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Fundraising from Companies + Charitable Trusts/Foundations & through the Internet


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(Fundraising eBook Published by Mr Gordon Owen) - Download via Kindle: …

(Fundraising eBook Published by Mr Gordon Owen) - Download via Kindle:

Guide and reference to fundraising techniques, things to consider, and contacts for new, small, and emerging Groups/ Organisations in the Charity Section seeking to improve their engagement with potential finders in the Corporate and Charitable Trusts/Foundations sectors

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  • 2. FUNDRAISNG FROM COMPANIES AND CHARITABLE TRUSTS / FOUNDATIONS & THROUGH THE INTERNET - CONTENTS - Suspects – Sources of Funding The Five “I’s” of Fundraising Resources Turning Suspects into Prospects Checklist for Identifying Trusts/Foundations Checklist for Applying to Companies Preparation # Home Work Case Study # Example From the potential Donor’s Point of View 10 Top Tips Getting Beyond the Wastepaper Basket! Common Pitfalls Writing your Application Some Tips on Writing Style Then What? Reporting Procedures ICF Internet Fundraising Guidelines © GPO • 2002.
  • 3. SUSPECTS – SOURCES OF FUNDING • Trusts and Foundations - start up costs - need right locality - need right theme - give £1.25 billion per year UK wide - organisational restrictions • Companies - sponsorship or PR potential - publicity materials - employee involvement - campaigns in schools - high profile projects - give £200 million per year • National Lottery - highly specific criteria - organisational restrictions – - Make grants worth £320 million per year • Government - local authority grants and contracts • Europe - ESF - complex – Discuss with the EU Office in London • Individuals - Highly personalised – [Discuss with known sources of contact] © GPO • 2002.
  • 5. Turning Suspects into Prospects Steps to work through: • in-depth research assessing: - locality (national or local remit & where) - size of grant (match their capacity to your needs) - timing (match frequency of grant making to your schedule) - interests (how much commonality is there?) • looking at the bigger picture: - degree of competition and likelihood of a grant - work required to submit an application - what relationship already exists - do you have any contacts or a lead in? • a list of prospects: - which you must check with before contacting – Consultancy available via Gordon Owen • these are your potential donors! © GPO • 2002.
  • 6. Checklist for identifying Trusts / Foundations • Have they donated previously? - Check computer and paper records, please ask – Consultancy available from Gordon Owen • What are the objectives of the Trust/Foundation? - Are we eligible to apply? • What is the giving capacity of the Trust/Foundation? - Look at their income and expenditure - what are they capable of giving? • What are the types of grants they normally give? - capital projects, scholarships, fund over several years? • What are their conditions for a grant and what are their exclusions? - Do we have to raise some of the money before approaching them? Geographical constraints? • When do the trustees meet? - Monthly, quarterly, as necessary? How far in advance do they like proposals? • Do they have a formal application form or guidelines? - Do they require a summary of the project first? • Who are the Trustees/Settler/Administrator? - Do we know any of them? • Do we have any Trustee contacts? - Do any of our Trustees know any of theirs? How can we make use of this? • What kind of projects do they like to fund and which part of our work is most likely to find favour? - Look at previous giving history. If unsure, seek advice from the Administrator. • How much should we ask for? - Look at previous history. If unsure, ask the Administrator. • Who is the best person to submit the application? - Director, Chairperson, Secretary, Fundraiser • Who should the letter of application be addressed to? - The Chairman of the Trustees, the Secretary, Administrator • Would the Administrator/Trustees like to visit? - Do they ever visit applicants' projects? Would they like to visit a project as an introduction to our work? © GPO • 2002.
  • 7. Applying to Companies This section gives basic information for • Because the Chairperson or other putting together applications to companies. senior managers have a personal interest in that cause, this is particularly the case for To make an effective appeal to industry you smaller companies. Even where a company must have a basic understanding of why has well-established criteria for giving, if you firms give. This enables you to put forward can get a friend of the Managing Director to good reasons why they should support your ask on your behalf, you are more likely to get work. Some companies in this guide receive a donation, even when your cause does not up to 100 applications each week. You need exactly fit those criteria. to make a good case for yours to be successful. A company will not be Generally it is worth emphasising the sheer particularly impressed with a general plea to chaos of company giving. Few companies 'put something back into the community'. have any real policy for their charitable They want something more substantial. You giving. Mostly they cover a wide range of should be able to demonstrate a clear link good causes or attempt to deal with each with the company, be it geographical, appeal on its merits. product, employee contact, or some other connection. However, some companies do have a clear policy. Where policies are printed please Why companies give? respect them; dealing with a mass of clearly The main reason for company giving is often inappropriately applications is the single said to be enlightened self-interest, rather biggest headache in corporate giving and than pure altruism and they see their giving has caused some to consider winding-up as 'community involvement' or' community their charitable support programmes investment'. The following are some of the altogether. reasons why companies’ give:- clearly inappropriate applications is the single What companies give? • To create goodwill. Companies like to be seen as good citizens and good There are a variety of ways in which neighbours, so they support local charities. companies can support charities:- They also like to create goodwill amongst employees. Contributing a senior member • cash donations; of staff to the charity's • sponsorship of an event or activity; • sponsorship of promotional and • To be associated with certain causes educational materials; that relate to their business. Mining • sponsorship of an award scheme; companies often like to support • joint promotions, where the company environmental projects, pharmaceutical contributes a donation to the charity in companies health projects, banks return for each product sold in order to economic development projects and so encourage sales; on. • making company facilities available; secondment of a member of staff, where Because they are asked and it is expected a member of the company's staff helps of them. They know that other companies on an agreed basis whilst remaining also receive appeals and give their support. employed (and paid) by the company; They will often support trade charities such • contributing a senior member of staff to as a benevolent fund or an industry research the charity's Management Board; organisation; beyond that they will probably • providing expertise and advice; pitch their level of giving more or less at that • encouraging employees to volunteer; of their rival. © GPO • 2002.
  • 8. • • organising a fundraising campaign As a first step you might contact the amongst employees; company to find out the following:- • advertising in charity brochures and publications. • who is responsible for dealing with charitable appeals Key factors in approaching companies • their name and job title Research • what information theyof ansend regarding ~ sponsorship can award scheme Research is very important, not just into their company companies, but also into personal contacts. When planning an appeal, an important first • any procedure or timetable for submitting step is to find which of the people associated applications with your charity have influence or know people who have. If you can find a link • whether they might be interested in coming between one of your supporters and a to see your organisation at work. particular company - use it. Visitsfirst step is to find which of the people are useful when discussing bigger • One of your trustees/members may be on donations with the larger companies, but are the board of directors or have contacts difficult to arrange for anything small. there - it will • prove useful for them to write or sign the Almost certainly your appeal will be in the appeal letter. form of a letter. Make this as personal as • One of your volunteers or supporters may you can. Circular letters tend to end up in the be an bin. Make the letter short and to the point. • employee of the company. Be specific in your approach • Your clients/users (or their parents) may work for the company. Rather than sending out a circular mailing to 100 or 1,000 companies, you will be more Alternatively, you might be able to tie your successful if you select a few companies you appeal in to a known personal interest of a believe will be particularly interested in your director. project, and target your application to them and their policy. (Many companies will not Getting in touch consider circular appeals as a point of policy). Generally an appeal through a personal contact will work the best. But if you haven't Find a good reason why you believe the got a contact and can see no way of company should support you and include developing one, then you will have to come this prominently in up with another link. your letter. You may be able to relate what a related company's support. If there is no you are doing as a charity to companies relationship, should you be approaching that which have some relevance to your work; for company at all? A health education charity example, a children’s charity can appeal to may not want to accept money from a companies, making children’s products tobacco or brewery company or from the companies, a housing charity to construction confectionery industry, or similarly an companies, building societies, etc. Any environmental group may not wish to accept relationship, however tenuous, creates a a donation from a nuclear power company. point of contact on which you can build a These may feel that as a result of doing so good case for obtaining the company’s they would be seen to be compromised. support. If there is no relationship, should Similarly, a local charity might not want you be approaching that company at all? money from a company who has made people in the area redundant. Each charity There may be occasions where a charity will has to judge where it draws the line. not want to accept money from a company in
  • 9. Be clear about why you need the money never support you. Go back a second and even a third time. You must be clear about the objectives of the work you are raising money for, If you are going back, mention the fact that particularly its time-scale and how it relates you have applied to them previously, to your overall programme of work. Try to perhaps saying that you are now presenting think in project terms rather than seeking them with something different which may be money to cover basic administration costs. (you hope) of more interest to them. This can be difficult, because most people spend most of their money on administration If they give you reasons for refusing support, in one form or another, so you need to use them to help you put in more appropriate conjure up projects out of your current applications in the future. If they said that activities to present to potential donors. You they do not give to your particular type of can build a percentage of administrative activity then you know that it is absolutely no costs into the costs of the project. If you use your going back. If they said their funds relate what you are doing to a specific time- were fully committed, you can try to find out scale, this again makes what you are when would be a better time to apply applying for more of a project than a (although it might only have been a contribution to your year-on-year core costs. convenient excuse because they did not want to give to you). Be persistent Note the response to your appeal and use Do not underestimate the persistence factor. any information you can glean to improve If you do not receive a donation in the first your chances the next time. People respect year, do not assume that the company will persistence, so it really is important to go back again and again. How to find out which firms to approach? • The Directory of Directors and Who's Who are useful for finding out more The firms to approach must depend on what about company directors. sort of organisation you are. If you are a • Corporate Register - updated national organisation then an appeal to the quarterly - a guide to makers in UK country's leading companies is appropriate. Stockmarket companies. Local groups should approach local firms and local branches of national companies For local companies in addition to this which have a presence in their area. All guide: organisations can approach companies in allied fields: for example, theatres can • The appropriate regional section of appeal to fabric companies. Kompass. • The local Chamber of Commerce. You will find the names and other details of • Confederation of British Industry – companies in a whole series of useful Regional contacts. directories and publications. • The Institute of Directors. Sources of information: Whichever directories you are using make sure they are up-to-date copies. Company • The Times 1,000 personnel and/or donations policies change • The Kompass Register of British regularly. Industry & Commerce – [available in regional sections] If you want gifts in kind, you should find likely • Guide to Key British Enterprises suppliers of what you need. Trade • Stock Exchange Official Year Book associations will often provide a list of its • Jordan's Top Privately Owned member companies. Another idea is trade Companies – [2 volumes] list of its member companies. Another idea is trade exhibition catalogues which give To find key contacts in companies: details of all exhibitors.
  • 10. One big problem is the ownership of policy remains a purely local matter for seemingly independent companies. Many company management in the country companies are in fact a part of a much larger concerned. concern. In recent years there has been a substantial number of mergers and Leading national companies take-overs, plus the buying and selling of business between corporations. A useful Many support large national charities, of source of information is the directory Who which many have departments set up to Owns Whom, which has a subsidiary index raise money from companies. Some make listing most subsidiaries of companies grants through regional offices and most will included in the guide. You can also use give preference to charities local to their company annual reports, which (for most main operating sites. companies) can be obtained on request. These reports provide good background Larger local companies information on the company, and occasionally information on the company's In any city or region there will be large corporate support programme. Some private companies who are important to the local (and occasionally public) companies will not economy. These companies will often feel a send out annual reports except to responsibility to do something to support shareholders; in such cases you can go to voluntary action and community initiatives in Companies House to get hold of a copy. The those areas, and value the good publicity main offices are situated in Cardiff, that this will provide. It is a good idea to form Edinburgh, Belfast and London, with satellite some kind of relationship with larger offices in Birmingham, Glasgow, Leeds and companies in your area Manchester. Finally there are national and local Some basic don'ts when applying to newspapers which can provide useful companies information and ideas about who to approach. Informal sources or information Don't write indiscriminate 'Dear may include the local business school, Sir/Madam’ circular letters to any rotary, round table, Chamber of Commerce, company you come across. Business Breakfast Clubs, as well as clients Don't use any guide you may have of your auditor, banker, legal advisor or access to as a simple mailing list. suppliers. Don't write to a company which specifically says it does not support The types of companies that give your kind of work. Don't write to a Foreign owned multi-national companies company unless at least one of the following applies:- Many of the large multi-nationals have global giving programmes. Some have an • The company has a declared policy international structure for managing their indicating a specific interest in your giving with budgets set for each country and group's area of work. a common policy for the sorts of activity they • The company operates in the same are interested in supporting. small budget to locality as your group and a clear spend on charitable projects of its choice. product link exists between your Others may give each country a small needs and their supplies. budget to spend on charitable projects of its • You have a strong personal link with a choice. With others, community involvement senior company officer, or a member of their staff is actively involved in your There are also companies that have a work. regional remit, such as water, electricity and • There is some good reason to write to television companies. The support of these that particular company. The fact that companies is usually confined within these the company makes a profit and your regional boundaries. group needs money is not a sufficiently strong link.
  • 11. Smaller local companies • You should state why you need the money and exactly how it will be Almost everyone is targeting the large spent. The letter itself should be companies, because good information is straightforward. It should include the available on these for fundraisers and there following information (not necessarily is little available information on smaller local in this order): what the organisation companies. Many of these are privately does and some background on how it owned and the approach will often be was set up; whom the organisation through the ‘Chairman & Chief Executive’ or serves; why the organisation needs ‘Managing Director’, or ‘Senior Partner’. funds; how the donation would be Most of these companies will have no spent if it were to be forthcoming, and policies about what to give to and may prefer why you think the company might be to give in kind, for example a prize for a interested in supporting you. raffle, or a fundraising event. It might be easier to approach these companies for this • You should attempt to communicate sort of support in the first instance; and later the urgency of your appeal. on, (once they have given something), to Fundraising is an intensively persuade them to make a cash donation. competitive business; there is a limited amount of money to give have Constructing an Appeal Letter to ensure that some of it comes your way. If it appears that although you Important points to consider:- would like the money now it would not matter terribly much if you got it next • Think up a project or aspect of your year, this will put people off. But don't work that the business sector might give the impression you are like to support. Generally, do not fundraising at the last minute. Show appeal for administration costs or a them you are professional and you contribution to an endowment fund have carefully planned your (although there will be cases where fundraising appeal. You should also this approach will succeed). try to show that your charity is Recognise that companies are likely well-run, efficient and cost effective in to be interested in some ideas and how it operates. not others. For exarnple, a drugs charity would be more likely to get • You should mention why you think the money for education than company should support your cause. rehabilitation. An appreciation of the This could range from rather kind of projects that companies like to generalised notions of corporate support will be very helpful to you. responsibility and the creation of goodwill in the local community to • Your letter should be as short as much more specific advantages such possible. Try to get it all on one side as preventing children painting graffiti of A4. You can always supply other on their factory walls or the good information as attachments. Company publicity companies will get from people are busy. You can help them supporting your cause. If the firm's by making your appeal letter short generosity is to be made public, for and to the point. It should be written example through advertising or any clearly and concisely and be free from publicity arising from the gift, then jargon. Someone not acquainted with emphasise the goodwill which will what you are doing should be able to accrue to the company. Most read and understand it and be companies would say that they do not persuaded to act on it. Give your require any public acknowledgement letter in draft to someone outside your for the contributions they make, but charity to read and comment on most will appreciate and welcome before finalising it and sending it out. this.
  • 12. • As for something specific. It is all too easy • If you do not succeed, go back again next to make a good case and then to mumble year (unless they say that it is not their something about needing money. Many companies, having been persuaded to give, The Application Letter – Checklist are not sure how much to give. You can ask them to give a donation of a specific amount, • Is it only one side of A4? (matched to what you believe their ability to • Does it state what your link is with the contribute to be), or to contribute the cost of company? a particular item. You can suggest a figure • Does it stress the benefits to the by mentioning what other companies are company? giving. You can mention a total and say how • Is it clear why you need the money? many donations you will need to achieve • Is it clear what you are asking for? this. Do not be unreasonable in your • Is it addressed to the correct contact? expectations. Just because a company is • Is it attractive to the company? large and rich, it does not mean that it • Is it endorsed? makes big grants. • Applying to companies • If you can demonstrate some form of’ leverage' this will be an added attraction. policy to support your type of Organisation Company donations on the whole are quite or to give to charity at all). Persistence can modest, but companies like to feel they are pay. If you have received a donation, go having a substantial impact with the money back again next year. The company has they spend. If you can show that a small demonstrated that it is interested in what amount of money will enable a much larger you are doing and in supporting you. It may project to go ahead, or will release further well do it again next year, especially if you funds say on a matching basis from had thanked them for the donation and another source, this will definitely be an kept them in touch with how the 'project' advantage. developed. • Having written a very short appeal letter, How companies reply to you you can append some background support literature. This should not be a fifty-page Many companies will not even reply to your treatise outlining your latest policies, but appeal. A few may acknowledge receipt of like your letter it should be crisp and to the your letter, and occasionally you will get point, a record of your achievements, your thanked for your request and be told that it is latest annual report, press cuttings or even being considered and you will only hear the a specially produced brochure to outcome if you are successful. Up to half of accompany your appeal. the companies you approach will write back depending on the spread of the companies • Make sure that the letter is addressed to you approach. Larger companies have a the correct person at or the correct system for dealing with charity mail, and address. It pays to do this background most will see it as good PR to give a reply. research. Keep all the information on file as Smaller companies which are not giving it will make your job much easier next time. much charitable support will not have the time or the resources to do anything but • If you are successful, remember to say scan the mail and throw most of it in the bin. thank you; this is an elementary courtesy which is too often forgotten. If the company What sort of reply should you expect? If you gives you any substantial amount of do an extensive appeal, you will inevitably money, then you should probably try to get a lot of refusals. These will normally be keep them in touch with the achievements in the form of a pre-printed or related to their donation (such as a word-processed letter or a postcard. between the lines. Companies in trying to Occasionally you will get an individually be polite may in brief progress report or typed letter of reply. If they say yes, you will copies of your annual report or latest get a cheque or a Charities Aid Foundation publications).
