Daniel Ferrell-Schweppenstedde

Former Policy and Public Affairs Manager

Charities Aid Foundation

Budget 2021

Philanthropy and giving in a post-Covid-19 world cannot be underestimated as CAF calls for rise in Gift Aid

19 January 2021

This year’s Spring Budget is under particular scrutiny from the voluntary sector and many others given the impact of the protracted Covid crisis. The March 3rd budget will be the next key moment for the Government to set its  course for the foreseeable future on how to continue to tackle the crisis while also looking towards recovery. Many of the emergency programmes which have helped organisations across many sectors to survive (including charities) are either coming to an end or will be adjusted.

It is highly likely that throughout 2021 charities will continue to face a drop in income, while at the same time demand for their services is set to increase due to the knock on effect of Covid on their beneficiaries.

Charities are providing vital help to the most vulnerable in our society across areas where state or private sector support is not available or sufficient If these services are forced to  scale back further or indeed shut down in 2021 and beyond, the effects will be felt on public services as well as the wider economy.

Not only will employment in the sector go down, but  beneficiaries will be less able to access some of the support that charities offer to help them enter the labour market or engage in further economic activity. Before this crisis, the sector employed an estimated 3 per cent of the UK workforce.

At the same time civil society continues to play a crucial role in tackling the crisis, which in turn requires additional resources. For example, St John Ambulance has committed to training more than 30,000 volunteers to administer the vaccination programme and organisations in the VCSEP partnership have been essential partners to the government’s crisis response.

The Brain Tumour Charity

The gap between need and support

An initial £750m charity support package issued last year, along with the furlough scheme, were welcome and offered a degree of help to charities. But the gap between the support provided and the need remains vast - a potential £10.1bn funding gap was identified for the second half of 2020. And much of the emergency support (such as the furlough scheme) are due to end on 31 March 2021, leaving charities short of resources to meet the needs of the people and causes they work to support.

While direct government stimulus for the sector will be crucial, the importance of philanthropy and giving in a post-Covid-19 world cannot be underestimated. For that reason, it is important that the tax system also supports and facilitates giving as effectively as possible.

A coalition of leading voices in the UK charity sector (including CAF) has called on the Government to increase for two years the level of Gift Aid that can be claimed on donations.

Keep charity services running

A Gift Aid Emergency Relief package would contribute significantly to keeping charity services running and enable many charities to get through the crisis which may otherwise need to shut their doors. A temporary increase in the rate at which Gift Aid is paid represents a simple, practical means of ensuring that more money gets to charities at this vital time, and one that has clear precedent in the form of the Gift Aid Transitional Relief scheme which was introduced between 2008 and 2011.

The proposed Gift Aid change would mean that a £100 donation from a UK taxpayer would increase in value to £133.33 (from £125) for the charity once Gift Aid had been claimed.

Raising Gift Aid from one-quarter to one-third on donations could secure an extra £450m for charities and benefit over 70,000 charities of all sizes, as they return to fundraising activity and re-open charity shops.


Join us

Over 600 charities of all sizes have pledged their support for the campaign, as have a number of Members of Parliament. Polling carried out by CAF also found that four in ten people who already donate money to charity said Government incentives such as top-ups make them more likely to give. We also found that four in five people who have used Gift Aid on a recent donation support a temporary increase in the tax benefit for charities.

For more information on the proposal including a detailed briefing visit the campaign website for the Gift Aid Emergency Relief Package.

Join our campaign now and receive the supporter pack, which provides you with resources to spread the word on social media, inform your local press and talk to your MP about the campaign.

  • Our full submission to the Spring Budget consultation can be accessed here. 
  • The submission by our coalition partners the Charity Tax Group and the Charity Finance Group can be downloaded here.