For the Easter break my wife and I took our son to a stately home, spending the day wandering around lovely gardens and an old house in the sunshine. Before we had even seen the place though I almost derailed the trip by getting into a polite disagreement at the front desk because two rates of entry were offered, the standard rate and a higher ‘gift aid’ rate – something that seems to have swept across the heritage landscape over the past couple of years.
I told the woman at the desk, no doubt a volunteer, that I wanted to pay the standard rate but that I was happy to sign so that they could claim gift aid on it.
Two genuine options?
‘You mean you want the gift aid rate?’
‘No, I want the standard rate, but gift aided, because you can claim gift aid on any rate.’
‘But the standard rate doesn’t include gift aid.’
‘But it can, so you might as well claim for it.’
I’ll spare you the rest of the exchange before my wife paid and led me away. I admit I was a bit unfair on the woman who was simply doing her best, but the charity (which I won’t name) is not being truthful. The way gift aid works is that for any charitable donation by a UK taxpayer the charity can claim the tax back on your donation. You don’t pay more, the charity doesn’t pay more, it is the UK tax payer who contributes the extra. There is no such thing as a gift aid price. You can pay any price and the charity can claim back gift aid on it, whether it’s 20p or £200. I would have been happy to pay a couple of extra quid, it was the underhand way they were trying to get it out of me that irked.
Why this is important is because the public’s willingness to give to charities is based on the perception that they are morally sound. They are organisations trusted to do the right thing. Charities trade on that trust and use it to solicit money from people. Conning people to pay more by pretending gift aid works in a certain way when it doesn’t is a sure way to undermine that trust.
Two other areas where charities need to be careful are firstly around delivering public services. Charities have carried out public services for hundreds of years – the salvation army was paid by the government to take children off the street in the nineteenth century – but in recent years the number of charities delivering public services have increased sharply, as has the areas they work in. From care for the elderly to supporting people looking for work to helping run prisons, charities are carrying out services on behalf of the Government in return for pay.
If trust in charities declines, donations are sure to decline as well.
The problem is that the public doesn’t realise that charities undertake so much public service delivery. If they did the question back to charities would be along the lines of ‘why should I give £10 to you to help homeless people when you’ve just won a government contract for £4 million to do the same thing?’ That question can be answered, but it’s much easier to do so proactively rather than when you’re under attack.
Furthermore not every charity is perfect so in the future there is bound to be a scandal involving a charity running a government contract. At that point the public outcry about what charities are doing running services will be damaging. This disconnect between what charities actually do and what the public thinks they do is being ignored because it’s easier to leave the public in blissful ignorance. However leaving people in the dark could well come back to haunt them.
A third area, which has been discussed more often, is around charity finances, in particular administration costs and CEO pay. The amount of money charities spend on administration is much lower than the public perception. A few of the larger charities tried to highlight this a few years ago but seem to have given up. There is also the perception that charity CEOs get paid too much, despite the fact that the median salary for charity CEOs with a turnover of less than £150,000 is £34,600 – hardly a bunch of fat cats. These are the kinds of misconceptions which can eat away at charity trust if they aren’t robustly challenged, but they aren’t being challenged at the moment.
Charities survive on their reputation for being morally spotless. That is always a fragile place to be and, once sullied, hard to regain. They need to think about everything they do, and act together, to ensure they retain the confidence of the public. A short term gain of an extra pound or 2 on a ticket price is not worth the damage to charities as a whole if this trick is exposed. Removing it will also spare the poor volunteers I encounter when I come across it.