  • 13. Charities Trust voucher. But more often they will say no. There may be various reasons given or phrases used by a company for refusing your request. The company may not mean what it says. Funds may still be available for those appeals the company wishes to support; the company may be able to give support and just not want to; or it may not want to now or in the future. You should try to read fact be misleading you if you take what they say at face value. © GPO • 2002.
  • 14. PREPARTION # HOME WORK Identify the need and research study • What is exactly required • Why the need • Who will benefit • Provide facts and figures to support the need; area in which it will operate; and the people it is aimed to aid. • Provide all data to grant body in advance to study. • Support with presentation summary + any graphical material possible - • if a building - a visual drawing of what will look like • if children - photo of them showing expression of disappointment of not having the ability to benefit and image the excitement of what the expression would be from the benefits and skills achieved from meeting that need. • Create & develop positive image of the scheme • Publicly & material • Costings - Broken down into Capital & Revenue - Budgets - Projections Shopping list of anything in terms of good needed (with costs) to enable smaller potential contributors to be able to support and be able to identify specifically with what they have given in support. Who appeals will be target at:- - Trust / Companies / Central & Local Government Departments/ Lottery / Euro funding Prepare appeal letters and supporting material:- - Identify voluntary & statutory authorities who will be invited to be involved. - Identify any other useful contacts to help achieve goals. - Programme - Time-table - Development Plan - Enables (a) Monitoring; & (b) Determine strategies to achieve goals © GPO • 2002.
  • 15. CASE STUDY # EXAMPLE NEWHAM YOUTH LODGE HOSTEL PROJECT: Picture for a moment the expression of a child’s face and what might be going through their minds reading an airline magazine on holiday about other children travelling abroad on exchange trips. Imagine their thoughts when such opportunities are disappointingly not been available to them. Given the opportunity and resources that this project provides - Imagine - the expression of excitement and happiness on the face of a child who is told - here is a chance for you to participate. Think of the educational and cultural value helping them to understand and value others as people. Determine need: - What is the Project? An outer London Borough with a population of around 27,100 - high-rise flats, terraced housing. But it is home to the people and families. The people live happily engaging in professions, activities and interests with a host of skills. Along side this for the young are some 200+ youth clubs & organisations that make-up the youth service in the Borough. Trips to a variety of places in and around London, counties and even countries are organised by different youth organisations - to sight see, bike, camp and so on. We visit these places but rarely do we have the time, chance or inclination to meet, talk and live in these places for educational trips. The hostel currently provides accommodation to enable educational exchange trips to be complimented in situations where reciprocal visits are not possible because families do not have the space to accommodate visiting people from other counties and countries. It is designed and caters for groups of between 12 - 30 people, as distinct from individuals. Work Involved -- Historically: Sought assistance from Local Authority Architects to produce conceptual drawing to create visual concept of what the building would look like once converted. Negotiated Lease & Building Agreement for 15 years (with option to continue) with the Local Authority - therefore have the land. Engaged (at no cost), Architects & Quantity Surveyors to design and cost-out the building works of existing phase I of the project
  • 16. Worked with architects and QS to prepare works specifications and tenders. Liaised and work with final appointed contractors and sub-contractors to complete works. Worked through processes to expedite Building Regulations approval and Planning Permission. The Phase I initial official opening was so successful that no less then 50 Trusts alone, apart from another 100+ dignatories attended securing relationships for the future in terms of support and future funding. Some even offered more help at the time and subsequently helped again. Had a scale model of the building made to exhibit for consultation with youth organisations and schools in the borough. Also took this model to some presentation meetings with Trusts. Proved successful. Other promotional and publicity produced to include brochures with list of contacts to arrange direct exchanges, information on hostelling and graphics/photos. Plus: translated material languages + in Braille for the blind. Initiated and designed logos to project image of the project. Met and subsequently registered with the English/London Tourist Board and British Tourist Authority who included the project in their handbooks translated for a number of countries to generate interest and future use. This task has successfully underpinned revenue income. Feedback from youth groups and schools were initially mixed but enough to qualify the project being forthcoming. Clearly the building would be used - others uncertainties from some potential users with in-house commitments - later a significant number of these came on board and participated. Visits made to each group to coordinate. Secured arrangements with local City airport for groups and have made many visits using the airport to discuss future arrangements. During the VE/VJ commemorations earlier this decade, worked in partnership with the International Duke of Edinburgh’s Award and hosted a group of people from some 14 countries around the world and an informal dinner for some 150. Co-ordinated arrangements with the main activities in Hyde Park and arranged trips for visitors. So successful was this venture that an invitation from the Duke of Edinburgh and Prince Edward to attend a Garden Party at Buckingham Palace was received and attended. Thousands of people, representing youth groups from all over Europe, Asia, Africa, Scandinavia, US, Canada, Australia and latterly the former Eastern block now visited the Borough putting them and the Organisation clearly on the map - moreover, think of the children & young people who benefited as a result from the Borough! Funding: • Feasibility Study [So as to be official recognised and accredited] - Grant-aided by CAF. Made shopping list of items required within the building to furbish, equip and furnish hostel. Sent this list to an initial host of some 500 manufacturing companies with information about the project, a brochure and covering appeal letter. Prepared and submitted grant-aid applications to the Local Authority, Department of the Environment and a variety of Trusts researched for initial funding required of £250k. Applications were successful and total monies needed raised. Building also took on needs for
  • 17. disabled and separate funding secured to provide for this, e.g. wider doors, disabled toilets & showers, ramp, easier access to phone etc. Before the decision of this was known a quarter of the manufacturing companies written to had positively responded pledging a variety of furnishings and goods for the buildings, including carpet tiles, bunk beds, office equipment, kitchen equipment etc. Successfully secured sponsorship from the British Council to personally visit the Borough’s twin-town in Germany to carry out study and to promote the project. This included producing a brochure translated in German to distribute. Subsequent to approval, received invitation to be a civic guest of the town by the Oberburgermeister (Lord Mayor). In the early stages we spent fruitful week visiting hostels and youth groups in and around town. Secured a scholarship through the Churchill Foundation to extend study to the US and visited a variety of hostels operated and again promoted project. Conceived idea of aesthetically improving the external of the building by introducing figurative murals on the external walls. Engaged an artist to produce concept ideas based on the history of the Borough. Later secured monies and paints/materials to bring this to reality and some 7 12ft high murals painted based on different historical elements of the Borough - introducing a new element in terms of companies/organisations who would otherwise not have become involved and who were interested - plus excellent publicity! This included dealing with all the processes for further Planning Permission with the Local Authority. Secured revenue funding from the former LDDC for salary to employ first member of staff, e.g. Administrative Secretary to facilitate the project. Prepared job advert and job description/ specification + contract for this post. The project has provided a real need for almost two decades. Now reached a cross-road with entire site under a new development with the intention of demolishing school and hostel and build purpose built accommodation - exciting future ahead. The proposed new purpose built hostel for international youth exchanges will cost a quarter of a million pounds. The research in support of this has been supplied. Equipping & furnishing will not be such a costly task with existing resources from the current building being moved into the new complex when complete. Part of this exercise is underway in terms of upgrading and replacing old items so as to suitable compliment the needs of the new building. © GPO • 2002.
  • 18. FROM THE DONOR'S POINT OF VIEW • Is this project within our policy, priorities and area of benefit? • Is it clear - what do they want, why and when? • How do we know they can do it? • Who are they- do we know this organisation? • What are the implications for the future? • Has anyone else supported this project? • Do we expect to get anything in return? © GPO • 2002.
  • 19. 10 Top Tips 1] Address your appeal to the right person 2] Tailor your appeal to the prospect 3] Include a clear statement of Organisation's work and objectives 4] State clearly how much money you need and include a budget 5] Tell them what the money's for 6] Break a large appeal down into realistic chunks for particular items 7] Include the latest accounts 8] Offer to go and see them and follow up the letter within a week 9] State the benefits for them 10] Be positive and upbeat about the Organisation and your ideas © GPO • 2002.
  • 20. GETTING BEYOND THE WASTEPAPER BIN! PLAN AHEAD • Think in terms of months not weeks • trusts may meet only twice a year; • sponsorship budgets may be committed 18 months ahead. RESEARCH THE DONOR • Read up on their policy and priorities. • How much do they normally give? • Find out the right contact name • When is the best time to apply? • Do they issue guidelines • How do they like to be approached? PACKAGE YOUR PROJECT • Identify unique selling points • Package specific needs • Prepare a proper budget • Is it cash you need? • Is it sponsorship or a donation? • Consider unit costs or a choice of costs • Sponsorship benefits PLAN THE PROPOSAL • Organise your information • Gather supporting documents • Decide on a format NOW YOU CAN WRITE IT! • Avoid jargon • Bring out human interest • Generate emotion, belief and commitment • Break up the text & include a summary • Do not forget enclosures © GPO • 2002.
  • 21. Common Pitfalls • "Dear sir/madam". There is no excuse for not addressing a named correspondent and preferably the correct name! Circulars waste time and money. • Long-winded and vague appeal letters. Be concise and precise - most letters will be scanned. • Not understanding the commercial world. Companies want to know what they will get out of it. Companies expect some good publicity, even from a donation. • Not stating what you want. Many appeals give lots of information, but the donor is left wondering what you actually want from them. Be very clear what you are asking for and why. • Insufficient time. Plan ahead and appeal in good time. If you want the money next week it suggests bad planning, • Wrong address. Appeals may end up on the right desk, but a two week delay is unhelpful and creates a bad impression. • Tactical error. When sending photographs to Kodak in support of an appeal, do not send a Fuji film! • Not valuing their time. Applications should consist of a short letter. Do not say all the information is in the enclosed video! • Being unrealistic in what you ask for. • Lack of professionalism. Appeals, particularly by telephone need to be carefully thought through. Trying to make them feel guilty rarely produces a positive response. © GPO • 2002.
  • 22. WRITING YOUR APPLICATION EXECUTIVE SUMMARY - A brief outline of the proposal • Problem • Solution • Funding requirements • Organisation and its expertise THE STATEMENT OF NEED - Why is this project necessary? • The problem - evidence of need, facts and statistics • Who are you helping? - comments and quotes from beneficiary group/s • Why is the issue important? • What would be the consequences if nothing was done to address the need? PROJECT DESCRIPTION - Nuts and bolts Show the project will be implemented • Objectives • Methods • Staffing and administration • Monitoring and Evaluation BENEFITS FOR THE PROSPECTIVE DONOR - what will they get out of it? • Business benefits, e.g. value of press coverage and PR • Corporate citizenship, and how it fits with their aims • Opportunities for employee involvement through volunteering • Opportunities for in store/branch promotion • Branding on promotional materials • Networking and contact with key government figures BUDGET - Financial description of the project • How much the project will cost in total? • How much will you need from the funder? • Income already received or expected ORGANISATION INFORMATION - Introduction and background to your Organisation • History • Main activities • Location and size • Aims and objectives • Beneficiaries and services CONCLUSION - Summary of the proposal 's main points • Final appeal for your project © GPO • 2002
  • 23. Some tips on writing style • Use shorter sentences and avoid overly complicated sentences • Use a PC/Mac and the spell check! • Include a summary • Improve the visual appearance and readability by using shorter paragraphs, headings, sub-headings and indented tabulations • Ask someone to check it for errors, typos and clarity • Vary the length of sentences and paragraphs - it makes it easier on the eye and helps the reader • Use smaller rather than longer words • do not forget the enclosures! • Avoid unsubstantiated superlatives, such as "woefully inadequate" • Avoid jargon. Write as though you are presenting the information to a friend who has no knowledge of what you do • Write for the reader, with an understanding of their level of knowledge and their perception of the issue • Avoid the use of words or concepts that may be controversial • KISS - keep it short and simple, but say all that you need to say. They may have stacks of requests to sift through • Make it clear and logical © GPO • 2002
  • 24. Then What? • KEEP TRACK - When is a decision likely? • NO REPLY? - Try a gentle prompt • YES - Thank them! - Report back (interest) - Invite to visit (involve) - Send Action etc – [inform] • NO - Thank them! - Speak to them (interest) - Invite to visit/meet (involve) - Send Action etc – [inform] © GPO • 2002
  • 25. REPORTING PROCEDURES Keep the funder informed of the progress of the work • Follow any given reporting guidelines/requirements. • If these are not clear, clarify with the funder. • Ensure you report to the funder on time. • Invite the funder to become involved where appropriate (attending launch events etc). • Keep reporting information brief and to the point, with a fuller report at the end of the grant, including whether the objectives of the work were met. • Enclose relevant information with your report such as financial update, publicity materials and photographs. • Offer the funder the opportunity to discuss the work or to request more information at any time. • If there are problems with the work, keep the funder fully informed. • If you are planning any changes to the way you are going to spend the money from what was originally proposed, seek the funder’s permission first. Be prepared to change your plans or payback the money if they decline permission. • Inform the funder of any key staff changes or funding information. © GPO • 2002 ICF INTERNET FUNDRAISING GUIDELINES
  • 26. covered here, in their entirety the guidelines INTRODUCTION may still appear onerous to some UK charities have been using the Internet organisations. Not all of what is contained since the mid-1990’s. Today, the number of here will apply in every case. charities using the Internet in increasingly The guidance can easily be prioritised into diverse ways is mushrooming, and with it what is law, what is specifically grows the range and number of online recommended by the ICF and what is fundraising opportunities that they are being understood to be best practice. Charities offered. Charity web sites spring up in must balance the information offered here different ways, and very often the 'advisor' with their organisation's overall context and or the 'expert' being used can have little or priorities and form their own judgements. no knowledge of the charity and its Nevertheless, we would caution ICF fundraising practice. It is therefore timely members and affiliates to pay attention to that charity fundraisers are given some the fact that managing your guidelines on best practice and the charity's Internet presence opportunity to take a full and informed role and fundraising is also in the development of their organisation's about managing your online conduct. charity's reputation and risk. Charities have been The committee which developed this guide known to mischaracterize brought together a wide range of relevant their relationship with a dotcom as skills. These included legal, consultancy, philanthropic or to fall into unrealistic online donation handling, online event contracts but, as with any contract for management, trading, research, and web service, charities should consider all their publishing. Fundraisers and online agreements carefully and enlist the suppliers/agencies were both represented. advice and expertise of relevant people where they have any doubts or concerns. The guidelines presented here address There can simply be no replacement for Internet fundraising in two parts. Firstly, due diligence in both the short and the long they cover your charity's own organisation's run for any charity embracing the web. web presence in terms of its web site(s) and e-mail communications. Secondly, they Finally, these guidelines focus explicitly on cover relationships with third parties who fundraising using the web and e-mail and provide charities with a wide range of online do not specifically address other new media services. They are designed to be used by issues and channels such as digital TV, all members and affiliates of ICF. mobile telephones and handheld devices. The advice here is intended to be general A basic awareness and experience of the enough to be useful when considering other Internet is assumed but otherwise the media. We have made every effort to avoid guidelines are designed both for those new built-in obsolescence wherever possible. to using the Internet to fundraise and for those with more experience. We would encourage Many of the guidelines will be familiar, since anyone who rules covering data protection, trading, has a query, an issue or an addition to contracts and other legal requirements these guidelines to contact the ICF. It is our apply as much to online fundraising as to intention to ensure this document is traditional fundraising. Ethical updated at appropriate intervals, to keep considerations are included also but for the pace with the inevitable changes in online largest part the guidance is of a practical fundraising practice. nature. FUNDRAISING USING YOUR CHARITY'S The Internet is a vast INTERNET PRESENCE field and, whilst not every aspect can be OnLine handling of personal data
