Looking Gift Aid in the mouth

An interesting discussion last week: straying into the moral minefield of charitable giving, the issue of Gift Aid came up. (A small warning here. If you’re the treasurer of a charity, you’re probably not going to like this very much. Sorry.)

“How marvellous is Gift Aid!” my neighbour cried.

“How fraudulent is Gift Aid!”, I replied.

OK, perhaps not actually fraudulent. No one is actually being defrauded in a way that a court would recognise. But it’s not a wholly transparent business.

“Hang on, for every pound I give, the Chancellor adds another 28p. Everybody wins”, intones the fan.

“Well, how very kind of him”, comes my refrain. Reaching into that large piggy bank (or ‘coffer’ – beloved tabloid phrase) under his bed and counting out the extra pennies himself. “What a saintly man!”

Of course he doesn’t. Where do you think that 28p is coming from? Alistair’s little printing press? No: it’s a draw against general taxation in just the same way as education and social services (or indeed nuclear deterrent, aviation fuel tax relief, and lots of other things you might find less palatable).

Is it a good thing in principle to do this? Well, it might be. But only if one is prepared to make a huge, sweeping assumption that giving to any charity does more ‘good’ on average than the alternative of spending it on any other public sector cause.

So what could be improved here? I’m not suggesting it should be scrapped, but at least we could try and get a little more real about Gift Aid. What if the government labelled it more honestly as “a way in which you can add to your contribution by diverting some money that would otherwise prop up the health service, light the streets, build Olympic infrastructure etc. etc. etc.”*

It’s your choice, of course – but your choice should be informed.

Oh, and higher rate taxpayers – what about you? There’s a tiny little issue that no one really likes to talk about. Come tax return time, the penny usually drops. Or indeed, drops, bounces, and flicks back up into your pocket. There’s a nice little kick-back, isn’t there? That difference between higher and standard rate that neatly offsets some of the aforementioned general funding of public services.

Now isn’t that the ultimate win-win? You get to feel worthy, and you get cashback! B-b-b-b-b-but – my neighbour burbles – it’s such a good incentive. It makes people give more.

I agree. It does. So would giving them beer vouchers, or a free MacBook Air, but it doesn’t make it the right thing to do. That transparency point again – how it all works and where the money really flows should be made much more clear.

But ultimately this is all about personal choice.

You could choose to keep it simple. Don’t tick the box. Don’t put charitable giving on your tax return. Let your pound be an honest, real pound. Up it by the extra 28p yourself if the cause is that dear to your heart. Or if you do declare it, factor in that little kick-back in advance when deciding what to give. But of course, you probably do that already, don’t you? ;-)

*this is a bit wordy. Ever my weakness. Could you put it more succinctly?

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4 Responses

  1. John H says:

    Full disclosure: I’m both a charity treasurer (at our church) and a higher-rate taxpayer (who claims back Gift Aid).

    I don’t see there is anything “fraudulent” or “opaque” about Gift Aid. I assume the thinking behind it was that a vibrant charity sector was worth encouraging through the taxation system, even if some charities would not necessarily be approved of by everyone. That may or may not be an appropriate policy decision, but it’s not an inherently foolish or dishonourable one.

    As for claiming Gift Aid back: well, if the government scrapped that rule, I probably wouldn’t shed many tears, or (for that matter) intentionally reduce my giving. But there is nothing wrong with citizens claiming back tax to which they are entitled (setting aside exploitation of loopholes through artificial ruses, which is a different matter). There’s no rule, legal or moral, which means we have to regard ourselves as “depriving” the Exchequer of money that could be better spent on other things. The government’s job is to budget for such things on the basis of the rules as they stand; if they need more money than the rules provide for, they can always change the rules (as we’re about to find out in the next few days).

  2. paulclarke says:

    No issue with the motivation behind it as a policy – the key for me is in the labelling to the individual as they make their decision.

    The trigger phrase that will always set me off is: “The Chancellor just needs to provide x, and all will be well” – and variants thereon. There are always trade-offs and transfers involved, but I’ve never yet seen a charity go beyond saying “if you tick here, we get more money” to note that it doesn’t appear out of thin air; it’s always got to be traded for something else.

    For my part I prefer to tick No, and uprate, however artificially, the contribution. It just feels better that way.

  3. K Jarratt says:

    Do you fancy saying this on television?!

  4. paulclarke says:

    Depends on the angle being taken! Give me a call.

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