Monday, February 12, 2018

Is Gift Aid a good thing?

There's a programme on Radio 4 called Simon Evans Goes to Market. I'm not sure if he is an economist who decided to take up comedy or a comedian with an interest in economics but the programme about various money matters is factual but with a humorous slant. Most of it is mildly interesting and amusing.

But last week a very interesting point was raised that has got me thinking. He was looking at altruism and charitable giving by the very rich and at charitable giving in general.

Now in the UK we have a thing called Gift Aid; I don't know if it has been adopted universally but if you're a tax-payer and you give money to a charity the charity can claim back the tax you would have paid on that money thus increasing the value of the donation at no cost to the giver. So, for example, if a tax-payer gave a charity £1 the charity could claim another 20 pence from the government - or whatever the basic rate of tax is at the time. It doesn't sound much but adds up significantly.

So all that sounds like a good thing, right? I can support my favourite charity at no extra cost to me. But is it at no extra cost to me? Strictly speaking, yes it is. But each 20p that the government gives back to a charity is 20p out of the spending pot for the government. Which means 20p diverted away from hospitals and schools - and warfare and foreign aid and countless other things that the national government is responsible for.

In order to become a charity an organisation has to prove it's doing good. (At least I assume they have to prove something.) And most charities are very worthy causes and to many of the smaller ones especially the extra money could be vital.

I am very happy that Zac's is a charity and can claim back Gift Aid on the money we give. Likewise the other charities we support. But while I'm a bit of a soft touch and love everything from hedgehogs to trees, do I necessarily want my money (Husband's to be precise as I'm not a tax-payer) to go to support weird and wonderful causes however deserving they may be if it's at a cost to my grandchildren's education?

I have no control over what other charities do with their money. I didn't vote for this government but they are democratically elected with a duty of responsibility to provide the services. I might not think they're doing a very good job but they are accountable. And, yes, charities are accountable to their trustees and the charity commission, but that's not quite the same.

So should I tick the Gift Aid box in future? Or should I choose to make up the difference myself. My charitable giving, my choice.


nick said...

But it's a not a zero-sum game, is it? Just because the charity gets an extra 20p doesn't necessarily mean 20p is being taken from public services. If the government chooses, it can give money to both gift aid and public services. Or to look at it another way, on your original premise, 20p in gift aid might mean 20p less for nuclear weapons.

SmitoniusAndSonata said...

If there was a charity box in shopping centers for shoppers loose change, perhaps the proceeds could solve a lot of smaller local problems. We have a scheme here every Christmas which provides toys, toothpaste, gym eqipment, school books, winter coats etc. Perhaps it should run all year? Everyone be happy to provide a little something extra now and then , knowing it was for a neighbour. Big national charities which are impersonal and have overheads don't appeal.
And yes, taxes should provide everything but they obviously can't.

Leslie: said...

Here we need to research which charities actually give the most of contributors' dollars to those needing it. Lots of famous charities pay everyone who works for them very well and that comes from your charitable giving. No matter which way you look at it it is vital to remember it is those in need you want to help rather than pay someone to shuffle the money around.