  • 27. The capture and cause donor resentment and damage handling of public confidence in the sector. personal data online can be a Acceptable Use Policy sensitive area, particularly when it comes to the methods used to capture information on In using the Internet to fundraise and visitors. Transparency is usually the best conduct other activities charities will give policy. The Data Protection Act 1998 Internet access to paid staff and volunteers. specifically covers the handling of personal In doing so charities should act to protect data using the Internet. both the organisation and individuals from any use or misuse of this access. Charities Do not use should seek legal advice on establishing unencrypted such an Acceptable Use Policy. pages for taking credit card payments or donations. Do not Such a policy could include the following use unencrypted e-mail to send or receive issues:- credit card payments or donations and actively discourage people from e-mailing Whether personal use of the Internet is their credit/debit card numbers to your acceptable, and if so at what times. charity. State clearly on your Web site, e- Instruction in responsibilities with regard to mail list or other communication how you adhering to copyright and other intellectual will use individuals' personal data e.g. to property legislation. Whether access to mail or e-mail supporters with information certain Internet resources e.g. pornographic related to your charity or other Web sites are not permitted from a charity organisations' sites, products or services to PC/Mac or other access device. Staff contact supporters in the event of a should be expected to monitor and respond necessary communication exchange to e-mail messages within a set period. requested by you or initiated by your Compliance with requests to remove e-mail charity, such as to confirm or check addresses and other personal data from supporters' donation details to use in your charity's database. The transmission aggregate form, that is not personally of e-mail that may be deemed harassing, identifiable, for analysis to help your charity libellous, defamatory, obscene, threatening, improve its services and products. Ensure abusive or hateful to recipients. Avoidance that any consent obtained complies with the of propagating chain e-mail letters, virus Data Protection Act 1998. Explain clearly "warnings", and other inappropriate how individuals may edit or delete their attachments. details at any time, or request such changes. Personal data should either be The more advanced the site, the more held offline and not on the live Web server chance that all sorts of different or be held securely behind a firewall or in a copyright works have been used e.g. non Web-accessible database to prevent photographs, music, film, sound, unauthorised access. ICF recommends graphic design and animation. Check that you be as transparent as possible, you have the necessary global for example in declaring how you intend permission to use any copyright works to use personal information collected by not created by employees of the charity. your charity's Web site. Cover how your If your Web site has been designed by visitors' movements/activities are an agency, get them to warrant that the tracked (if at all) and whether income is site does not infringe any third party generated simply by clicking through rights and that you have the necessary links to commercial participators. licences to use all the software involved Fundraisers should at no time use or in running the site. Some specialist encourage unsolicited commercial e-mail software companies will give permission (spam), where individuals have not given free of charge to charities. their consent for their details to be released or used. Fundraisers should understand Check as well that all assets and integral that currently even the use of legitimate e- components e.g. scripts, used to create mail lists purchased from third parties can the sites are assigned to you on
  • 28. delivery; this should be clearly stated in Company registration number • Privacy the contract. For example, components policy • Security statement (on personal could include copy, code, programs, data handling) • Copyright statement. images and sound files. However, this may not be always possible. Some Terms and conditions of use, and companies share code across clients, disclaimers e.g. regarding accuracy or and therefore cannot assign the currency of data, and external links to third- intellectual property rights to a single party Web sites. client. In these instances, you should insist that your charity is given a lifetime Charities should also consider displaying licence to use the code and develop it prominently and consistently their logo or 'for non-commercial gain'. It is also trademark, together with the logos of any handy to ask for a detailed style sheet of relevant membership organisations or the site's design so that you know which kitemarks to which they belong or fonts and colours have been used. subscribe. You could should not infringe someone Copying from Web sites happens all the else's intellectual property in other ways time and is difficult to prevent. However, if e.g. words used as "metatags" can you use the © symbol on all your pages, it infringe registered trade marks (so shows that the charity is the copyright ensure that you have permission to use owner of material on the site and acts as a them) linking to other sites without warning against copying. On the other permission could give rise to copyright hand, there are some pages you might infringement claims. It is good practice want actively to encourage visitors to copy to seek such permission. You might e.g. sponsorship or donation forms, so also choose to ensure that external sites make it clear which pages can be printed linked to on your charity's site should off. open in a new, separate browser window, so that you do not alter the If your organisation is a registered charity external site's page layout in any way. with gross income in the last financial year of more than £10,000, then its status as a If your Web site includes a chatroom, or registered charity must be stated in English noticeboard, guestbook, or archived copies on all documents soliciting money of e-mail discussion lists, then you could be (Charities Act 1993 Section 5). It is held liable if you allow libellous statements sensible to assume that documents to be published on the site, however soliciting money include web-sites and temporarily. emails soliciting money. Anyone who designs a site and fails to include this is ICF recommends that you speak to your guilty of an offence and liable to a fine of up legal advisor and your charity's to £1,000. The charity number should also insurance company to establish what be included as a matter kind of AUP best suits your charity. This of course, as this will will help you to identify areas where you give some donors a need to protect yourself or your staff sense of security that and limit any liability you may have. In their money is going to a most cases you can assume your regulated charity. Of Internet activities are excluded from course, some charities your insurance cover unless you have may wish to have the site owned by their asked explicitly for them to be assessed. trading subsidiary. Minimum legal statements for a Web site ICF recommends that all applicable Remember that codes of practice such as items from numbers 1 to 6 should be the British Codes of Advertising and Sales included on your web site and that a Promotion apply equally to the Internet. copyright symbol should appear on Charities that are companies should also every relevant page. show their registered company number, status and registered office address.
  • 29. Setting up secure/encrypted online of what particular clauses could apply and donation systems ask if any cases have arisen already. Authorising payment by credit or debit card Trading - selling goods or services via securely on the Internet requires expensive, the Internet complex hardware and software systems. It is much easier and substantially less Current legislation prohibits the sale of expensive to contract a third party to charity society lottery tickets via the authorise credit and debit cards online for Internet. This is because the lotteries your charity. legislation prohibits sale of society lottery tickets "by machine". If you are selling Before you can accept credit/debit card goods via the Internet (for example, you donations via the Internet you should have:- have included your usual catalogue on the charity's Web site), then you must make • A bank business account sure you comply with The Consumer • An online merchant ID (arranged by Protection (Contracts Concluded by Means the bank) of Distance Communication) Regulations • Optional online BACS authorisation 2000. These came into force on 31st for paperless direct debit October 2000. • A Web site If you are advertising fundraising events run These are not essential, but will reduce by the charity's trading subsidiary (such as costs and increase the number of suppliers challenge events) or if you are advertising who will deal with you if you have them. merchandise sold through the trading Once these elements are in place, you will subsidiary, you do not necessarily need a need to set up a secure payment system, separate site for the trading company's where credit/debit cards are authorised activities (though there may be VAT online. benefits to doing this). But the relevant pages should make clear they are activities There are more than a dozen companies carried out through the trading company. that securely authorise credit card The charity should recover from the trading payments/donations via the Internet in the subsidiary a proportion of the costs involved UK. Some companies will charge a set up in setting up and servicing the site. fee (anywhere from between £100 to £2000), others will not. Most companies will Global issues charge between 0% and 5% of each donation to maintain the service: 5% is the One of the difficulties with the Internet is commercial rate and 2% is the average that while you could (and should) make charity rate. If you receive sure that your Web site complies with all a free service, you might relevant UK law, it currently seems an not be entitled to much impossible task to ensure a Web site support. complies with the laws of every country from which it could be accessed. However, See Appendix 1 for a checklist on selecting some countries (and in particular some US a secure online credit card handling states) are taking active steps to require supplier in terms of range of services, Web sites accessible by their nationals to security, handling of fraud, administration be compliant with their local laws. and reporting. ICF recommends that you read the contract with your Internet credit Ways to minimise risk include:- card payment provider carefully. Check to see where you are required to indemnify or • make clear that your site is only otherwise protect the company against any intended for fundraising in the UK legal action or injury. Consider your rights • ensure you can react quickly if a and responsibilities, the company's and the problem arises and you need to customer's. Do not sign anything with which change the content of your site. you are not entirely happy. If in doubt, ask the service provider to give you examples
  • 30. FUNDRAISING USING A THIRD- organisation's bank and from other PARTY'S INTERNET PRESENCE participating charities and business partners where possible. What does the Practical organisation ask of participating charities in Charities are receiving terms of marketing? Is the marketing offers from third-party planned by the organisation realistic and organisations such as sustainable? Avoid organisations that companies and non- expect charities to conduct all the marketing profits to provide online activity on their behalf. Can the organisation fundraising services. These include online provide you with statistical reports on the shopping malls, cause related marketing number and quality of visitors generated by programmes, online events management, its marketing? How will you allow your donation handling services and many other charity's name and brand to be used by the services. organisation in its efforts at audience acquisition? To assess the benefits of proposals from such third-party organisations it is worth Is there a limit on the considering the following:- number of charities or the number per market sector? On some Avoid signing exclusivity agreements as sites this will increase income for these can limit your charity's options. Is the participating charities, on others it will limit organisation's contract flexible enough to it. Does the organisation's site take other cover your charity's requirements and forms of online payment in addition to credit concerns? Will the organisation adapt it to cards e.g. direct debit payments from bank meet your needs? Would you as an accounts? This could expand the number of individual buy in to the proposed service? supporters likely to make an online Can you work with the staff at the transaction at the site. Have they taken into organisation? With new start-up companies account tax efficiency issues and are they without a track record, this can be one of able to offer online tax reclamation of any the few key elements on which you can donations? What is unique about the judge them. Will the site be accessible to organisation's offer? Why should your people with disabilities using the Web? Do charity work with them and not similar not deny yourself a large market: for online fundraising companies? With regard example, 1.7 million people in the UK have to trading Web sites, does the organisation serious uncorrectable sight loss. Is the offer a customer charter covering issues organisation aware of the Web site such as their delivery commitments and amendments required to address this issue, their returns and/or refund policy? Is this and will they undertake to address them? acceptable? What is the revenue split in Promote accessibility of all fundraising shared revenue schemes between the materials to all Internet users irrespective of organisation and your charity? How long disability. Ensure reasonable backward will it take the money to reach your bank compatibility of material with regard to account? Does your charity incur any browser software and type of hardware. costs e.g. for marketing, bank fees, receipts This is most easily done by providing a text of acknowledgements to donors? Does only version of the site. RNIB publishes your charity need to consider acquiring guidelines at insurance or indemnities with regard to Alternatively, sites can be checked using a liability? Consider preparing a response to free service from CAST at offers and enquiries from Internet fundraising companies. Set out your fundraising plans and minimum Conduct due diligence requirements from organisations you are checks to find out if the prepared to work with. For example, do you organisation and its business are have ethical trading criteria? What sustainable. How is it funded? What documents do you expect to see from an commitments does it owe to its financial organisation? This checklist will help you backers and shareholders? Is its business assess approaches made. A response to plan realistic? Seek references from the an approach from an online fundraising
  • 31. organisation could be: Compare the formal agreement should specify the proposal with your charity's checklist e.g. degree of liability which the Internet-based exclusivity, financial data, ethical concerns, service provider assumes to the donor, the your fundraising priorities. Educate them charity and third parties for information, and request that they submit a proposal transaction handling and losses related to specifically for you. Evaluate the proposal the Internet-based service provider's and decide on the options available. If you administration of a donation. Consider decide to continue, perform due diligence financial losses and brand reputation. and sign a contract that reflects your Include a termination clause in the Service charity's requirements. ICF recommends Level Agreement, such that the contract that you take care not to confuse offers and can be terminated if customers are not arrangements with dotcoms or commercial receiving a sufficiently high quality of services providers as philanthropic service. Immediate termination should initiatives. Avoid services where the come into place if the partner brings the company cannot offer you some evidence charity's name into disrepute, and income of its sustainability and audience potential. from existing customers should still be These things can be more time-consuming protected even though the active and wasteful than they appear at first! agreement fails. Contracts should specify explicitly data ownership, not only of Contracts standard personal data but also of related Contracts can be time- data e.g. tracking of individuals' consuming and difficult to preferences and movements throughout a understand. The Internet arena is no site via "cookies" and other methods. exception. All the more reason to exercise Contracts regarding licensing or syndicating due diligence and consult with others to content should include delineating ensure that you are comfortable with what responsibility for a charity's content on an you are signing up to and that you are external/third-party site. In certain cases, being treated fairly. service level agreements should be established. These should make clear ICF recommends that you show any issues such as:- agreement to your charity's compliance officer, financial director, legal firm or • Will you have a dedicated account insurance company before signing. manager? Consider drawing up your own contract • If yes, how many other accounts or seek amendments to the standard does he/she manage? contract offered by the organisation. • Can you speak directly to the technical support team? Avoid signing • What levels of service are Non Disclosure guaranteed? Agreements. Consider offering written • How are you compensated if they confirmation that all conversations, whilst are not met? active, are commercial and in confidence • How important is your organisation and will not be shared. Contracts with to the supplier? If your business online fundraising organisations may need accounts for less than 0.1% of the to comply with the Charities Act 1992 and supplier's turnover, you are unlikely its definitions of "commercial participator" or to receive a premium service so you "professional fundraiser". In these cases, might do better with a smaller the obligations to make statements and supplier. have agreements covering minimum terms will apply. Some relevant legislation Be clear - Computer Misuse Act 1990 what your - Data Protection Act 1998 charity's Copyright Designs and Patents Act liability 1988 could be should anything go wrong. A Consumer Protection (Contracts Concluded by Means of Distance
  • 32. Communication) Regulations 2000 Broadcasting Act 1990 - fundraising Contempt of Court Act 1981 Universal Copyright Convention, Geneva 1952 - Government sponsored fundraising Berne Convention for the Protection site of Literary and Artistic Works, Berne 1886 - fundraising site Useful resources & - All about Gift Aid - Messrs G Owen & Co (e-Mail: - Donating via the Web - Buying gift vouchers for family/friend y/ - % goes to charity - High-Tech Dictionary from Computer User - Tax concessions on giving via the Payroll - Charities Aid Foundation (tel. 01732 520 000) - Donating via the Web - Charity Commission for England and Wales - Donating via the Web (tel. 0870 333 0123) - Data Protection guidance tel. (01625 545745) - Details about charities & donors - UK Fundraising (tel. 020 8640 5233) - Fundraising collection boxes - Horwath Consulting (tel. 020 7583 - fundraising database 1577) - Web Site ISP - RNIB's advice on accessibility in electronic publishing (tel. 0845 766 9999) /graphics - Graphics & Web Tutorials - Scottish Council for Voluntary Organisations (tel. 0131 313 2488) - Graphics & Web Tutorials - help in constructing an online policy document. - Gifbuilder – Web Animation - possible fundraising frauds/scams 10215-108-
  • 33. 19334.html?tag=st.dl.10215.upd.10215- Gift Aid donations? Very few online 108-19334 credit card processing systems are - Graphics & Web assistance designed with charities in mind - it is advisable to ensure that the www.stud.fh- company you chose can meet your special requirements. - Graphics & Web assistance 5. Do they offer paperless direct debit? Very few online credit card processors currently do. This may also have a very high set-up and running cost. 6. Can they process transactions where donors have come straight into the APPENDIX 1 donation page from an affiliated web site (this Choosing a secure online credit card can cause security processor issues, so needs to be carefully handled). The level of service, security and customer care offered by online credit/debit card Security processors varies dramatically. When choosing an online credit card processor, it 1. Do they process credit card would be advisable to ask the following payments for gambling or questions:- pornography web sites? The majority of online fraud occurs in these areas Range of services and charities may choose to avoid 1. Do they process both credit and online credit card processors that are debit cards, including Switch cards? involved in these industries. It is advisable to go with a supplier that processes both. 2. When credit card payments are processed, what kind of security is in 2. Can they process donations of any operation? amount? Or is there a minimum Is online live authorisation of cards amount? It's advisable to go with a (involving no storage of details) sent company that offers a zero floor limit. over a Secure Sockets Layer- Does the usage charge increase for encrypted (secure) link? Are all small payments? card details inputted on their site sent through both offline (expiry date 3. Do they process in multiple and hot/stolen card server) and on- currencies? If you choose to process line (hot/stolen card server, sufficient only pounds (you are charged for funds, authorisation) to prevent use each additional currency), this does of stolen or lost cards on their site? not mean that people using foreign credit cards won't be able to donate, Can a maximum number of failed it just means that all donations will attempts to make a donation with be made in pound amounts and the one credit card be set? donor will have to do the maths. Do they charge extra for processing Can a maximum number of multiple currencies? successful donations made with one credit card be set? 4. Can they process tax Can a maximum number of failed efficient attempts to make a donation from donations e.g. one IP address, which details the
