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[28.01.2020]

Charity Update – Gifts & Donations

Over the last couple of weeks we have published a series of blogs on updates and news for charities, to read earlier blogs click here. This weeks blog will advise on gifts and donations and how to ensure your charity meets its obligations.

Gift policy

With many charities under financial pressure it can be tempting to accept funds without sufficient consideration of the source of those funds. Such an approach can backfire when it later comes to light that such funds have been raised in a manner incompatible with charitable giving, with the potential for considerable reputational damage.

For charities that are reliant on donations to support their charitable giving, including legacies, we recommend that they put in place a gift acceptance policy that provides clarity over the circumstances when donations will be refused, rejected or returned to the donor. Such a policy would include:

  • the principles that should guide the charity’s decision making process when deciding whether to accept a donation or not
  • what due diligence steps the charity will take to verify the source of any donation
  • the requirement to keep written records of the decisions reached
  • the media response to be followed ensuring that the charity’s decision making processes are presented positively if called into question.

Legacy notifications

Many charities derive a significant proportion of their income from legacies, and receiving timely information on the amounts being left to them in wills provides charities with opportunities to increase and accelerate the amount they receive.

In 2019 HM Courts and Tribunals Service (HMCTS) announced they were ending arrangements with legacy solution specialists Smee & Ford that enabled charities to subscribe to a notification service advising them of amounts being left to them. With no alternative solution in place, interim arrangements were adopted in August (expected to last for about a year) whereby Smee & Ford continue to notify charities when they have been left a legacy, and which now also includes the provision of a copy of the will. To find out more click here.

Gift Aid and donor benefits

Tax legislation limits the amounts of benefits that can be given to donors in relation to gifts made by individuals to charities, so that those gifts remain eligible for Gift Aid.

The Finance Act 2019 simplified these rules, which in certain cases also increased the value of benefits that can be given to donors.

Under the new simplified rules which apply for gifts made to charities on or after 6 April 2019:

  • the benefit threshold for the first £100 of the donation remains at 25% of the amount of the donation, and
  • for larger donations, charities can offer an additional benefit to donors up to 5% of the amount of the donation that exceeds £100.

There is an overriding limit on the value of benefits received by a donor in a tax year as a consequence of donations to a charity, which is £2,500.

 

For more information on any of the points raised or to discuss how DNG can support you and your charity contact us.

Nicola Fox

 

 

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