Failure to reclaim Gift Aid loses sector £1 billion?

Third Sector magazine's front page story today reports that 'Failure to claim Gift Aid 'cost sector £1bn in 2007'. Referring to a report by unbiased.co.uk, Inefficient Giving Costs Charities Over £1 Billion, it combines the report's figures for both Gift Aid and Payroll Giving.

According to unbiased.co.uk, failure by donors to use Gift Aid on small donations lost charities about £250 million last year, and failure by donors to use Gift Aid on larger donations of £100 or more lost charities a further £450 million. That makes a total of £700 million lost to the taxman in potential income by Gift Aid.

Unbiased.co.uk then points out that, because "more than four in five employees who donated more than £5 a year don't make use" of payroll giving, it "estimates that UK charities missed out on an additional £337 million in tax refunds last year".

So, together donors' decisions not to take advantage of both these tax-efficient ways of giving to charity - or fundraisers' failure to persuade them to do so - did lose the sector about £1 billion last year.

What you can't do though is to lump it all under the headline of "failure to claim Gift Aid."

Others of course have spotted the error. Kevin Kibble at Whitewater today questioned the figures and argued that charities were getting better at reclaiming Gift Aid in particular.

To be fair to Third Sector, the story's first paragraph did set the record straight by reporting "UK charities missed out on £1 billion last year through donors' failure to use tax-efficient schemes such as Gift Aid and payroll giving".

But the headline told a different story.