  • 34. location of a specific computer, be used in conjunction with different set? credit card numbers. Is the donor's e-mail address Many donations are made in rapid validated before the credit card is succession from the same IP authorised? address (an IP address details the location of a specific computer). Fraud The donation is very small (£1 1. Credit card fraud is a major problem donations should be carefully on the Internet. Fraudsters typically examined). obtain credit from lists of stolen cards published on the Internet, or A free web-based e-mail address is by using illicit programmes to used, such as Hotmail. Many are produce lists of algorithmically legitimate, but when combined with allowable card numbers. Fraudsters any of the above the donation should use charity sites to test stolen credit be very carefully examined. card numbers, because they don't have to go through the lengthy The e-mail address does not match process of purchasing a product. the IP address of the machine the Once they've used you to authorise donation was made from. a card, they'll abuse it on other sites. 4. If credit card fraud occurs, what can 2. It is currently against the Data your online credit card processing Protection Act in the UK and company do to stop it? Can they:- Germany to capture and cross- reference someone's postal address Block the fraudster's IP address? with his or her credit card number on Remember that the computer could the Internet. As a result the billing be located in an Internet cafe, or address of credit cards used online large organisation such as AOL or are not verified by the online credit FreeServe, where many computers card processing company. Because can appear to have the same IP this law has made online fraud in the address. Block the fraudster's e- UK and Germany easy, the credit mail address? Most fraudsters’ use card companies, banks and UK free, Web based e-mail such as government are currently re- Hotmail -- some online credit card evaluating the law. It may be processors will send you a warning revoked in April 2002. In the mean when a donation has been made by time, if you plan to ship goods to somebody using this kind of e-mail someone who has purchased them address. via your Web site, you should always verify that the address provided is Implement an intelligent software the billing address associated with system that develops a profile of the credit card. typical donor behavioural patterns and warns you if a donor's behaviour 3. When should you be suspicious that varies from this norm? a donation could be fraudulent? If fraudsters continued to use stolen The same credit card number is credit card numbers to purchase being used from different countries. products or make donations to your organisation, can the online credit The same e-mail address is being card processor implement what is used in conjunction with different known as a deferred payment credit card numbers. system? Deferred payment systems ring fence funds that have been The same postal address is being donated on the individual's credit
  • 35. card -- but do not actually debit the provide you with? card for five days. During this time Can you view reports about the number, the charity can decide whether it quantity, and origin (donor details) of thinks the donation is fraudulent or donations online at your convenience? not. If the charity thinks the donation is fraudulent, it can un-ring fence the Can you reimburse credit cards that have funds. If it thinks it is genuine, it can been fraudulently debited via the online debit the card. However, fundraisers system? should be aware that this procedure Can you reimburse credit / debit cards for could add significantly to the other reasons, not only due to fraudulent administrative burden. use? Can you utilise the deferred payment Although online credit card system online to un-ring-fence or claim processing companies are not liable donations? for credit card fraud, it would be What kind of security at your charity and at advisable to ensure that your the payment service provider is used to contract with them states that they ensure that only authorised personnel have will do everything in their power to access to the above systems? Passwords? limit fraud and to co-operate with Certificates (digital)? Certain IP addresses your bank and international police to only? track down fraudsters, once they have been identified. Reports 5. If credit card fraud occurs, what - What kind of confirmation does a should you do to stop it? donor receive after having made a donation? Report the stolen card numbers to - An e-mail sent instantly by the credit your bank. card processing system? - Can this e-mail be customised or Reimburse the cards that have changed? been fraudulently used. - Can your charity do this over the Web? Ask your online credit card - Is there a charge for this? processing company to block the - How long does the change take to fraudsters' e-mail and IP effect? addresses. - Can different e-mails be sent to different people? Implement a deferred payment system if the fraud continues How do they report back to you about donations:- Administration - Is an e-mail sent to you every time a What kind of online administrative systems donation is made? are provided? - Is a daily report e-mailed to you about all the donations that have Can you edit the layout and content of your been made that day? secure payment pages via the Internet? - Is a monthly report e-mailed to you Can you use this system to launch one or about all the donations have been more new appeals in a matter of minutes? made that month? How many appeals can you run - What information is provided about simultaneously? donors? Can they be different e.g. one-off - IP address? Resolved IP address? donations, prompted levels of giving, direct - How are the donation reports debit/regular gifts? formatted? It is advisable to ensure If you are a membership organisation, how that the online credit card processing many membership ID numbers can they company can supply you with reports in a format that is compatible with
  • 36. your internal donor database so that every record doesn't have to be Server: computer that is connected to the keyed in by hand. Internet and on which documents are stored. It serves or publishes these APPENDIX 2 documents when requested by other computer users. Glossary Style sheet: a standard method of defining Encryption: a method of encoding how text and graphics should appear on sensitive data, such as donor records and one or a series of Web pages, including credit card numbers, so that it might be font size, colour and alignment. stored or transmitted safely. Web: see World Wide Web Extranet: a private or restricted access computer network usually operated by an World Wide Web: a method of storing and organisation. Unlike an intranet, an extranet retrieving information, including text, is made accessible to other relevant graphics, video and sound. Relevant organisations or individuals such as documents on multiple computers are suppliers as well as to the organisation's linked using hypertext, a global standard employees. method of connecting. Internet Protocol: a standard method of naming and identifying a particular computer connected to the Internet using a unique series of numbers. The shorthand "IP" is more common. Intranet: a private restricted access computer network usually operated by an organisation. Information is stored and retrieved in the same method as the Internet but access is restricted usually to company employees. IP: see Internet Protocol. Meta tags: "hidden" information within a Web page that describes the content and other qualities of that Web page. The information does not appear when the Web page is viewed, but is used by search engines to interpret further the text content of Web pages. Offline: not connected to the Internet or © GPO • 2002 other computer network. Online: connected to the Internet or other computer network. Secure server: a server that features encryption facilities. Documents stored and information entered on a secure server can be encrypted and protected from unwanted access. Secure sockets layer: a standard and widely used method of data encryption.
  • 37. FUNDRAISING - FINANCIAL MATTERS 1. REPORTING TO FUNDERS (1) Find out what they want: (a) Application/Budget (b) Regular reports and returns (c) Annual Project accounts (d) Parent Body accounts (2) Does the funder understand the relationship between the individual Project and Parent Body. 2. APPLICATIONS/BUDGETS It is essential that the application is based on fact land reality and not on "last year's application plus a built-in element for contingencies. This is not only to ensure that the figures and costings are reasonable and based on up-to-date information, but also to ensure a consistency in the various figures supplied to the funder. Any variances between the application and the accounts supplied ma, at best result in a query, and at worst result in a withholding of funds. (1) Is the expenditure in the correct cost centre? (2) Is the income in the correct cost centre? 3. PROJECT ACCOUNTS/REPORTS (1) How much detail does the funder require? (2) Are all our expenditure headings acceptable? For example, are your on-costs, (e.g. audit fee), chares to be included or re-categorised. (3) Are annual accounts sufficient or do we need to provide quarterly accounts? (4) Is the funder's financial year different to Project/Parent Body and do we have to adhere to this rather then our own (5) What is the funder's timescale for reporting? (6) Are separate salary details required, if applicable. (7) Does' the funder require the individual Project accounts to be separately audited or will they be satisfied with an "extract from the audited accounts".
  • 38. A separate audit certificate for a project can be arranged during our normal audit in June, but at an additional cost to the Project. However, if the auditors have to make a special visit this adds to the cost. Therefore try to persuade funders to accept an 'extract' in preference to a separate audit. (8) Is a special audit certificate required? The remarks on timing in (7) above also apply (9) Will the funder require their own auditors to examine the project's records? (10) Do the accounts separately identify the funder's cash and is the correct amount shown? 4. RESERVES Some funders may consider the level of a project's reserves, (or Parent Body reserves as a whole) are too high and that we have no need of further funds. You may need to explain that most funding is "project specific" and therefore only available for use on the project for which it was specifically given. Accounts generally show three sorts of reserves: (a) Restricted Funds (b) Designated Funds (c) General Funds Only General Funds are freely available, but it must be noted that an organisation the size of some Parent’s Body’s, (albeit perhaps deemed a ‘small charity'), must have a level of reserves to ensure its survival. As a well run and prudently managed organisation a Project/parent Body should be aiming at reserves sufficient to cover three months operating expenses at least. A further point is that reserves are not necessarily matched by cash in the bank; they are tied up in other assets such as property, debtors and office equipment. 5. VAT AND TAX ISSUES These are dealt with in the note on VAT, Tax and Gift Aid matters. 6. CONTRACTS Wherever possible prepare a written contract which should include the following: (a) The cost or fee "subject to VAT where applicable". (b) Payment terms (and interest?). (c) Financial reporting requirements. 7. CASH FLOW Have you considered the cash flow implications of the funding? When will you receive the cash relative to when you have to incur the expenditure? 8. AVOID SURPRISES If all requirements and deadlines are agreed in advance it should be relatively easy to keep everyone happy - Funder, Project and even the Treasurer/Finance Director. © GPO • 2002
  • 39. VAT & TAX MATTERS These notes are intended as an "aide-memoir" for some of the various tax and VAT problems you may encounter. This list is not comprehensive and there may be further points which need to be added. Nor is it intended to give you the answers which would take a lot of paper; it is intended to alert you to potential problems so that you can then seek further advice from a qualified person, e.g. Accountant where appropriate. This is given as a guide only and no responsibility will be taken by the publisher for any inaccuracies and consequences arising out of the information below. All matters relating to VAT should be discussed and verified with the local H M Customs & Excise VAT Office before acting, unless otherwise professionally advised. Similarly, matters relating to other Taxation should be referred to the HM Revenue & Customs – (HMRC) • Charities office at Bootle, unless again advised otherwise by a professionally qualified person or business. INCOME 1. FUNDRAISING Is it a donation, a contract or sponsorship? (i) Donation Straight gift with no strings (i.e. the Project/Parent Body is providing NOTHING in return) no tax or VAT implications. Could it be made more effective? (a) Consider Gift Aid or Deposited Covenant for 'one-off’ gifts (b) Deed of Covenant for regular gifts (ii) Contracts Is the Project/Parent Body providing a service or something in return for the funding? If so, it will undoubtedly be subject to VAT. This need not always be a problem if the funder/sponsor is made aware at the start. e.g: £1,000 + VAT means the funder will have to pay £1,175 (£175 of which they may be able to reclaim) but £1,000 VAT inclusive means you only end up with about £851. BUT there are a few exceptions e.g. the provision of "care". Always prepare a written contract which should include the following:
  • 40. (a) The cost or fee should always be "subject to VAT where applicable". (b) Payment terms (and interest?) (c) Financial Reporting requirements. (iii) Sponsorship Is the Project/Parent Body providing the funder with publicity? If so this will probably constitute sponsorship. The inclusion of a funder's logo on printed matter etc will always constitute sponsorship. Sponsorship is VATable. As this is in effect a "contract there should be a written contract as in (ii) above. 2. DONATIONS IN KIND Donations in kind, (e.g. secondees or studio facilities), could fall into any of the above so make sure that you AND the funder/sponsor are clear which it is. Just because no cash changes hands doesn't mean there are no VAT implications. 3. TRAINING COURSES AND CONFERENCES The provision, otherwise than for profit, if: (a) Education or research of a kind provided by a school or university; or (b) training or re-training for any trade, profession or employment is exempt from VAT. This is not necessarily to our advantage - [see 6 below ]. 4. TAX RELIEF ON VOCATIONAL TRAINING Where, for example NVQ training is provided to individuals they can be charged the 'net of tax' price. e.g. if the cost of a course was £100, the Project/Parent Body would only charge the person £75 and we would reclaim the other £25 from the HM Revenue & Customs – (HMRC) • Charities. 5. SALE OF GOODS VAT is chargeable on all sales of goods (e.g. tapes, vans, computers) with a very few exceptions (e.g. books, cars). 6. VAT is not necessarily all BAD news. Do not be afraid to charge VAT - provided it does not jeopardise your funding - it increases the amount of VAT that can be reclaim, if registered for VAT. It shouldn't be a problem for the funders if they are able to reclaim the VAT we charge, and most of them can. 7. GENERAL VAT RULE FOR INCOME Generally, the nature of the goods or services supplied determines whether or not a transaction is VATable and not the status of the supplier or 'customer'. 8. CHARITY TRADING Does what you are proposing to do fall within ~'s charitable objectives? (Is it primary purpose?)
  • 41. Trading profits could be taxable (and the Charity Commission might object). 9. NOTES FOR COMPLETING THE VAT CERTIFICATE DOMESTIC USE The following uses of energy all count as domestic and are VAT rated at 5%. VAT at 5% also applies where the energy is resold by landlords to tenants for domestic use. DOMESTIC DWELLINGS Houses • Flats • Chalets • Caravans • Houseboats and other Dwellings. OTHER PREMISES QUALIFYING FOR VAT AT 5% 1. Children's homes. 2. Homes or institutions providing residential accommodation witl1 personal care for reason of old age, disablement and past or present dependence on drugs or alcohol 3. Hospices. 4. Hospitals which only provide long term residence and palliative treatment (treatment intended only to relieve and not to cure). 5. Residential accommodation for students and school pupils. 6. Residential accommodation for members of the armed forces. 7. Monasteries, nunneries and similar establishments. 8. Any other institution which is the sole or main residence of at least 90% of its inhabitants. 9. Self-catering accommodation. 10. Premises used by charities for non-business purposes. The following uses count as non-domestic and are liable for VAT at 17.5%: a) Ordinary hospitals b) Prisons, secure units and maximum security hospitals. c) Hotels, Inns and similar establishments. d) Show Homes. The following count as business activities for charities, these are liable for VAT at 17.5% a) The sale of donated goods b) The rental of charity run buildings i.e. for weddings, christenings or to other charitable organisations etc. c) The provision of membership benefits by clubs, associations or similar bodies d) Any, property for which an entrance fee is charged i.e. museum, art gallery, etc. **When completing the certificate, the percentage used for qualifying must be given as a percentage of energy used i.e. 5% or 100% etc. It is not acceptable to put 5% or 17.5% NON-DOMESTIC USE VAT is charged at 17.5% on energy used for all other purposes. Should you require further information regarding your VAT liability, please contact your local Customs ~ Excise Office. © GPO • 2002
  • 42. GIFT AID MATTERS How the Gift Aid Scheme Works If a donor pays Income Tax, (or Capital Gains Tax), they complete a simple form, (provided by the charity), and return all the proposed giving to the charity. Every £1 you give becomes £1. 28 at no extra cost to you. It is as simple as that. Q] A prospective donor does not pay much tax - can I still use Gift Aid? A] Yes...the donor just need to pay enough tax to cover what the charity re-claims, (e.g. if you give £2 per week, donor needs to pay £29 tax in a year). Q] How long is a donor committed for? A] Unlike the old Covenants Scheme, a donor can cancel a Gift Aid Declaration any time by just writing and informing the charity. Q] What if the donor wants to change the mount they give? A] Just change it! Unlike again the old Covenant Scheme, a Gift Aid Declaration covers all monies. Q] What if the donor becomes unemployed, or moves away and has to stop giving? A] Do not worry. Once more, unlike the old Covenant Scheme, a Gift Aid Declaration does not tie the donor to a set amount. The donor can stop or reduce their giving at any time Q] What if the donor stops paying Tax? A] The Donor just writes and lets the charity know that they want to cancel their Gift Aid Declaration. [For more information, queries, or other question, refer to the Gift Aid Web site @] © GPO • 2002
  • 43. GIFT AID © HM Revenue & Customs – (HMRC) • Charities 3.1 Introduction – Gift Aid 3.1.1 This Section covers the revised Gift Aid Scheme, as introduced from 6 April 2000 (1 April for companies) by Finance Act 2000. In order to place the changes in Finance Act 2000 in context, Section A gives a brief outline on the old Gift Aid and Deed of Covenant schemes. If charities need further information on these previous schemes they should telephone or write to HM Revenue & Customs – (HMRC) • Charities. SECTION A: BACKGROUND 3.2 Gift Aid pre-April 2000 3.2.1 The original Gift Aid Scheme was introduced in 1990. It enabled United Kingdom resident individuals and companies to give single gifts of money to charity tax-effectively, but it required a minimum amount to be given. Non-close companies could give any amount. 3.2.2 The individual or company made a donation net of basic rate tax and gave the charity a certificate (R190 (SD) for individuals and R240 (SD) for companies. The individual must have had at least as much income chargeable at the basic rate as the amount of the gross donation. Companies were required to deduct basic rate tax from the donation and pay it over to the HM Revenue & Customs – (HMRC) • Charities. 3.2.3 If the individual paid tax at the higher rate he or she could get relief on the gift on the difference between the basic and higher rate on the grossed-up amount. A company deducted the grossed up amount of the donation as a charge in its corporation tax computation. 3.2.4 Charities receiving Gift Aid donations could reclaim basic rate tax on the donations, provided they were in receipt of a valid certificate from the donor and could demonstrate a clear audit trail linking the donation to the donor. 3.2.5 If the donor received benefits from the charity worth more than 2.5% of the net gift, the gift would not qualify for Gift Aid. The maximum total benefits received by the donor from any one charity in a tax year could not be worth more than £250.
