Holy Spirit

Holy Spirit

Wednesday, 7 December 2011

Ethics and Gift Aid

I appreciate this is a slightly random topic but I have been thinking recently about the ethics of Gift Aid. Gift Aid seems to be a wonderful scheme which has benefited many charities, not least the church. It is available to all UK tax payers and means that by making a simple declaration you are able to add £0.25 to every pound you give to a charity.  This £0.25 is claimed by the charity from the government - and each £0.25 comes from the tax you have already paid.  So it is a way of re-allocating the tax you have paid to a charity of your choice.

So far so good.  But unless I have missed the point (and will be happy for someone to put me out of my ignorance) this means that every time I Gift Aid a donation, I am in fact taking money out of the tax I have paid to support essential services, and putting it somewhere else.  I know this seems churlish, but I'm not entirely sure that this is OK.  If my tax pounds are needed to support the NHS, schools etc. is it really ethical for me to choose to opt out of part of that essential payment by re-allocating it to my chosen charity?

I suppose for those who understand this area better than I there are many mitigating factors. I would be happy to be enlightened.


Jo BM said...

Hi Rachel

You're not wrong - tax is taken out of the system by Gift Aid but the Govt also support the charity sector with grant support in other ways as well - in fact something in the order of 60% of charitable funding in the last decade came either from central or devolved govt coffers.

In harder times, when the Govt feels it can't directly fund charities in the same way they tend to use the Gift Aid system as a method of 'topping up' govt support for the sector indirectly whilst also allowing the individual tax payer to decide exactly where that top up goes.

I have less of a problem with the latter than I do with the former. In the past decade, as I say, Govt became the largest 'donor' if you like, to the charity sector. But because this was public money a lot of conditions and controls had to be put in place attached to the money. In a lot of cases this meant that voluntary organisations were finding themselves becoming more and more like pseudo public bodies, with all the red tape and bureaucracy that involved - this had a knock on effect of taking the 'edge' off some charities who found that due to the restrictions placed on them by the funder they could no longer be as fluid and responsive to needs on the ground - they spent more time chasing the grants and ticking the boxes than they did focused on the actual needs of the beneficiaries (this is a sweeping generalisation but is a recognised problem in the sector)

For me, a far better way for Govt to support the sector is Gift Aid because it puts control back in the hands of the charity - Gift Aid doesn't carry with it requirements to 'evidence outputs' (one fund I know of required charities to complete 50 pages of reporting for a grant worth on average £500 !) so the charity gets govt support but doesn't have to behave like a govt department.

Does it take away from essential services ? well not at the moment - the amount paid out in Gift Aid is less than govt were previously spending in the sector anyway -and to be honest, encouraging individual tax payers to be more generous with their cash ain't a bad way to build a civil society either - if it's all done through central govt I think we abdicate responsibility for our own generosity- which is why giving is such an uphill struggle in our society - we hide behind 'I pay my taxes' instead of taking an active interest in how we use our money for good.

But I would say that wouldn't I ;)

Rachel F said...

Thanks Jo - a brilliant think through - thank you for helping me in my laziness!

Jo BM said...

No laziness - I have friends who would argue that you are entirely right and that charity would be wholly unnecessary if we had a proper taxation system and everyone contributed to it according to their wealth. So encouraging charitable giving through the tax system is anathema to that.

Don't agree with that particular POV but this is just my opinion. We need a civil society which cares for the weak and vulnerable - personally I don't think taxation can solve that on its own but if it should then yes, Gift Aid does take away some of the cash available.

jante said...

My husband- an accountant agrees with you Rachel. I'm still trying to decide what I think as I'm in training at the moemnt and don;t pay tax it is something I have been able to lay on one side.