek advice before taking any actions or incurring costs.
The information applies to England and Wales only.
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