  • 44. 3.3 Tax relief for covenanted donations to charity pre-April 2000 3.3.1 Regular payments made by individuals and companies to a charity under a Deed of Covenant were paid after deduction of basic rate tax. The charity could claim back from the HM Revenue & Customs – (HMRC) • Charities the basic rate tax deducted from the payment. 3.3.2 The individual must have paid at least as much income tax at the basic rate as the amount of tax reclaimed by the charity on the payment. If the amount reclaimed by the charity exceeded the amount paid by the covenantor, the HM Revenue & Customs – (HMRC) • Charities might require the individual to pay the tax difference. Companies were required to deduct basic rate tax from the covenanted payment and pay it over separately to the HM Revenue & Customs – (HMRC) • Charities. 3.3.3 If the individual paid tax at the higher rate, he or she could get relief on the payment on the difference between the basic and higher rate on the grossed-up amount. A company deducted the gross amount of the payment as a charge in its corporation tax computation. 3.3.4 Charities receiving covenanted payments could reclaim basic rate tax on the payments made, provided the covenant was legally valid, lasted for over three years and a clear audit trail could be demonstrated linking the payment to the donor. 3.3.5 There was no statutory limit on the benefits which could be received in relation to payments made to a charity under a Deed of Covenant. However, for payments of £100 made under a Deed to a membership charity, benefits up to 25% of the net amount of the payments were ignored for tax purposes. SECTION B: GIFT AID FOR INDIVIDUALS FROM APRIL 2000 3.4 Introduction 3.4.1 The Gift Aid scheme was amended by Finance Act 2000 for donations made by individuals on or after 6 April 2000. The main changes were to: * abolish the £250 minimum limit for Gift Aid donations, so that the scheme applies to any donation, whether large or small, regular or one-off * withdraw the separate tax relief for payments made under a Deed of Covenant and give all relief for such payments under the Gift Aid scheme * replace the requirement for donors to give the charity a Gift Aid certificate with a requirement to give a new, simpler and more flexible Gift Aid declaration * allow donors to give a written Gift Aid declaration by post, by fax or by internet or an oral declaration over the phone or face to face. * allow * Crown servants and members of the UK armed services serving overseas, and • other non-UK-resident individuals who make donations out of income or gains charged to UK tax, to use the new Gift Aid scheme.
  • 45. 3.5 Commencement date 3.5.1 In the case of donations by individuals, the new Gift Aid measures apply to: * covenanted payments falling due on or after 6 April 2000, and • all other donations made on or after 6 April 2000. 3.5.2 Where a covenanted payment due before 6 April 2000 was made on or after that date: * the Gift Aid scheme will not apply to the payment * the existing rules for Deeds of Covenant will continue to apply to the payment. In particular, the rule entitling the charity to reclaim tax at the basic rate in force when the covenanted payment falls due, rather than when it is made, will continue to apply to the payment. Example Mr MacDonald made a Deed of Covenant in favour of his local church, promising to pay £5 a week by until 31 December 2000. Mr MacDonald was unable to attend church on Sunday 2 April 2000, but paid £10 on Sunday 9 April 2000. The £5 due on 2 April 2000 will come under the Deed of Covenant scheme, and tax can be reclaimed at the basic rate of 23% (the tax rate in force when the payment was due). The £5 due on 9 April 2000 will come within the Gift Aid scheme (as will future payments under the Deed). Tax can be reclaimed at the basic rate of 22% in relation to this amount. 3.6 Abolition of the £250 minimum limit 3.6.1 From 6 April 2000, the £250 minimum limit for Gift Aid donations was abolished. From that date the charity can reclaim tax on any donations made by individuals, whether large or small, regular or one-off - provided the other conditions for the tax relief are satisfied. In particular, the charity will still have to be able to show an audit trail (see section 3.36 below) from the donation to a donor who has given a Gift Aid declaration which covers that donation. For Gift Aid declarations, see section 3.10 below. 3.6.2 Each charity will need to decide, from its own circumstances, whether it wishes to reclaim on small Gift Aid donations. For some charities it may not be cost effective to claim on donations below a certain threshold. For a small charity that can call on plenty of volunteers, it may be cost effective to claim on all Gift Aid donations. Whether a charity makes a claim on a Gift Aid donation or not, it is still possible for the donor to claim higher rate relief on the gross amount of the donation, provided he or she has completed a Gift Aid declaration and met the other conditions of the scheme. Example A donor who pays higher rate tax makes a Gift Aid donation on 30 June 2000 of £3 to a charity to which he has made a declaration. The charity has a policy of not claiming on donations below a
  • 46. threshold of £5, because it is not cost effective to do so. It therefore does not claim back the tax of £0.85 on the donation (£3 X 22/78). The donor, however, can include the donation of £3 amongst any other donations on her tax return. Higher rate relief of £0.70 (£3.85 X 18%) will be due. 3.7 Who can make a Gift Aid declaration? 3.7.1 Before 6 April 2000, only donations by UK-resident individuals could qualify as Gift Aid donations. From April 2000, the following will qualify: * donations by individuals who are resident in the UK * donations by individuals who are Crown servants or members of the UK armed forces serving overseas • donations by other non-resident individuals, provided they have income or capital gains charged to UK tax at least equal to the gross amount of the donation (i.e. the donation before deduction of basic rate income tax). 3.8 Methods of donation 3.8.1 Donors must donate their own money. The donation can be made by cash, cheque, direct debit, credit card, debit card, postal order or standing order. `Telegraphic transfer' is also acceptable. Donations can be made in sterling or any foreign currency. When calculating claims the charity must convert foreign currency into sterling at the rate on the date when the donation was made. 3.8.2 Donations by cheque are only valid pending clearance of the cheque. If the cheque is not honoured a donation has not been made. 3.8.3 A donation must be a payment of a sum of money. A donation cannot be made in kind, by loan waiver or by debt/loan conversion. 3.8.4 Subject to the benefits rules outlined below in Section D, outright payments to a charity in return for services, rights or goods are not gifts to charity and so are not eligible for Gift Aid tax relief. For example, the following cannot come within the Gift Aid scheme: Payment * of school fees for a specific person * to purchase books, jumble sale items, food etc * for admission to events (jumble sales, concerts etc) * for raffle or lottery tickets (including 100 clubs etc). The payment to purchase a raffle ticket from a charity is not a gift to that charity but a payment for the right to enter the raffle. It is immaterial that the chance or expectation of winning a prize is small or that the value of the prize maybe negligible. A charity must not make claims under the Gift Aid scheme in respect of payments which have already received tax relief. This includes payments received in the form of charity voucher or from a Payroll Giving Agency in respect of payments made under the Payroll Giving scheme.
  • 47. Charities also should bear in mind that charity vouchers cannot themselves be used to purchase services, rights or goods, examples of which are shown above. 3.9 Tax to cover 3.9.1 From 6 April 2000, donors no longer need to pay income tax at the basic rate equal to the tax reclaimed by the charity on their donations. Instead, donors have to pay an amount of income tax and/or capital gains tax, whether at the basic rate or some other rate, equal to the tax deducted from their donations. This means that donors who previously may have paid tax at a marginal rate between the lower and basic rates of tax (and therefore had not paid enough tax at the basic rate to cover the tax reclaimed by the charity) will no longer have additional tax to pay. 3.9.2 Even though a donor cannot receive payment of non-payable tax credits on dividends paid by UK companies, those credits can be used by the donor to cover the tax reclaimed by the charity on the donation. Tax deducted from bank and building society interest etc., and not repaid, can also be used to cover the tax reclaimed by the charity. 3.9.3 Prior to 6 April 2000 donors could only claim higher rate tax relief for their donations against income tax they paid. From 6 April 2000 donors will be able to claim higher rate tax relief for their donations against both income tax and/or capital gains tax. 3.9.4 The position of a taxpayer making Gift Aid donations can change from one tax year to the next. Charities are recommended to remind donors on a regular basis of the need for them to have paid sufficient income and/or capital gains tax on their donations. It need not be done in a separate letter to each donor, but could be included in any material sent to supporters (a newsletter, for example). 3.10 Gift Aid declarations: introduction 3.10.1 From 6 April 2000, Gift Aid certificates were replaced by new, simpler and more flexible Gift Aid declarations. Before a charity can reclaim tax on a donation by an individual, it must have received a Gift Aid declaration from the donor containing certain information and confirming that the donation is to be treated as a Gift Aid donation. Without this declaration, a donation from an individual will not qualify under the scheme. 3.10.2 Donors will be able to give the charity a declaration: * in advance of their donation, at the time of their donation, or at any time after their donation (subject to the normal time limit within which tax can be reclaimed - normally around six years) * to cover a single donation or any number of donations * in writing (e.g. by post, by fax or electronically through the Internet) or orally (e.g. over the phone or face to face). 3.10.3 The amount of information required by law on a Gift Aid declaration has been kept to the minimum consistent with proper administration of the tax relief and the need for the charity to be able to show an audit trail. Charities may well wish to add further information and notes of their own on their declaration forms. It may also be necessary for the charity to add further information to satisfy other legal requirements. For example:
  • 48. * if the charity plans to use the information provided by the donor for any use other than reclaiming tax, the Data Protection Act 1998 requires you to explain this * if a registered charity in England and Wales incorporates the Gift Aid declaration in appeals literature, the Charities Act 1993 requires a charity to include a statement that it is a registered charity. Under Scots law, Scottish charities are required to include a statement that they are recognised charities. 3.10.4 The HM Revenue & Customs – (HMRC) • Charities has no objection to charities incorporating declarations into other documents, such as standing order mandates or Deeds of Covenant. These documents may contain more than the minimum requirements laid down in the legislation. 3.10.5 Charities will need to design their own Gift Aid declarations. There is no official form produced and available from the HM Revenue & Customs – (HMRC) • Charities (but see paragraph 3.10.6 below). Charities should ensure that the declarations satisfy all the requirements set out in the paragraphs below and any other legal requirements under the Data Protection Act, the Charities Act, etc. There is no need to get the HM Revenue & Customs – (HMRC) • Charities's approval for own- design declarations, but HM Revenue & Customs – (HMRC) • Charities will be happy to review declarations if a charity wants. If a charity or fund-raiser wants the HM Revenue & Customs – (HMRC) • Charities to comment on a declaration, they should contact: For charities in England, Wales and Northern Ireland HM Revenue & Customs – (HMRC) • Charities St John's House • Merton Road BOOTLE • Merseyside • L69 9BB Telephone: 0151 472 6035 • Fax. 0151 472 6268 For charities in Scotland HM Revenue & Customs – (HMRC) • Charities Meldrum House 15, Drumsheugh Gardens Edinburgh EH3 7UL. Telephone: 0131 777 4040 Fax. 0131 777 4045 3.10.6 Appendix B1 to these Guidance Notes contains an HM Revenue & Customs – (HMRC) • Charities model declaration form, which you can use or adapt if you wish. The model declaration contains some notes over and above the minimum requirement. You do not have to include all of these notes in your own-design declaration form. Those notes in bold type must be included if the declaration form is to be valid. 3.11 What a Gift Aid declaration must contain
  • 49. 3.11.1 All Gift Aid declarations must contain: * the donor's name * the donor's home address * the charity's name * a description of the donations to which the declaration relates * a declaration that the donations are to be treated as Gift Aid donations and, except in the case of a declaration given orally: * a note explaining the requirement that the donor must pay an amount of income tax and/or capital gains tax equal to the tax deducted from his or her donations. 3.11.2 There is no statutory requirement for a declaration to be signed and dated. 3.11.3 A date is needed on the declaration only where it serves to identify that a particular donation or donations are to come within the scheme. For example, if the declaration stated that `all donations I make from today" were to be Gift Aid donations, clearly a date would be required. A date would not be required, however, where the declaration stated, for example, `all donations I make to the charity from 6 April 2000'. 3.11.4 In the case of a written declaration, the charity may wish to pre-print most of the information on the declaration form. For example, the charity's name might be pre-printed. Charities need to bear in mind, however, that a donor might later wish to deny that he or she made a declaration. If there is no part on a written declaration completed by the donor, the charity will find it difficult to prove that the declaration was genuine. The donor's name and home address 3.11.5 In order to ensure that the charity can establish an audit trail to the donor from a donation, the charity should get as full details of the donor's name and home address as possible. In the event that HM Revenue & Customs – (HMRC) • Charities audits the tax reclaim and the information held is insufficient to enable the auditor to trace the donor, the charity may have to get further information to show that the tax reclaim is correct. If the charity cannot get the further information, it is likely that the declaration will be considered invalid. 3.11.6 Ideally, the charity should obtain the donor's full name. At the very least it should get his or her initials and surname. And it should also get the full postal address, including, in particular, the postcode. 3.11.7 If a donor subsequently changes his or her name or address, this will not invalidate the declaration. If the charity is notified of a change in the donor's name or address, it must keep a record of the updated information. The declaration itself does not need to be amended, but a record of the change should be kept on the charity's database.
  • 50. The charity's name 3.11.8 The charity's full name, usual name or acronym will suffice, provided it is adequate to identify the charity. 3.11.9 Declarations can include the name of more than one charity - for example, where a joint fund- raising event takes place. In such a situation charities need to ensure that: * the donor is aware how his or her donation is to be split between the charities listed on the declaration, and * the charities keep records to show how the donations have been divided between them. Both charities will need to be able to produce a copy of the declaration, if required. Description of the donations to which a declaration relates 3.11.10 Any appropriate description can be used. For example: * "the donation of £x I made to you on dd/mm/yy", or * "the enclosed donation", or * "all donations I make under the direct debit mandate below", or * "all donations I make on or after the date of this declaration", or * "all donations I make from this date until further notice", or * "all donations I have made since 6 April 2000 and all donations I make hereafter". 3.11.11 Whether the charity chooses from one or more of the above descriptions or devises its own, it is important to get the description right. The declaration will not cover any donations received that fall outside the description used. 3.11.12 Depending on the description used, a declaration may apply indefinitely to future donations. There is no requirement for such declarations to be renewed periodically, but see paragraph 3.9.4 above about reminding donors concerning tax to cover. 3.11.13 If a donor wishes to alter the description of the donations to which a declaration relates, they should cancel the declaration and make a fresh one. Declarations do not need to be cancelled when, for example, the donor changes his or her address. Declaration that donations are to be treated as Gift Aid donations 3.11.14 Again the charity can devise appropriate wording. For example: * "Please treat my donations as Gift Aid donations", or * "I want my donations to be Gift Aid donations", or * "Please reclaim tax on my donations", or * "I want the charity to reclaim tax on my donations", or * "I want the charity to reclaim tax on my donations Yes/No (delete as appropriate)", or • "Tick here if you want us to reclaim tax on your donations [ ]". Note explaining the tax requirement
  • 51. 3.11.15 Again the charity can devise appropriate wording. For example: * "You must pay an amount of income tax and/or capital gains tax equal to the tax we reclaim on your donations", or • "Remember to notify us if you no longer pay an amount of income tax and/or capital gains tax equal to the tax we reclaim on your donations". 3.12 Written declarations 3.12.1 Written declarations include declarations made on paper or electronically. The former can be handed, posted or faxed to the charity by the donor, and the latter can be made online via the Internet. 3.13 Oral declarations 3.13.1 In the case of an oral declaration, the person taking the declaration on behalf of the charity might recite information already held by the charity to the donor and ask him or her to confirm it, rather than asking the donor to recite the information him/herself. 3.13.2 If a charity receives an oral declaration it must send the donor a written record of the declaration showing: * all the details provided by the donor in his or her oral declaration * a note explaining the requirement that the donor must pay an amount of income tax and/or capital gains tax equal to the tax deducted from his or her donations * a note explaining the donor's entitlement to cancel the declaration retrospectively within 30 days (see paragraph 3.14.3 below) * the date on which the donor gave the charity the declaration, and * the date on which the charity sent the written record to the donor. 3.13.3 An oral declaration will not be effective unless and until the charity or its representative sends the donor the written record of the declaration. The charity cannot reclaim tax in respect of a donation covered by an oral declaration until it has sent the written record. Once the written record has been sent, the charity can reclaim tax in respect of any donations covered by the declaration, even if they were received before the written record was sent. If the oral declaration is cancelled within the 30-day period, however, any reclaimed tax will have to be repaid to the HM Revenue & Customs – (HMRC) • Charities (see paragraph 3.14.3 below). 3.13.4 The written record of the declaration does not have to be recorded on paper. For example, the charity's representative might record the details on a computer, with an electronic copy being e- mailed to the donor, or a hard copy sent by post. If the charity uses an electronic means of recording the donor's information, it will need to demonstrate to HM Revenue & Customs – (HMRC) • Charities at an audit that the electronic recording of the information generates a written record sent to the donor.
