Individual giving

Individual giving provides the largest source of income for the Third sector. The total amount donated in 2005-06 is estimated at £8.9 billion. Welsh donors gave around £391 million to charity in 2005-06 - it is not known what proportion of this income stayed in Wales. Every donor has their own characteristics, motivations and preferred way of giving - it is the role of the fundraiser to understand and utilise these characteristics.

Guide to UK Giving 2005/2006 provides more information about donor trends.

Gift Aid
Gift Aid is a simple scheme administered by HM Revenue and Customs which allows charities to reclaim the basic rate of tax (28.2%) on donations given to charity by tax paying donors. Gift Aid is applicable when donations are given freely without expectation of any significant benefit in return for the gift.

  • Voluntary and community organisations need to register with HM Revenue and Customs (HMRC) to reclaim tax on donations under the Gift Aid scheme.
  • 28.2 per cent of the value of each donation can be reclaimed provided that the donor has paid tax in the same year as the gift is made (income tax or capital gains tax) e.g. £2.82 reclaimed for every £10.00 given.
  • Voluntary and community organisations registered to reclaim Gift Aid from HMRC need to have the appropriate authorisation from the donor (called a declaration).
  • Where the primary aim of a charity is the preservation or conservation of an area or heritage site, the Gift Aid rules are slightly different. The charity, in this instance, must offer either free entry for a year, in return for a Gift Aid admission charge, or the donor must pay 10 per cent above the standard admission charge, for the admission charge to be eligible for Gift Aid.

There are four steps to reclaim Gift Aid on donations:

  1. Register with HM Revenue & Customs to reclaim Gift Aid
  2. Produce and promote Gift Aid authorisation / declaration forms for donors
  3. Keep a record of all declaration forms from donors and their associated gifts
  4. Calculate and claim the Gift Aid from HM Revenue & Customs

Useful resources

Major donors
Some donors have potential to give much more than others. Major donors are defined as any supporter who gives over £250; however, a larger charity may define a major donor by gifts over £1,000. According to the UK Giving Guide 2005/2006, high-level donors are identified as those who give £100 or more in an average month, representing 6 per cent of all donors in 2005-06. Major donors can be identified by researching the supporter base and by identifying those giving a larger gift than requested. Once identified, aim to make major donors more involved than standard donors through, for example, clubs for larger donors, or provide incentives tailored to suit their needs.

Useful resources:

Legacy Giving
Legacies are money and items left in wills to charity. They provide a considerable source of funds, valued at £1.6 billion (2004-2005) for the UK Third sector. Charitable gifts left in wills are free of inheritance and capital gains tax. The areas that benefit most are:

  • Health & social welfare sector - 23.9 per cent
  • Animal welfare – 16 per cent
  • Arts - 0.8 per cent

Women are most likely to leave legacies to charity, 69 per cent of legacies; men provide 31 per cent of legacy income.

When promoting legacy giving you should aim to target:

  • The 64 per cent of the population who have not yet made a will – ‘make a will and leave a legacy to us’
  • For the 36 per cent who have made a will – ‘remember us by leaving a codicil to your existing will.
  • Case studies are a useful way to illustrate the impact made by charitable legacies.

There are a number of types of legacy charitable gifts:

  • Pecuniary: a specified amount of money is given.
  • Residuary: a proportion of an estate given, after all other specific bequests have been made.
  • Specific bequest: a specific item that can be kept or sold by the charity.
  • Long stop legacy: when an estate reverts to charity as the original provisions of the legacy failed or could not be met e.g. all residuary beneficiaries died.
  • Reversionary or life interest: this gives the donor the benefit of using an asset during their lifetime and upon their death, the asset reverts to the charity.

Useful resources:

Share giving

  • Shares given to charity give rise to neither a gain nor a loss for Capital Gains Tax purposes.
  • UK taxpayers may also be able to claim income tax relief on the value of the donation.
  • Giving shares is an alternative way of giving larger gifts to charity and reducing tax liability.
  • Smaller share gifts can be handled by a specialist charity called Sharegift.

Useful resources:

  • HM Revenue & Customs (Charities Department) Web: www.hmrc.gov.uk/charities Tel: 08453 02 02 03
  • Sharegift specialises in share donations, especially small holdings of shares that would cost more to sell than they are worth – Tel: 0207 337 0501.

Committed and regular giving
Committed giving is the most valuable and consistent form of individual donations. This form of giving can provide the best financial return on promotional activity. Encouraging regular gifts helps the charity build a supporter base as the ‘door opens’ for regular contact with the donor. Around a fifth (18.6 per cent) of adults, 10 million people, give in a planned and regular way.

Methods of planned and regular giving include:

  • Direct Debits / Standing Orders - monthly gifts direct from donor’s bank account (can be made tax effective through Gift Aid).
  • Covenants - an agreement to support a cause with a specific amount at specified times (can be made tax effective through Gift Aid).
  • Payroll Giving - a charity donation scheme run by employers, (tax effective at source, separate from the Gift Aid scheme. Offered free of charge through WCVA.
  • Membership / ‘Friends of…’ schemes - donors pay subscriptions (which can be treated as donations under the Gift Aid scheme depending on the value of the benefits received in return for the subscription).
  • Cash or cheque - not as efficient as the mechanisms stated above as donor’s will need continuous reminding (can be made tax effective under the Gift Aid scheme).

Useful resources: