Money: Give to charity and the taxman tops it up
Schemes that add to donations may rouse us to make them, writes Faith Glasgow
Sunday 11 April 1999
Under the Gift Aid 2000 scheme the Inland Revenue will boost individual donations of pounds 100 or more by adding basic-rate tax relief (plus a bit extra). So every pounds 100 you give is worth pounds 130 when it gets to the charity. And for those who don't have spare cash lying around, you can give from pounds 5 a month upwards and still qualify for the tax break.
The voluntary sector certainly needs a boost. Research from its umbrella organisation, the National Council for Voluntary Organisations (NCVO), published in January, indicates that nearly 90 per cent of those questioned considered it important to give both time and money to charity. But fewer than half had got as far as putting their hands in their pockets, and only 10 per cent had made any time commitment in the previous month.
These findings are set against an already depressing backdrop of falling financial support. Individual donations to charity have dropped by almost a third in the last five years. But the message is not all gloom. The research showed that 45 per cent of respondents in social classes A and B would give more to charity if the tax system added to their donation.
The Gift Aid 2000 scheme is one way to make your donations go further, and there are several tax-effective schemes already in existence, including setting up a deed of covenant, Payroll Giving, (the original) Gift Aid and the CharityCard.
Another recent step in the right direction is NatWest's Community Bond, available to investors with between pounds 500 and pounds 250,000 to tuck away. As far as the individual is concerned, it operates much like a fixed-rate savings bond with terms of either one or three years; but you choose an interest rate below the market rate and are paid at that lower level. The difference between the two rates is paid into a regional "community finance fund", where it is used to provide loans at near-market rates for charities and community groups.
It's a useful way of supporting a locality - but investors have no control over how the money will be allocated. And if interest rates continue to fall, the amount you give could be eroded as the market rate creeps nearer your chosen rate.
If you want to support in a focused way, it makes more sense to keep investment and giving separate. Make your money work harder for you in a conventional investment and then use your everyday bank account to target your giving through one of the routes below.
n The CharityCard, administered by the Charities Aid Foundation, is an extremely flexible way of giving to different causes. It's a simple idea: you open an account and put the amount you want to give to charity in it, then the CAF reclaims the tax you've paid on that sum and adds it to the pot. So if you put in pounds 100, for example, CAF will pay in another pounds 23 from the Government. With the account comes your CharityCard and "cheque book", which you can then use to write cheques or make payments by phone or on the CharityCard website whenever you want to make a donation. The scheme gives you complete control over how much and when you give, and to whom, which is especially valuable if you have diverse interests.
n Payroll Giving is an optional programme operated by employers. Participating employees give up to pounds 100 per month, which is deducted from their pay before tax, and passed to their chosen good causes via an agency charity. The Budget included plans to do away with the pounds 1,200 annual ceiling and for the Government to make an additional 10 per cent contribution to each donation for a limited period.
n If your employer doesn't offer the Payroll Giving option, your choice is dictated largely by whether you are prepared to sign up to a minimum of four years' support for one charity through a deed of covenant. A covenant has the great advantage to the charity of being a regular source of income, but it amounts to a long-standing commitment from you. It is a legally binding arrangement, which enables you to get tax relief on your gift. The charity can then reclaim this from the Inland Revenue. So if you want to give, say, pounds 100 to Oxfam, you make a covenant to it for pounds 77 and the Revenue will pay Oxfam the pounds 23 difference.
n A less committed route is the Gift Aid programme and its spin-off, Millennium Gift Aid. At the moment Gift Aid only enables charities to reclaim tax on one-off gifts to any UK charity of more than pounds 250. But the idea is to open it up to match Gift Aid 2000 once that project ends in 2001. Gift Aid will then be open for gifts of pounds 100 upwards, and will accommodate "drip feeding" payments over the year that total at least pounds 100.
n Contacts: Gift Aid 2000, 0845 075 2000 or www.gift- firstname.lastname@example.org; Inland Revenue Covenant Helpline, 0151-472 6037; Inland Revenue Gift Aid Helpline, 0151-472 6038. To give under Gift Aid ask the charity for form R190(SD). CharityCard, 01732 520050 or www.charitycard.org/
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