Chris White MP: Small charities mustn't lose out from the Chancellor's plans for giving

Chris White is the Member of Parliament for Warwick and Leamington. Follow Chris on Twitter.

A measure that didn’t receive a lot of press attention during Budget 2011, but which could make a big difference, was the decision by the Chancellor to create a new scheme for charities to claim Gift Aid on small donations up to £5,000 per charity without the need for donors to fill in a Gift Aid declaration.

This scheme was widely welcomed by charitable organisations up and down the country and showed that the Conservative Party understood the pressures they were facing and was trying to do something to help. Moreover, by giving charities an incentive to get more smaller donations, it would help build greater financial resilience amongst community groups in a difficult economic environment and encourage more organisations to diversify their funding streams.

But as with most things, the devil is in the detail and the proposals which have emerged since the publication of the Small Charitable Donations Bill have caused a great deal of concern for charities.

As the scheme currently stands start-up charities and smaller organisations which have traditionally not claimed Gift Aid will be significantly disadvantaged – exactly the groups we should be supporting.

The Bill states that eligible charities have to been registered with HMRC for a minimum of three years, made a Gift Aid claim in 3 of the past 7 years and not had a penalty imposed as a result of a Gift Aid claim. There is also a “matching” provision which means that a charity can only claim £5000 in donations a year, or if less, double the amount of donations that have been put through the Gift Aid process. So in order to take full advantage of the scheme and claim the maximum £1250 available, they will need to have claimed £625 in Gift Aid in the same year.

This will help those organisations which are already good at claiming Gift Aid, but it won’t help those smaller charities which only receive small cash donations which they do not claim Gift Aid on – moreover small charities are not registered with HMRC and so would have to wait three years before they are able to take advantage of it, a delay would could prove very costly. 

There is also other concerns about “connected charities” which could see organisations which share the same trustee lose out and provisions relating to “community buildings” which could disadvantage hospices, care homes and respite services.

One of the most important decisions that the Conservative Party made in opposition was to try and reach out local charities and community organisations and to show that we are on their side.

Since being elected as Member of Parliament for Warwick and Leamington, I have been consistently impressed by the passion, drive and dedication of our charities, particularly smaller ones, who are trying to do their best to make our communities better places to live in.

However unless we amend this Bill, there is a very real danger that would could disadvantage the very groups that we are trying to support and create widespread disaffection amongst these important community organisations.

So I have written to the Treasury and asked them to look again at these proposals, to make it simpler for organisations to take part in the scheme, to drop the matching requirement, to lower the eligibility criteria and to look at the provision on community buildings and connected charities. I will also be looking to raise these issues with colleagues during the 2nd Reading of the Bill.

Actions speak louder than words and getting this Bill right could not only benefit thousands of charities and communities but also show that the Conservative Party is still committed to championing the cause of the voluntary sector.

In opposition, we worked hard to show that as a Party we value the contribution these organisations make to our society. Now we are in Government, let’s not waste this opportunity to show that we are still on their side.