Campaigners and politicians want action to end Gift Aid commission

Charities are missing out on millions because of a 'giving tax' taken by fundraising platforms, it has been claimed.

Popular online donation groups take the cash after skimming a percentage off the top of the Gift Aid from donations in the form of commission. 

The online platforms have made it clear that any Gift Aid administration they offer is not compulsory and is designed to help charities manage the "complex" process of manually claiming it.

However, campaigners are calling for the UK Government to step in and ban commission being taken.

A peer who raised hundreds of thousands of pounds through JustGiving said he is “dismayed” and called for “an end to these opaque practices”.

Lord (Howard) Leigh of Hurley, a former Conservative Party treasurer and veteran fundraiser, who since 2013 has raised more than £600,000 for WaterAid by running, 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 and have been very dismayed to see donors have their support abused in this way.

“Certain fundraising platforms are possibly misleading people and siphoning money that could be going to good causes.”

A cross-party group of MPs has asked the chancellor and her cabinet colleagues to consider the issue.

Former development minister Anneliese Dodds, shadow culture minister Saqib Bhatti and Labour MP Jo Platt have all raised the matter in parliament.

According to polling conducted by Strand Partners, an advisory firm, 80% of people think online platforms should be more transparent about any commission they take from Gift Aid, and 66% support the government closing the loophole that allows platforms to do this.  

This comes after the Fundraising Regulator – which covers charities based in England, Wales and Northern Ireland - published an updated Code of Practice, urging online fundraising platforms to ensure how fees are calculated is made “clearly visible to donors”.

Scotland has its own fundraising ecosystem, with Scots charities covered by the Scottish Fundraising Standards Panel.

The Gift Aid system is UK-wide and is set by the Westminster parliament. 

Originally introduced in 1990, Gift Aid is a government scheme that allows charities to claim an extra 25p for every £1 donated, at no additional cost to the donor. Designed to boost charitable giving, the scheme enables charities to reclaim the basic rate of tax on donations. 

According to its website, if a donation is eligible for Gift Aid, JustGiving will claim Gift Aid from HMRC on behalf of the charity, but it will deduct a 5% commission before passing on the remaining amount to the charity or fundraiser.

Localgiving does likewise, while Crowdfunder says that charities “have two options” - to manually claim Gift Aid or to use their “Swiftaid” service, which charges a 5% fee.

GlobalGiving UK retains a fee of up to 15% from any relevant Gift Aid claimed on donations on its platform.

A spokesperson for JustGiving said: “We’re proud to support charities through our optional Gift Aid administration service, which is fully compliant with HMRC requirements. Claiming Gift Aid can be complex, costly and time-consuming, which is why three-quarters of charities choose to rely on us to handle the process, allowing them to focus on their vital work. Full details of our Gift Aid administration fee are available on our website.”

Crowdfunder, GlobalGiving UK and Localgiving have all been approach for comment.