Conclusions of HMRC research into Gift Aid (Guest Post)

| 5th Dec 14

In this guest post, Matt Moorut, Marketing Executive at Tech Trust, sums up the main conclusions of the HMRC-backed report into Gift Aid reclamation, which gave suggestions on what charities can do to increase the proportion of donations that Gift Aid is claimed on.

In the 2014 Budget, the government announced their intention to encourage more donors to use Gift Aid.

Now a new HMRC-backed report into Gift Aid reclamation has concluded that a lack of understanding of Gift Aid on the part of donors is the biggest stumbling block.

Along with this, here are the main conclusions of the reports, which gave suggestions on what charities can do to increase the proportion of donations that Gift Aid is claimed on.

Understanding of Gift Aid

Donors who claimed Gift Aid broadly understood it as a scheme to increase the value of their donations to charities.

However, the detail of eligibility was widely misconceived. Though donors broadly knew they were required to pay tax in order to claim, the significance of this was not understood. Most assumed that they only had to prove that they were UK citizens and didn’t fully understand where exactly the extra money came from.

Factors affecting decision-making

Decisions about whether or not to claim Gift Aid were based on three factors:

  • Self-determination of eligibility;
  • Understanding of the purpose of the scheme; and
  • Any practical barriers related to the claiming process.

Respondents already claiming Gift Aid did so in the knowledge it didn’t cost them anything personally, and that it benefitted the charity. Those who were eligible to claim gift aid but decided not to did so based on one or more misconceptions about the scheme:

  • That it was an additional tax for the donor or charity;
  • That it was a request from the charity to sign up to regular donations; or
  • That it add only around 5-10% to donations, and was thus not worth claiming.

As well as this, there were a few practical barriers, including the inconvenience of form filling, and discomfort with sharing personal information or ‘signing up’ to something not fully understood.

The effect of misunderstandings on claiming behaviour suggests that improving the provision of information about Gift Aid should be central to increasing the number of correct claims, at least for first time claimers. For those who had encountered gift aid previously, behaviour quickly became habitual and automatic.

How to present Gift Aid

The report stated that introducing Gift Aid early on in the donation was a good idea, as it primed donors to pay more attention to it, viewing it as an integral part of the process.

Priming also offers an opportunity to emphasise how significant the benefits of Gift Aid are to charities with regards to their mission.

The report stated that using a multiple tick-box format as part of the Gift Aid Declaration (GAD) to confirm Gift Aid eligibility is effective, as it demonstrates that eligibility criteria exist, while avoiding legal language or messages that could deter donors from claiming.

When giving online, respondents in the study suggested that visually engaging pop-ups could be used to draw attention to Gift Aid. Online forms also make it possible to keep the GAD short and succinct, whilst retaining the option to learn more through hover-overs and links to more information for those who are unsure.

The report also pointed to a further benefit online, in that charities and their supporters could easily and effectively explain details of the scheme in much more depth.

How to communicate Gift Aid

While the design of the GAD could help to maximise correct claiming behaviour as a whole, it can’t be expected to reach everyone or correct every error.

Keeping the GAD short and clear is vital to retaining correct claims, as length was a barrier to individuals both reading information and claiming Gift Aid.

Further, those more likely to read detailed information and be discouraged from claiming were those already claiming correctly – whereas those claiming in error said they were more likely to skip the information and continue to claim. A 2-3 tick box format could engage donors to pay more attention to the information they are agreeing to – whilst the overall tone should be kept positive to maintain a disposition to claiming, for those eligible.

Based on the most common misunderstandings about the scheme and responses to the GAD options, the key messages to communicate include:

  • The benefit to charity at no cost to the donor
  • The fact that eligibility is related to individual tax paid, rather than taxpaying or working status
  • That the donor’s address is required to identify them as a taxpayer
  • The fact that donors must have paid enough tax to cover all Gift Aid donations
  • That the declaration refers to the current tax year