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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?