  • 52. 3.14 Cancellation of written and oral declarations 3.14.1 Donors are entitled to cancel their declaration at any time. They may do so by notifying the charity in any form of communication. The charity should keep a record of the cancellation of a declaration, including the date of the donor's notification. 3.14.2 Subject to paragraph 3.14.3 below, cancellation of a declaration has effect only in relation to donations received by the charity on or after: * the date on which the donor notifies the charity of the cancellation, or * such later date as the donor may specify in the cancellation. The charity must not reclaim tax in respect of such donations. However, any donations received before the date of the donor's notification will still qualify as Gift Aid donations. 3.14.3 If a donor who has given the charity an oral declaration cancels it within the period of 30 days after being sent the written record, the cancellation will have retrospective effect, so that it will be as if the declaration had never been made. 3.15 Particular types of declaration Joint declarations by spouses etc. 3.15.1 It is possible for spouses and persons living together to make a joint declaration on the same form. The joint declaration must include the full names and address of both. Both parties will need to make clear to the charity from whom each donation originates, or how a joint donation is to be split for purposes of the charity's records. Likewise, the donors will need to record similar details for purposes of their own tax affairs. The charity will need to list each person and their part of the donation separately on the R68 (Gift Aid) schedule form accompanying the claim. Partnership declarations 3.15.2 In England, Wales and Northern Ireland a business partnership does not have legal personality. So, a donation by a partnership is treated as made by the underlying partners. One partner may make a Gift Aid declaration on behalf of all the partners, provided he or she has the power to do so under the terms of the partnership agreement or some other instrument given under seal. In that case it will be sufficient for the declaration to show the name and address of the partnership. Otherwise, it will be necessary for each partner to make their own Gift Aid declaration. They may do so on the same declaration form, provided it lists all their names and addresses. 3.15.3 In Scotland, a partnership has legal personality. So, in all cases, one of the partners may make a Gift Aid declaration on behalf of the partnership, showing the name and address of the partnership. 3.15.4 The partners should enter their share of the donation on their own Self-Assessment return. How the donation is apportioned between the partners is a matter for them to decide, but, unless there is evidence to the contrary, it will be assumed to be in accordance with their share of the partnership profits.
  • 53. Declarations linked to sponsored events 3.15.5 The money raised from a sponsored event does not belong to the individual who has been sponsored and is not his or hers to give as a Gift Aid payment. However, it is possible for the individual amount raised from each sponsor to count as a Gift Aid donation from that sponsor. 3.15.6 The person being sponsored may ask the sponsors to make a separate declaration to the charity for which he or she is raising the money - this is likely to be on a one-off donation type of declaration supplied to the participant by the charity. 3.15.7 Alternatively, it is possible for charities to design a sponsorship form that can also be used as a joint declaration form. The suggested format is for the declaration to be placed at the head of each sheet, with each sponsor being able to opt to have his or her sponsorship money paid to the charity as a Gift Aid donation by, for example, ticking a box. The recommended method is to have the following boxes below the declaration for each sponsor to complete: * Sponsor's full name * Home address, including post code * Amount pledged * Amount collected * Date collected * Tick box to have amount treated as a Gift Aid donation. The date when the sums collected were handed over to the charity should also be entered on the form. A copy of a model Gift Aid sponsored event form can be found at Appendix B2. 3.15.8 The details outlined in the first three bullets above would be collected from the sponsors by the participant prior to the event, with the other details being entered on the form when the money is collected. 3.15.9 The participant will need to ensure, if the money collected is banked in his/her own account before a cheque is sent to the charity, that the sum on the cheque matches the amount collected on the sponsorship forms so that the charity is provided with a clear audit trail. 3.15.10 The charity can use a declaration/sponsorship form that has been approved by HM Revenue & Customs – (HMRC) • Charities as a substitute for the R68 (New Gift Aid) schedule that accompanies the claim (on which, see Section 6.4). The original should be retained by the charity and a copy sent with the repayment claim. It is recommended that claims made for this type of donation be made on a separate R68 tax claim form from those relating to other types of donors. You should provide a summary of the items eligible for Gift Aid and calculate the tax claimed on that total. Alternatively, for large events, charities can use the modified procedure set out in paragraphs 6.6.9 - 6.6.14 of this guidance. 3.15.11 HM Revenue & Customs – (HMRC) • Charities is happy to advise charities on how to operate Gift Aid for sponsorship events, and to review draft sponsorship/declaration forms.
  • 54. 3.16 Deeds of Covenant - transitional arrangements 3.16.1 From 6 April 2000 there is no longer a separate tax relief for payments made by an individual (or a company) under a Deed of Covenant - in future all tax relief for such payments is under the Gift Aid scheme. As a transitional measure, charities do not have to get a Gift Aid declaration in respect of payments under a Deed of Covenant that is already in existence before 6 April 2000. The Deed of Covenant will stand in place of the Gift Aid declaration. However, any donations made outside the terms of the Deed, or after expiry of the Deed, must be covered by a separate Gift Aid declaration. 3.16.2 Payments made under a Deed of Covenant executed on or after 6 April 2000 must be covered by a Gift Aid declaration. Where a charity wishes to continue with the use of Deeds of Covenants for donors, these can also be used as declarations provided all the information required in the declaration is given on the Deed. 3.16.3 The abolition of a separate tax relief for payments made under a Deed of Covenant to a charity does not mean, of course, that such deeds will cease to exist. It does mean that they are no longer required so that a charity can reclaim tax on the donations. Some charities may decide to continue to obtain Deeds of Covenant from their supporters in order to secure a regular flow of income. If they do so, they will need to make sure they also obtain a Gift Aid declaration from the donor, or ensure the Deed contains the necessary elements required in such a declaration. Example Mrs Jones has a Deed of Covenant in force with her local church to pay £2 weekly. The Deed commenced on 1 January 2000, and will cease on 31 December 2003. On 1 September 2000 she increased her weekly donations to £3 per week. Mrs Jones will need to make a Gift Aid declaration in relation to the additional £1 a week she is giving, if she wants the amount to come within the scheme. Even if she does not, she will need to make a declaration after December 2003 if her original donations of £2 are to continue to be tax effective. Alternatively, if Mrs Jones is willing, the church may decide to cancel the covenant with effect from 6 April 2000 and replace it with an open Gift Aid declaration in relation to all donations made by her on or after 6 April 2000. Mrs Jones can make a Gift Aid declaration from 6 April 2000, even if the covenant remains in force, to cover the deed payments and any other donations she may make to the church. 3.16.4 From 6 April 2000 HM Revenue & Customs – (HMRC) • Charities will no longer give advice on the drafting of Deeds of Covenant for individuals (or companies). Deposit covenants 3.16.5 A loan or deposit covenant is an arrangement under which the covenantor pays to the charity a lump sum equal to all the payments which will fall due over the life of a Deed of Covenant. The lump sum is treated as a loan or a deposit and the payments under the Deed are treated as being paid from this fund as they fall due.
  • 55. 3.16.6 For Gift Aid purposes, however, payment will be deemed to have been made when the lump sum is made over to the charity, and tax relief for the charity and donor will be for the year in which this occurs. Charities will need to ensure, if they continue to seek deposit covenants, that any loans or deposits they receive from a supporter who has an open Gift Aid declaration in place are supported by a deed making over the amount to the charity over a period of time. Loans or deposits that are returnable should not feature in a Gift Aid claim. 3.16.7 As a transitional concession, however, payments due under a loan or deposit covenant on or after 6 April 2000 which were prepaid before 6 April 2000 will be treated as new Gift Aid donations paid on the due date. The amount due under the deed will be treated as paid on the date it is converted from a loan or deposit to a payment. This will ensure that tax relief will not be lost, as would otherwise be the case, on loan or deposit covenants taken out prior to 6 April 2000. 3.16.8 Additionally, in the case of deposit covenants in existence at 5 April 2000, the outstanding loan can be converted into a Gift Aid payment, providing there is evidence that the charity are content to release the donor from the covenant and the donor wishes the deposit to be treated as a donation. SECTION C: GIFT AID FOR COMPANIES FROM APRIL 2000 3.17 Introduction 3.17.1 From 1 April 2000 Gift Aid donations made by companies to charities must be paid without deduction of income tax. No declarations are required. There are also special rules for companies owned by charities, allowing them to set off the donation in an earlier accounting period than the one in which the donation was made. 3.18 Commencement date 3.18.1 In the case of donations by companies, the new Gift Aid measures will apply to all donations - including covenanted payments - made on or after 1 April 2000, (even if paid under a Deed of Covenant executed before that date). Example A Deed of Covenant executed on 1 April 1999 provides for a company to make covenanted payments of "such an amount as after deduction of tax equals £1,000". While the basic rate is 22 per cent, the company is required to make gross payments of £1,282 (£1,282 less tax at 22 per cent = £1,000). From 1 April 2000, the company will simply pay the gross amount (£1282) and claim tax relief for this amount when calculating its profits for corporation tax. 3.19 Abolition of the £250 minimum limit 3.19.1 From 1 April 2000, the £250 minimum limit for Gift Aid donations by close companies was abolished.
  • 56. 3.20 Non-resident companies 3.20.1 From 1 April 2000, non-resident companies within the UK corporation tax regime can make Gift Aid donations. However, non-resident companies within the UK income tax regime cannot make Gift Aid donations. 3.21 Deduction of tax 3.21.1 From 1 April 2000 companies, including companies owned by a charity and unincorporated associations, such as clubs and societies, must no longer deduct tax from their Gift Aid donations. 3.21.2 The charity cannot reclaim tax on donations it receives from a company on or after 1 April 2000. There is no space on the claim form R68 (2000) for a claim to tax repayment on company donations. If a company incorrectly deducts tax from its donation, the company should be told about the new rule and asked to pay to the charity the sum it has incorrectly deducted. The change to gross giving for companies is noted on the CT61 (Z) returns issued quarterly to companies. 3.22 Declarations 3.22.1 From 1 April 2000 the company making the Gift Aid donation no longer completes a certificate (R240 (SD)) or makes a declaration. 3.23 Records 3.23.1 As far as the charity is concerned, it need do no more than keep the necessary accounting records normally required to record donations. The company should retain any correspondence with the charity in relation to the donation (a `thank you' letter, for example), as evidence of making the donation. 3.24 Carry-back to a previous accounting period Introduction 3.24.1 Charities often set up wholly owned companies to carry out activities that might result in an income tax or corporation tax liability if carried out by the charities themselves. This is because some activities fall outside the tax exemptions afforded to charities in the Taxes Acts. These companies often enter into a profit-shedding Deed of Covenant with the parent charity, or Gift Aid arrangements, under which they pay to the charity a sum equivalent to the profits assessable to corporation tax. Some deeds may provide for a percentage of the taxable profit to be paid, or even a fixed amount. 3.24.2 Under normal corporation tax rules, companies can only claim a deduction for a charge (such as a Gift Aid donation) in their tax computations in the accounting period in which the charge was paid. If a company wished to pay over to charity an amount equal to its corporation tax profit, it would be obliged to determine that profit by the end of the accounting period. This would be difficult to do because the accounts of the company would not have been drawn up at that stage.
  • 57. 3.24.3 Under the provisions introduced by Finance Act 2000, payments made by a company under a profit-shedding deed to a charity will fall within the Gift Aid Scheme if made on or after 1 April 2000. They are paid without deduction of tax and without the need for a declaration, as detailed above in sections 3.21 and 3.22. 3.24.5 Unlike other types of companies, charity-owned companies have nine months from the end of the accounting period in which to determine the amount they wish to give or are obliged to pay to the charity under a profit-shedding deed. They can then claim the deduction against the corporation tax profits of the accounting period to which the payment relates. Commencement 3.24.6 The new Gift Aid provisions in relation to charity-owned companies come into force for donations made on or after 1 April 2000, even if the donation relates to an accounting period which ended on or before 31 March 2000. Example The shares in Charity A Enterprises Ltd are all owned by Charity A. The company's accounting periods end on the 31 December. In the year ended 31 December 1999 it made a corporation tax profit. Provided it made a Gift Aid donation to its parent charity on or after 1 April 2000, but not after 30 September 2000, the donation could be deducted as a charge in the company's corporation tax computations for the accounting period ended 31 December 1999. Estimated donations 3.24.7 With the removal of the requirement for companies to deduct tax from Gift Aid donations, HM Revenue & Customs – (HMRC) • Charities no longer repay any tax or require over-repayments from charities to be adjusted. For Gift Aid purposes, HM Revenue & Customs – (HMRC) • Charities will simply expect to see an amount deducted in the charity-owned company's accounts and a matching entry in the charity's accounts. Where a charity-owned company makes a donation to its parent charity, to extinguish any corporation tax liability, and this proves to be excessive and is partly repaid by the charity, HM Revenue & Customs – (HMRC) • Charities will expect to see some sort of evidence that the intention was to pay over the annual profits (correspondence, Board minutes or profit-shedding deed), and that any money paid over was clearly provisional or loaned until the profits were finalised. If there were a need for the charity to repay some of the money, again HM Revenue & Customs – (HMRC) • Charities would look for evidence of the purpose of the payment by the charity to the company. In cases where the charity-owned company makes Gift Aid donations less than the full amount of the corporation tax profit within the nine-month period, no further relief can be given in the company's earlier accounting period for any remaining profit subsequently paid over in Gift Aid donations to the charity. Charity-owned companies 3.24.8 The nine-month carry-back facility only applies to companies that are wholly owned by a charity. In the case of a company limited by share capital, this means that all the ordinary share capital must be owned by one or more charities. The share capital can be owned directly or indirectly (through an intermediate company, for example).
  • 58. 3.24.9 However, charity-owned companies are not confined to ones limited by share capital. Some companies controlled by charities are limited by guarantee. This type of company is also included in the nine-month carry-back provisions if every person who is beneficially entitled to * participate in the company's profits, or * share in the net assets at a winding- up is a charity or a company wholly owned by a charity. The Memorandum and Articles of a company limited by guarantee will normally indicate if the company meets the conditions outlined above. SECTION D: BENEFITS RECEIVED BY DONORS 3.25 Introduction 3.25.1 Charities may wish to give a token of appreciation by way of a thank you to their donors for their donations. Modest benefits received in consequence of making a donation will not stop the donation from qualifying as a Gift Aid donation, provided their value does not exceed certain limits. If a charity wishes to provide benefits to its donors - for example, as part of a membership scheme - it should consider whether the benefits it intends to provide fall within the limits in the donor benefit rules given below. If the benefits exceed the limits, then the donation cannot qualify under the Gift Aid Scheme. 3.25.2 In order to decide whether a donation can qualify under the Gift Aid Scheme, the charity needs to determine: * whether the donor, or a person connected with the donor, receives any benefits in consequence of making the donation, other than of the type detailed in Section 3.27 below, which can be ignored. • if benefits are received, whether their value exceeds the limits in the donor benefit rules. 3.25.3 A person is connected with the donor if that person is * the wife or husband * a relative (brother, sister, ancestor (e.g. mother) or lineal descendant (e.g. grandson) * the wife or husband of a relative * a company under the control of the donor, or under control of connected persons. 3.26 What is a benefit? 3.26.1 A benefit is: * any item or service * provided by the charity or a third party * to the donor or a person connected with the donor * in consequence of making of the donation.
  • 59. 3.26.2 If goods or services are provided for the donor by an unconnected third party entirely unsolicited by either the charity or the donor, such goods or services will not be considered to be benefits for the purposes of these rules. 3.27 What is not a benefit? Acknowledgements 3.27.1 A mere acknowledgement of a donor's generosity in a charity's literature (e.g. a theatre programme) or on a plaque etc will not amount to a benefit, provided the acknowledgement does not take the form of an advertisement for the donor's business (as might be evidenced by the size and prominence given to the acknowledgement). The wording should be confined to thanks for the support the donor has given, together with the donor's name, and/or their logo. Right of admission to view heritage property or wildlife 3.27.2 A free or reduced-price right of admission to property is disregarded if: * it is to view property, the preservation of which is the charity's sole or main aim, or * it is to view wildlife, the conservation of which is the charity's sole or main aim, and * it is restricted to the donor and members of his or her family, and * it is available to any member of the public who makes a similar donation. 3.27.3 This relaxation of the donor benefit rules does not apply if the benefit extends beyond a right of admission to view property or wildlife (e.g. a right of admission to a heritage property to attend a concert). Depending on the objects of the charity, however, the relaxation may extend to the viewing of property or wildlife that is not directly under the control of the charity (to view a heritage property belonging to another similar charity by a reciprocal agreement, for example). 3.27.4 The relaxation does not apply if the benefit extends beyond the donor and members of his or her family. 3.27.5 The HM Revenue & Customs – (HMRC) • Charities recognises, however, that, in practice, charities: * will often want to lay down rules for the maximum number of people that a donor may bring into the charity's premises, and * cannot be expected to check the identity and family relationship of people who seek admission to their premises. The HM Revenue & Customs – (HMRC) • Charities will therefore accept that rules that are intended to restrict the right of admission to family groups - such as a right of admission for the donor and up to two other adults and six children -satisfies the "members of the family" test. 3.28 The donor benefit rules 3.28.1 The donor benefit rules contain two limits for the value of the benefits that a donor, or a person connected with the donor, may receive in consequence of making a donation. If the value of
  • 60. the benefits received exceeds either of these limits, the donation will not qualify as a Gift Aid donation. A donation will not qualify if: * the value of the benefits exceeds the limits in the table at paragraph 3.29.1 (the relevant value test), or * the value of the benefits plus the value of any benefits received in consequence of any Gift Aid donations made by the same donor to the same charity earlier in the same tax year exceeds £250 (the aggregate value test). 3.29 The relevant value test 3.29.1 The limits for the relevant value test are: Amount of donation Value of benefits £0-100 25% of the donation £101-1,000 £25 £1001+ 2.5% of the donation These limits apply separately to each donation. 3.29.2 Special rules apply to "annualise" the amount of certain donations and the value of certain benefits for the purposes of applying the limits. Broadly, in the case of subscriptions under a membership scheme, the limits normally apply by reference to the amount of the annual membership subscription and the value of the annual membership benefits. This way: * a charity can tell whether the benefits in its membership scheme will exceed the limit simply by looking at the annual membership subscription and the annual membership benefits * the result will be the same whether the donor pays the subscription in a single payment, or half- yearly, or quarterly, or monthly. When these principles are borne in mind, the calculations for the relevant value test can be seen in context. 3.29.3 Annualising applies where a benefit: * consists of the right to receive benefits at intervals over a period of less than twelve months, or * relates to a period of less than twelve months, or * is one of a series of benefits received periodically in consequence of making a series of donations at intervals of less than twelve months, or * is a one-off benefit received in consequence of making a donation that is one of a series of donations made at intervals of less than twelve months. 3.29.4 In each of the first three categories, the amount of the donation and the value of the benefit are annualised, so that the limits in the table at paragraph 3.29.1 apply by reference to the annual amount and the annual value respectively. In the final category, the amount of the donation, but not the value of the benefit, is annualised, so that the limits in the table at paragraph 3.29.1 apply by reference to the annual amount of the donation and the actual value of the benefit.
  • 61. 3.29.5 Annualising is done by: * multiplying the amount of the donation or the value of the benefit by 365, and * dividing the result by * the number of days in the period of less than 12 months, or * the average number of days in the intervals of less than 12 months. In practice, where the period or the intervals are measured in calendar months, annualising can be done by reference to calendar months, rather than days. 3.29.6 The following examples illustrate how the relevant value test works: Example 1 Ms Smith makes four unconnected donations to a wildlife charity as follows: Date Amount Benefits 6 May 2000 £30 nil 21 June 2000 £10 nil 18 August 2000 £25 nil 5 February 2001 £80 fashion book worth £30 As no benefits are received in consequence of making any of the first three donations, they all pass the relevant value test. The book received in consequence of making the fourth donation does not fall into any of the categories at paragraph 3.29.3, so annualising does not apply. As the value of the book (£30) exceeds the limit of £20 (i.e. 25% of the £80 donation) the fourth donation fails the relevant value test and so cannot qualify as a Gift Aid donation. Example 2 Mr Patel makes a single payment of £240 to a medical charity, in consequence of which he receives the right to receive 12 free monthly computer magazines worth £2.50 each. The benefit of the right to receive the magazines is therefore worth £30 (£2.50 x 12). The right to receive the magazines does not fall into any of the categories at paragraph 3.29.3, so annualising does not apply. As the value of the right to receive the magazines (£30) exceeds the limit of £25 (i.e. the limit for donations of £100 - £1,000) the donation fails the relevant value test and so cannot qualify as a Gift Aid donation. Example 3 Mrs O'Connor makes a single payment of £120 to the same medical charity, in consequence of which she receives the right to receive six free monthly computer magazines worth £2.50 each. The benefit of the right to receive the magazines is therefore worth £15 (£2.50 x 6).
  • 62. The right to receive the magazines falls into the first category at paragraph 3.29.3 (a right to receive benefits at intervals over a period of less than twelve months) so annualising applies. The limits in the table at paragraph 3.29.1 therefore apply by reference to the annual amount of the donation £240 (£120 x 12 ÷ 6) and the annual value of the right to receive the magazines £30 (£15 x 12 ÷ 6). As the annual value of the right to receive the magazines exceeds the limit of £25 (i.e. the limit for donations of £100 - £1,000) the donation fails the relevant value test and so cannot qualify as a Gift Aid donation. Example 4 Mr Green makes a single payment of £120 to a performing arts charity, in consequence of which he receives the right to a five per cent discount on theatre tickets purchased in the next six months. The benefit of the right to the discount is worth, say, £15. The right to the discount falls into the second category at paragraph 3.29.3 (a benefit relating to a period of less than 12 months) so annualising applies. The limits in the table at paragraph 3.29.1 therefore apply by reference to the annual amount of the donation £240 (£120 x 12 ÷ 6) and the annual value of the right to the discount £30 (£15 x 12 ÷ 6). As the annual value of the right to the discount exceeds the limit of £25 (i.e. the limit for donations of £100 - £1,000) the donation fails the relevant value test and so cannot qualify as a Gift Aid donation. Example 5 Miss Tomkins makes monthly payments of £20 to a medical charity under an open-ended standing order, in consequence of which she receives a free monthly computer magazine worth £2.50. The right to receive the magazines falls into the third category at paragraph 3.29.3 (a benefit which is one of a series of benefits received in consequence of making a series of donations at intervals of less than twelve months) so annualising applies. The limits in the table at paragraph 3.29.1 therefore apply by reference to the annual amount of the donation £240 (£20 x 12 ÷ 1) and the annual value of the right to receive the magazines £30 (£2.20 x 12 ÷ 1). As the annual value of the right to receive the magazines exceeds the limit of £25 (i.e. the limit for donations of £100 - £1,000) the donation fails the relevant value test and so cannot qualify as a Gift Aid donation. Example 6 Mr Wong makes monthly payments of £2 to a charity under an open-ended standing order. In consequence of starting the payments he receives a one-off benefit of a free pen worth £5. The pen falls into the fourth category at paragraph 3.29.3 (a one-off benefit received in consequence of making a donation which is one of a series of donations made at intervals of less than twelve months) so annualising applies to the donation, but not the benefit. The limits in the table at paragraph 3.29.1 therefore apply by reference to the annual amount of the donation £24 (£2 x 12 ÷ 1) and the actual value of the pen £5. As the value of the pen does not exceed the limit of £6 (i.e. 25% of the £24 annual donation) the donation passes the relevant value test and so can qualify as a Gift Aid donation.
  • 63. 3.30 The aggregate value test 3.30.1 In addition to satisfying the relevant value test, the value of the benefits received in consequence of a donation must also satisfy the aggregate value test if the donation is to qualify as a Gift Aid donation. In other words: * the value of the benefits received in consequence of making the donation * plus the value of any benefits received in consequence of any Gift Aid donations by the same donor to the same charity earlier in the same tax year * must not exceed £250. The value of benefits is not annualised for the purposes of the aggregate value test. It is the actual value, as opposed to an annual value, of the benefits that counts. 3.30.2 For example, suppose in example 1 in paragraph 3.29.6 above Ms Smith makes two further donations to the charity in the tax year 2000-2001 as follows: Date Amount Benefits 11 March 2001 £9,600 weekend break worth £225 4 April 2001 £4,000 dinner for two worth £90 As the value of the weekend break does not exceed the limit of £240 (i.e. 2.5% of the £9,600 donation) the fifth donation passes the relevant value test. Furthermore, it passes the aggregate value test (it is not aggregated with the benefit worth £30 received in consequence of the fourth donation, because that donation did not qualify as a Gift Aid donation). As the value of the dinner for two does not exceed the limit of £100 (i.e. 2.5% of the £4,000 donation) the sixth donation passes the relevant value test. However, it fails the aggregate value test, because the value of the dinner for two plus the value of the weekend break exceeds £250. Therefore, the sixth donation cannot qualify as a Gift Aid donation. The other five donations are unaffected. 3.31 Valuing donor benefits 3.31.1 The valuation of donor benefits can be difficult. The starting point should be to look at the value of the benefits made available. Where the item or service, or a comparable item or service, is sold to the public (whether by the charity or someone else) on arm's length terms (for example, a ticket to attend a performance by a charitable opera society), the value of the benefit will generally be the sale price to the public. Where the value of the benefit is less immediately obvious, the charity will need to determine how much someone dealing with it at arm's length would be prepared to pay for the benefit. Evidence might be obtained from similar transactions in the commercial sector. 3.31.2 The value to be arrived at is the value to the recipient. Consideration in the form of a third party discount or benefit may cost the charity nothing to provide but will still be of value to the recipient.
  • 64. 3.31.3 Where a benefit takes the form of attendance at an event that is not open to the public (so that there is no ticket price) the benefit should be valued by reference to the cost to the charity of staging the event and the number of people in attendance. 3.31.4 Where a benefit is given in return for a life membership subscription the value of all benefits that will be received over the lifetime of the membership must be estimated when valuing the benefit. For practical purposes the benefits received over the first 10 years of membership will be taken as the benefits received over the life of the member when deciding whether the benefit limits have been breached. 3.31.5 Where the benefit takes the form of, for example, a discount on purchases from a museum shop, the valuation needs to take account of factors such as the take-up of the discount by the average donor. 3.32 Provision of literature 3.32.1 Where a charity sends literature to its donors, the HM Revenue & Customs – (HMRC) • Charities will accept that the value is nil provided the material is produced for the purpose of describing the work of the charity. The material must be relevant to and distributed in furtherance of the objects of the charity. The fact that the literature has a cover price and is also is on sale to members of the public is not relevant. This means that literature like newsletters, bulletins, annual reports, journals, members' handbooks and programmes of events will generally carry no value for the purposes of the donor benefit rules. 3.33 Charity auctions 3.33.1 When an item is purchased at auction, the sale price can normally be taken as the value of the item. However, the HM Revenue & Customs – (HMRC) • Charities recognises that when a person purchases a lot at a charity auction they may intentionally pay more than it is worth in order to support the charity. If it can be shown that the market value of a lot purchased at a charity auction is less than the sale price paid for the lot, the lower figure can be taken as the value of the lot. This will only apply where an item has a clear and recognisable value. Where the value of an item has been enhanced, for example because it has been owned by a celebrity, the market value will not be the original price of the item but the amount it fetches in the auction. Example 1 A travel agent gives a weekend break that normally retails for £225 as a lot for a charity auction. Ms Smith purchases the weekend break with a bid of £9,600. As the value of the weekend break does not exceed the limit of £240 (i.e. 2.5% of £9,600) the payment of £9,600 passes the relevant value test and so can qualify as a Gift Aid donation. Example 2 A famous pop music star gives a pair of her shoes for a charity auction. These shoes normally retail for £150. Mr Webster purchases the shoes with a bid of £10,000. Although the shoes retail for £150, because a celebrity has owned them, their value has been considerably enhanced. The market value for these shoes will be £10,000, and the Gift Aid Scheme cannot be used.
  • 65. 3.33.2 Even if a purchase at a charity auction fails the relevant value test, it might still be possible to pay by means of a split purchase (on which, see section 3.34 below). 3.34 Split payments 3.34.1 Where the value of benefits would exceed the limits in the donor benefit rules, the donor may specify that part of his or her payment is to be treated as payment for the benefits and part is to be treated as a donation. This treatment can only apply where the item has a readily ascertainable value and the excess has a clear donative purpose. Provided the donor specifies this before, or at the time of making the donation, the part of the payment that is specified as a donation may qualify as a Gift Aid donation, provided it satisfies all the conditions for the tax relief. The charity and donor should keep evidence of how the payment was to be split - a copy of a dated letter accompanying the payment, for example. Alternatively, separate payments could be made. 3.35 Donations to support missionaries and other full-time workers for a charitable cause 3.35.1 Gift Aid only applies to unfettered gifts to a charity for its charitable purposes. Donors earmarking money for the support of relatives are, in principle, no different from those generally making payments to support other relatives, for whatever reason. These are not tax relieved. Once a Gift Aid payment has been received it is for the charity to show that its income has been applied for charitable purposes only. Gifts given on condition, rather than hope or expectation, that they will be used to feed and clothe a relative are likely to breach the benefits rules for Gift Aid. 3.35.2 The HM Revenue & Customs – (HMRC) • Charities takes the view that donations to cover the costs incurred by a charity such as a missionary society in supporting the relative of the donor, as a missionary, can qualify under the Gift Aid scheme provided the missionary society is not merely channelling a donation to the donor's relative. Where, for example, a missionary society says to its workers "It costs us £10,000 a year to support you while you carry out your charitable work. We look to you to raise at least this amount of funds for the society through donations from family, etc" the donations may qualify under the Gift Aid scheme. Where, on the other hand, a missionary society says to its missionaries "It is up to you to support yourself while you carry out your charitable work, with the help of your family, etc. If your family wish to send you money they can do so via the Society" payments will not qualify under the Gift Aid scheme. 3.35.3 This situation equally applies where a church, for example, supports the charitable work of a Christian worker. The Christian worker is unlikely to be in the employment of the Church and so the onus in demonstrating that payments made to particular individuals are unfettered and only applied for charitable purposes falls to the trustees of the church. SECTION E: KEEPING GIFT AID RECORDS 3.36 Introduction 3.36.1 In order to operate the Gift Aid scheme, charities need to keep records to show how much has been received from each donor who has made a declaration. Charities must keep sufficient records to show that their tax reclaims are accurate. In other words, they must keep records that enable them to show:
  • 66. * an audit trail linking each donation to an identifiable donor who has given a valid Gift Aid declaration, and * that all the other conditions for the tax relief are satisfied (provision of benefits, for example). 3.36.2 If a charity does not keep adequate records it may be required to pay back to the HM Revenue & Customs – (HMRC) • Charities tax reclaimed, with interest. It may also be liable to a penalty under the Self-Assessment rules. 3.37 Records to be maintained 3.37.1 The form of records to be kept is not prescribed in the legislation and has not changed significantly as a result of the revised Gift Aid measures. In practice, it will depend on the size of the charity, the number of donors and the kind of systems used. 3.37.2 In the event that HM Revenue & Customs – (HMRC) • Charities audits the tax reclaim, the auditor will usually ask to see, as appropriate, in respect of a donation: * any written Gift Aid declaration * in the case of an oral Gift Aid declaration, a copy of the written record sent to the donor * any correspondence to or from the donor which relates to the donation, including * any notification of a change of name or change of address * any notification of the cancellation of the Gift Aid declaration * the charity's bank statements * the charity's bank paying-in book stubs showing details of cheques and cash banked * statements received from credit card companies showing details of credit card donations * the charity's cashbook recording the receipt of cash donations * if the charity uses envelopes to collect cash donations, a sample of the envelopes and a record of the sums enclosed • any other records the charity keeps relating to the donation. 3.38 Means of keeping records 3.38.1 The charity does not have to keep records on paper. They may be held on the hard drive of a computer, floppy disc or CD-ROM, or stored on microfiche. If records are kept on computer, it is advisable to make regular back-ups and store these in a different location to the computer. Further details on the procedures to follow when transferring original records onto microfiche or an electronic medium can be found in section 7.4 in Chapter 7. 3.39 How long should records be retained? 3.39.1 Please see section 7.3 in Chapter 7 – (available from 3.40 Using envelopes to collect cash donations
  • 67. 3.40.1 Charities may choose to collect cash donations in envelopes, such as church stewardship envelopes, so that they can show an audit trail linking the donation to the donor. For one-off donations, charities may choose to pre-print the Gift Aid declaration on the envelope for completion by the donor. If the donor is a regular supporter, the charity may already hold his or her Gift Aid declaration, in which case the envelope need simply contain either: * the donor's name, or * some other unique identifier, such as a reference number which can be cross-referenced to a donor register. 3.40.2 Where a unique identifier is used, such as a reference number, ideally this should be unique to the donor. In practice, where envelopes containing the same unique identifier are used by the donor and his or her spouse and minor children, it can assumed that all the donations are from the donor, unless there is evidence to the contrary. 3.40.3 When the envelope is opened and the contents are counted, an official of the charity should record the sum that it contained both: * on the envelope, and * in a donor record. 3.40.4 Charities should retain for the period set out in section 7.3 in Chapter 7: * all envelopes on which a Gift Aid declaration is printed * a sample of other envelopes (normally for one month of the year) * the donor record. 3.41 Joint donations 3.41.1 If a charity receives a donation drawn on a joint bank account, and it has not been given a Gift Aid declaration by all of the account-holders, it will need to determine whether the donation is from a donor who has given a Gift Aid declaration. It can normally be assumed that the donation is from the account-holder who signs the cheque, debit card slip or direct debit mandate or standing order mandate. In the case of a donation received over the phone or through the Internet, it can normally be assumed that the donation is from the account-holder who authorises the transaction. 3.41.2 Similarly, if a credit card donation is received drawn on an account in respect of which there is more than one authorised signatory, it can normally be assumed that the donation is from the authorised signatory who signs the credit card slip. In the case of a donation received over the phone or through the Internet, it can normally be assumed that the donation is from the person who authorises the transaction. 3.41.3 If there is any doubt whether the donation is from the person who signs the cheque, etc. or authorises the transaction, the charity should ask them to confirm whether the donation is from them.
