Gift Aid, a form of tax relief in which a charity can claim an extra 25p for every pound donated, has boosted charitable donations since it was introduced 30 years ago.

But charities are thought to miss out on around £564 million of Gift Aid each year due to 'clunky administrative processes' and hard-to-understand eligibility criteria.

But now a group of charities, tax and fundraising experts and universities, including the University of Exeter Business School, have proposed a solution that will allow the use of an individual’s tax status to determine automatically if a Gift Aid declaration is valid and remove the burden on the taxpayer, while processing Gift Aid automatically across all digital donation methods.

The Future of Gift Aid project was instigated by the Charity Tax Group (CTG) and uses Swiftaid technology, pioneered by the payments firm Streeva, which allows Gift Aid to be added automatically to donations made via card payments while taking care of the entire claiming process by generating declarations, claims and all reports required by HMRC.

The University of Exeter Business School will contribute its expertise in digital economy and payments through its digital research centre INDEX (Initiative in the Digital Economy at Exeter), as well as advise on the economic impacts of taxation systems through the Business School’s Tax Administration Research Centre (TARC). 

Dr Phil Godsiff, Senior Research Fellow in Digital Economy at INDEX, said the project is timely given the impact of COVID-19 on the charity sector, which is projected to lose 48% to its voluntary income due to the pandemic.

“Being able to work on such an important and timely project, with so many key people brought together to make it successful, is really rewarding,” Dr Godsiff said.  

“Getting more Gift Aid more quickly to charities is especially crucial as COVID-19 has impacted on so many of their fundraising activities.” 

The Future of Gift Aid is an industry-wide initiative supported by the likes of fundraising experts JustGiving and LibertyPay, as well as the charities Cancer Research UK, The National Trust, Sue Ryder, The Children’s Society, The Association for interactive media and micropayments (AIMM) and the Charity Retail Association.

“In this time of crisis the charity sector needs our help more than ever,” said Beth Michael, Co-founder of Streeva.

“I strongly believe that with industry-wide support and expertise along with the innovative enabling technology Streeva can bring, this project will make a huge difference to the sector, bringing real hope in these challenging times.”

8th October is Gift Aid Awareness day.