Gift aid (GASDS) claims for donations on behalf of another charity

systemparadox

Can anyone help me clear up some confusion about giftaid/GASDS eligibility when there's another charity involved?

To clarify, I am the treasurer of the local parish church. We do giftaid and GASDS claims on a regular basis, which is usually straightforward for normal Sunday collections and donations to the church. However, I recently discovered this section (gov.uk/guidance/gift-aid-what-donations-charities-and-cascs-can-claim-on#church-collections):

You cannot claim Gift Aid on donations collected in your church that are for another charity. This is because the money collected is not part of the church’s income.

If a church chooses to set up a fund to raise money for a charity, then the money collected forms part of the church’s income. In this case, the church (which is a charity in its own right) must claim any Gift Aid due.

This seems to contradict itself a bit, it says we can't claim but then it says if we "set up a fund" we can. But what does "set up a fund" actually mean?

I've got a few scenarios called into question by this:

1. Sometimes the normal Sunday collection will be annouced as being a collection for a specific cause, for example after a natural disaster the collection for that week might go to a specific disaster response charity.
2. Similarly, sometimes we have other events in the church such as a concert which may have a retiring collection in aid of a particular cause.
3. Some of the small midweek groups take donations and then periodically decide amongst themselves where to send the donation.

Ignoring the "set up a fund" part for the moment, my current thinking is that it seems to come down to what was advertised as the purpose of the collection? If it's just a normal collection for the church and we later decide to make a donation to another charity then it seems we can claim, but if it's advertised as a collection for something then we can't? This seems a bit vague and arbitrary. It becomes even more confusing if we add in that something could be advertised as a collection to help with some disaster, but without specifying which charity it would go to. Now are we collecting "on behalf" of another charity or not?

Can anyone help provide any clarity on any of this?

Thanks.

cr1mson

Setting up a fund in this context is likely to mean that there is a designated fund set up and reported in your accounts. 

This provides greater clarity.

Chapter 3.36 Church collections

3.36.1 Whether or not collections made for a particular charity by churches (which are themselves charities) can fall within the churches’ Gift Aid Scheme will depend on the particular circumstances.

3.36.2 If the church has not exercised any discretion in collecting the donations and the donations are merely given to the church to simply pass on to a particular charity then the:

• church has no entitlement to the donations (and they do not form part of the church’s income)
• church is merely acting as a conduit and it’s the charity that’s the donee
• charity must claim any Gift Aid tax relief (subject to the normal requirements, Gift Aid declaration and audit trail)

3.36.3 However, if the church exercises its discretion and decides to open a fund for donations to a particular charity, then the:

• fund is a restricted fund of the church
• church is the donee and the donations form part of the church’s income
• church is able to claim any Gift Aid tax relief (subject to the normal requirements)

3.36.4 The church is legally obliged to pass the tax associated with a Gift Aid payment to the charity. The donor would have made their donation in expectation that both the Gift Aid donation and the associated Gift Aid tax would go to the charity for which the collection was made.

systemparadox

Thanks for the additional info. My question then becomes what exactly does "exercised discretion" mean?

Additionally, as usual the official wording has a logical gap:

- If the church has not exercised any discretion then not eligible
- If the church has exercised discretion and opened a fund then it is eligible
- But if the church has exercised discretion but not specifically opened a fund then what?