Rachel Reeves is facing calls to tighten rules around charity donations due to concerns millions in cash given to good causes is being siphoned off to companies under a hidden tax.
MPs and peers are urging the Chancellor to either ban or force online fundraising platforms, such as JustGiving, to be more transparent about their commission when handling donations given via Gift Aid, demanding an “end to these opaque practices”.
According to the most recent figures, charitable causes, including donations given to support the victims of the Southport attack, are missing out on more than £7.5m in donations from Brits due to the handling fees of fundraising platforms.
Designed to boost charitable giving when it was introduced in 1990, Gift Aid is a government scheme that allows charities to reclaim the basic rate of tax on donations, meaning they can claim an extra 25p on every £1 given.
Under the current rules, donation sites are able to cream off 5 per cent in commission on donations given via Gift Aid without the knowledge of donors.
Campaigners are now calling for the Treasury to step in and ban commission on Gift Aid, which allows charities to claim an additional 25p for every £1 donated at no extra cost to the donor.
Lord Leigh of Hurley, a former Conservative Party treasurer and veteran fundraiser, who has raised more than £600,000 for WaterAid since 2013, said: “Charging commission on Gift Aid ultimately stops more money going to charity and risks damaging trust in the charitable giving sector. There needs to be more transparency and an end to these opaque practices.
“I have raised hundreds of thousands of pounds using JustGiving and have been very dismayed to see donors have their support abused in this way.”
And he added: “Certain fundraising platforms like JustGiving are possibly misleading people and siphoning money that could be going to good causes.”
Thousands donate to charities for people running the London marathon (Photo: PA)The issue has been raised by opposition MPs, such as the shadow culture minister Saqib Bhatti, who has called for the Government to take steps to ban the practice of charging commission on Gift Aid.
According to Strand Partners, around £584m was raised for charity last year via online donation platform JustGiving, but the company was able to keep £7.3m of the donations via commission.
This included a fundraiser, called “Swifties for Southport”, organised by fans of Taylor Swift in the wake of the horrific Southport attack on a dance studio that killed three children, which raised nearly £400,000 and was JustGiving’s third largest fundraiser last year.
The platform is not alone, with CrowdFunder, GlobalGiving UK and Localgiving all charging commission on Gift Aid donations from unwitting Brits.
JustGiving has been approached for comment.
The Treasury has been asked for comment, but responding to a parliamentary question on Monday, Treasury minister James Murray said charities have “the flexibility to decide on their own strategy for fundraising and are free to partner with other organisations to process their Gift Aid claims”.
“It will ultimately be a commercial decision on the part of a charity to work with a fundraising platform and whether it is appropriate to pay a fee for any services provided,” Murray said.
“Many of the fundraising platforms are voluntarily registered with the Fundraising Regulator which can act if it believes standards have been breached.”
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