  • 68. SECTION F: PARTICULAR SITUATIONS 3.42 Introduction HM Revenue & Customs – (HMRC) • Charities are occasionally approached on Gift Aid issues where possibly a number of charities might be affected by the decision we arrive at. The purpose of this section is to alert charities to the HM Revenue & Customs – (HMRC) • Charities view of particular situations involving the use or proposed use of the Gift Aid scheme. 3.43 Educational school trips 3.43.1 HM Revenue & Customs – (HMRC) • Charities received approaches from schools and PTA's enquiring if Gift Aid could be used in respect of voluntary contributions toward educational school trips. 3.43.2 The following text has been passed to the Department of Education and is to be included in advice issued by the department to schools. In schools, other than independent schools, the education provided wholly or mainly during school hours is free. This means that head teachers may not impose a charge on parents for any visit that is undertaken as part of the National Curriculum and occurs during school hours. The head teacher may, however, ask for a voluntary contribution. Parents must be made aware that the contribution is not compulsory, and the children of parents who do not contribute may not be discriminated against. It is permissible for the school to ask parents to contribute more than the minimum amount in order to subsidise those pupils whose parents have not contributed. However, if there are not enough voluntary contributions and the shortfall cannot be made up, the visit may have to be cancelled. Gift Aid Voluntary parental contributions to charitable schools or charities associated with LEA schools to assist schools to send pupils on educational school trips in school time may be eligible for tax relief under the Gift Aid scheme, provided the usual requirements of the scheme are satisfied and in particular: * Parental contributions are made on the basis that they are not refundable (and are not in any event refunded) if the trip does not go ahead or if their child does not go on the trip * Any benefit arising from the school trip does not exceed the maximum level of permissible benefit for the donation. For a donation of £0 - £100 the value of the benefits must not exceed 25% of the donation. For a donation of £101 - £1000 the value of the benefits must not exceed £25. Benefits include travel costs, trip insurance, cost of entry and associated educational material, cost of food and drink supplied and any other costs associated with the trip (costs averaged per pupil if appropriate).
  • 69. In general, however, it is likely that the benefits associated with a school trip contribution will exceed the maximum level of permissible benefits and so the donation will not come within the Gift Aid scheme. Example 1 The cost of an educational trip to a local museum amounts to £8 (transport £5 entry £2 and brochure £1). The school asks for a voluntary contribution of £10. The payment of £10 cannot be made under the Gift aid scheme as the benefit of £8 exceeds the 25% limit (80%). However, provided the requested contribution is not less than the benefits, any payment in excess of the requested contribution can be Gift Aided. Example 2 The position is the same as in example 1 but a parent makes a voluntary contribution of £15 instead of the requested £10. The additional £5 can be made as a Gift Aid payment. HM Revenue & Customs – (HMRC) • Charities Website General information about the tax reliefs and exemptions available to charities is available on the HM Revenue & Customs – (HMRC) • Charities website: by clicking on: · `Charities and charitable giving' (on left hand side of page); then · `Guidance notes for charities'. 3.44 Church collections 3.44.1 We are frequently asked if collections made for particular charities by churches can fall within the churches Gift Aid scheme. This will depend on the particular circumstances. 3.44.2 If the church has not exercised any discretion in collecting the donations and the donations are merely given to the church to pass on to a particular charity then: * the church has no entitlement to the donations (and they do not form part of the church's income); * the church is merely acting as a conduit and it is the charity that is the donee; and * the charity must claim any Gift Aid tax relief (subject to the normal requirements, Gift Aid declaration and audit trail). 3.44.3 However, if the church exercises its discretion and decides to open a fund for donations to a particular charity, then: * the fund is a designated fund of the church; * the church is the donee and the donations form part of the church's income; and * the church is able to claim and Gift Aid tax relief (subject to the normal requirements).
  • 70. 3.44.4 We are also frequently asked if the tax reclaimed as well as the net Gift Aid donation should be passed to the charity by the church. It is our view that a church would be legally obliged to pass the tax associated with a Gift Aid payment to the charity. The donor would have made his donation in expectation that both the Gift Aid donation and the associated Gift Aid tax would go to the charity for which the collection was made. 3.45 Educational Trusts 3.45.1 The HM Revenue & Customs – (HMRC) • Charities has been approached by a number of educational trusts for clarification of position of parents and persons connected to them making Gift Aid payments to such trusts. 3.45.2 Invariably the Trust is established to provide education for children as an alternative to State education. Whilst parents may pay for text books, exercise books, exam fees and consumable materials, they are not required to pay any fees to cover the costs of tuition and other overheads. 3.45.3 The HM Revenue & Customs – (HMRC) • Charities view of payments made by parents and persons connected to them, to such trusts, under the Gift Aid scheme is that the benefit the donor or someone connected to them receives will generally be in excess of the benefit limits. 3.45.4 The HM Revenue & Customs – (HMRC) • Charities view is based on the fact that there is a cost in providing education for the child and this cost is met in consequence of the Gift Aid payments being made. This includes the cost of tuition, heating and lighting of premises and other administrative costs, which would be taken into account by a private school in setting fees. 3.45.5 In situations where the trust has a genuine fee structure in place i.e. fees are charged in respect of all students and the fees are set at such a level that enables the trust to operate without needing additional support, the HM Revenue & Customs – (HMRC) • Charities would accept that the benefit of receiving education arises from payment of the fees. Consequently, the receipt of education would not be received as a consequence of making donations over and above the fees and so those donations could qualify for Gift Aid. 3.45.6 Where there is no fee structure or only nominal fees are charged, insufficient to enable the trust to operate without additional donations we do not accept that the additional donations give rise to no benefit. In considering whether the level of fees was sufficient to cover operating costs we accept that trusts should be allowed to take account of reliable, ongoing income sources such as endowments, but not one-off or periodic donations where no binding commitment exists. Claiming Tax Back How charities get started with Gift Aid * Who can claim? * How do we claim? * Further information Who can claim?
  • 71. To claim repayment of tax under the Gift Aid scheme you must be a charity. In England and Wales, you must be registered as a charity with the Charity Commission, unless you are excepted from registration. Information about registering as a charity is available on the Charity Commission website at In Scotland or Northern Ireland, the HM Revenue & Customs – (HMRC) • Charities must accept you as a charity. You should contact our Edinburgh office for Scottish charities or our Bootle office for Northern Ireland charities. The addresses and telephone numbers are shown below. How do we claim? New charities who want to claim exemption from tax and claim repayment of tax under Gift Aid should write to HM Revenue & Customs – (HMRC) • Charities (Charities), Charity Title Section at the address below stating: * The full address, including postcode, to which we should send all communications; and * If registered, your Charity Commission registration number * If not registered, a copy of your governing document and details of activities, along with copies of any literature that explains your work. * the date on which the accounting period of the charity ends We will confirm your status as a charity and issue a reference number that you must state on all future correspondence with us. We will also send you repayment claim forms R68 (2000) and R68 (New Gift Aid) and a form asking for the name and signature of authorised signatory who will sign your repayment claims. A charity can reclaim tax on any donations made by individuals, whether large or small, regular or one-off - provided the conditions for the Gift Aid tax relief are satisfied. In particular, the charity will have to be able to show an audit trail from the donation to a donor who has given a Gift Aid declaration that covers that donation. A model Gift Aid declaration is available on the HM Revenue & Customs – (HMRC) • Charities website. You will need to list on form R68 (New Gift Aid) the details of the donations for which you are claiming. You then calculate the tax you are reclaiming on the total amount of donations. The formula is on the bottom of the second page. You should send your completed claim forms R68 (2000) and R68 (New Gift Aid) to the appropriate Bootle or Edinburgh office. The repayment claim form R68 (2000) must be signed by the authorised signatory. Further information The guidance for charities on our website at contains more detailed information on applying for charitable status (chapter 2) and Gift Aid (chapter
  • 72. 3). You can also get more information by calling the HM Revenue & Customs – (HMRC) • Charities – (Charities). Claiming Tax Back - Frequently asked questions How often can we claim? You can claim as often as you like, so long as the income on which the tax has been suffered has been received by the charity. It would help us if you claimed a minimum amount of £100 each time as this enables HM Revenue & Customs – (HMRC) • Charities to process claims faster. How long will it take to get our money? We aim to repay all claims within 10 working days. When a charity claims repayment for the first time the process can take a little longer, as we need to ensure that all appropriate details about the charity and its authorised official are held. How much do we get back? This will depend upon the amount of tax that has been deducted from the income on which you are claiming repayment. The most common claim is in respect of Gift Aid. Here for every £1 given by individual donors the charity will receive an extra 28p (whilst the basic rate of tax is 22%). Can our membership subscriptions be Gift Aided? Yes, subject to the requirements of the Gift Aid scheme being met. The donor benefit rules may prevent subscriptions being paid under Gift Aid if the value of benefits provided to members exceeds certain limits. Can you give me a Gift Aid declaration? Yes, we provide a model declaration. Can we design our own declaration? Yes, but it must contain the name of the charity, the donor's name and address, a description of the donations to which the declaration relates, a declaration that the donations are to be treated as Gift Aid donations and a note explaining the requirement that the donor must pay an amount of income tax and/or capital gains tax equal to the tax deducted from his or her donations. Further information can be found at paragraph 3.11.2 of our guidance notes. Can companies make donations through Gift Aid? Yes, but as Gift Aid donations by companies are not paid under deduction of tax there is no tax to be reclaimed by the charity. The company making the Gift Aid donation gets relief against its corporation tax profits for the amount paid to the charity.
  • 73. How do we claim for Deeds of Covenant? Tax relief for payments under deed of covenant was replaced by Gift Aid on 6 April 2000. If the charity is still receiving covenanted payments under a deed that was in existence at 6 April 2000, the payments are simply claimed as payments under the Gift Aid scheme. Further information about the transitional arrangements is in our guidance notes at paragraph 3.16. Can we claim for several years? Yes, but use a separate schedule for each type of income for each tax year. The combined total can be put on the main claim form. Can we claim for earlier years? Yes, but there are different rules depending on whether the charity is a trust or a company for tax purposes. © HM Revenue & Customs – (HMRC) • Charities – (Charities) About the Author: Background Criteria: Proven into youth exchange hostel • Inaugurated trust background and record of over body as charity & limited company • achievement • A personality Founded/composed constitution for many that is tenacious, positive, groups. determined and very professional • Particularly Senior Co-Ordinator - Parish of East Ham • successful in opening and Night Shelter [Turnaround - Newham Night developing new opportunities • Shelter) - 1998 - 2003 • Fundraising & Actively involved in voluntary sector for over Development Officer - London Borough of 34 years • Served on committee/executives as Newham Swimming Club 1985 - 2000 • Chairperson or Secretary of over 30 such Fundraising & Development Officer – B&D groups over a decade • Successful re- CVS 2002 - 2003 • Vice-Chair - Barking Abbey developments of church premises, with Comprehensive School PTA • (Fete introducing one of these as part of the official Chairperson/Co-Ordinator: 1993-94), Friends' opening to HM The Queen • of Barking Church of England School - PTA • Studied/organised International Youth (Vice–Chairman: 1978–79 & Chairman: 1979– Exchange Visits • Personal sponsorship by 85) / 1985/87 Executive Officer Newham The British Council • Organised/Co-Ordinated Youth Leader's Association • (Chairman: successful public outdoor events designed to 1983–85 & Founder Member/Director), provide awareness + public display / exhibition currently Trustee & Company Secretary, of youth clubs/organisations embracing Newham Youth Trust (Limited) • (Chairman: voluntary/ statutory bodies • Developer / 1976–79), Youth & Community Worker, St. Fundraiser, converting former part of school Bartholomew's Social Club 1984 to 1985 • Co–
  • 74. opted Member, London Borough of Newham individual & Commercial Member • The Education Committee, Youth Panel 1983–84 Carnival Guild) • Former member • The and 1985–1988 • Member, Newham Voluntary National Camping & Caravanning Club • Agencies Council – Children & Young People Former member • Conway Owners Club • Steering Committee 1981-83 • Founder & Former Member - National Union of Licenses Developer Newham Youth Lodge Hostel Victuallers Association • Member • London Project, 1979–94 • NYT • Never-Land Macintosh Users' Group • Full Member of the (Children’s Adventure) - 1993 - 2004 • NYT • Institute of Charity Fundraising' • Former Metropolitan Police Newham Volunteer Cadet member • Stop Steward (1982–84 & 1986 to Corps, 1996 - 2004 • Youth Worker, St. 1993) + Convener, Branch Officer/Information Barnabas Youth Club • Past Member, National Technology Officer & Metropolitan Regional Youth Bureau, National Association of Youth Representative – UNISON, (formerly, NALGO) Clubs, and London Union of Youth Clubs • • [Newham Branch] • Member • Royal (Chairman & Co–Ordinator, 1980–85) - NYLA Horticultural Society • Former member • The – All Our Own 1978-1984 • Regional Health London Bungee Club • Member • Cyclists’ Authority Appointee, Newham Community Touring Club • Member • British Mountain Bike Health Council 1982–85 • Member, St. Federation. Bartholomew's Development Committee 1977–84 • Member of the Parochial Church Chronicle of fundraising activities: Co- Council – Parish of East Ham, London 1977– Coordinating groups of people from several 87 & 2000 Todate • Parish Warden - East Ham parts of the world, residing at a hostel for Parish (St Alban's, St Bartholomew's, & St international youth exchange visits in Newham Mary's Magdalene), London - 1976/91 & 1999 on behalf of 'International' Duke of Edinburgh's Todate • Former Secretary St. Bartholomew's Award as part of VE/VJ day celebrations • District Church Council - 1977–87 & re-elected Composing/designing new brochure and other 1998 Todate - Parish Council Member 1978 promotional material, (with use of DTP) • Very todate • Elected Member • Newham Deanery successfully securing the services and Synod, London 1980–81 and 1982–84 • 2001 resources of one of the top major businesses Todate - Member of The Institute of who deal with marketing, corporate identify Fundraising IT Special Interest Group • and logo designs leading to a much more Registered Member of the Training impressive and proficient relaunch of an Consortium • Member – The Corporate organisation in Newham • Duel Initiative- Fundraising Special Interest Group of the objective of attracting new sources of grant aid Institute of Fundraising 2004 Todate; Member funding from outside and encourage other – Training Consortium 2004 Todate; Member organisations in the Borough to affiliate, (bring – TrainingZone 2002 Todate; Member - in new blood), and significantly help ensure CoachVille 2002 Todate; Member – Forum for the efficient service delivery to groups • Fundraising 2004 Todate; Member – Funders Fundraising - sources ranging from OnLine, European Foundation Centre 2004 local/central Government, companies & Trusts Todate; Member – CharityNet 2004 Todate; • Negotiated rent/terms for charity shop • Member – eTribes 2004 Todate; Member – Fundraising work has included Newham Youth Coaching 24-7 2004 Todate; Member – Trust/Newham Youth Lodge Hostel Project; Business in the Community 2002 Todate; NYT • Never-Land (Children’s Adventure) • member – The Global Fundraising Network NYT • Newham Volunteer Cadet Corps • 2004 Todate; Fundraising in Christian International Duke of Edinburgh’s Award • Organisations Special Interest Group 2002 St.Margaret’s Church of England School - Todate; Member of former British Apple [PTA funding for school resources + potential System Users' Group – (Apple 2000) • Former donors for building extension • London
  • 75. Borough of Newham Swimming Club • Inter- Fundraising • Five Thousand Personalities Action Trust • Base 51 [HINT] - Based in of the World • The Cambridge Blue Book • Nottingham. Face to face work with young Great Minds of the 21st Century • people suffering from homelessness; Dictionary of International Biography • ABI HIV+AIDS, Drugs, Alcohol Abuse, Pregnant - Man of The Year 2004-06 • Contemporary single women. Who's Who of Professionals • United Biographical sketch work appears in various Cultural Convention's International Peace reference works to include: Who's Who in Prize 2005 - (For Outstanding Personal the World Who's Who in Industry and Achievement to the Good of Society as a Finance • Who's Who • Men of Whole) • ABI - World Medal of Freedom Achievement • IBC - The Directory of ABI - The International Directory of Experts International Biography • The International & Expertise • Who's Who in the City Book of Honour • ICF - Who's Who in