Donor retention is the foundation of any successful fundraising campaign. Not only is it more cost-effective to retain existing donors than to acquire new ones, but also repeat donors tend to give larger gifts over time.

One of the easiest ways to boost donor retention is by encouraging donors to sign up for Gift Aid.

In this blog post, we’ll explore the benefits of Gift Aid and how it can help your organisation improve its donor retention strategies.

What Is Gift Aid and How Does It Work?

Gift Aid is a scheme available to non-profit organisations and charities in the United Kingdom, allowing them to reclaim tax on a donation made by a UK taxpayer, effectively increasing the amount of the donation. When a UK taxpayer gives a gift to a charity and chooses to apply for Gift Aid, they must have paid income tax or capital gains tax that financial year at least equal to the tax the charity reclaims on their donations.

The way it works is quite straightforward. The charity receives your donation, and they can then claim Gift Aid tax relief of 25p on every pound you give. This means if you donate £100 to a charity, the total value of your donation to the charity becomes £125, at no extra cost to you. The charity claims this extra 25% from HM Revenue and Customs.

To enable Gift Aid on your donation, you usually need to complete a simple, one-time Gift Aid declaration form for the charity. This confirms that you are a UK taxpayer and you are happy for the charity to reclaim the tax. This form is generally available in both paper and online formats from individual charities.

The Importance of Gift Aid in Donor Retention

Gift Aid plays a crucial role in donor retention, enhancing the impact of individual donations and fostering a sense of empowerment among donors.

In the UK, the Gift Aid scheme allows charities to claim an extra 25p for every £1 donated by a UK taxpayer, at no additional cost to the donor. This essentially amplifies the value of the donation, allowing the charity to further its cause more effectively.

For donors, the knowledge that their contribution has a greater impact can strengthen their bond with the organisation, leading to long-term support and repeated donations.

How to Encourage Donors to Sign Up for Gift Aid

Gift Aid is an initiative that allows UK charities to reclaim tax on a donation made by a UK taxpayer, significantly boosting the amount of the donation at no extra cost to the donor. To encourage donors to sign up for Gift Aid, it’s important to communicate the benefits clearly.

Start by explaining the concept in simple, understandable language. Let them know that for every pound they donate, an extra 25 pence is added by the government. This can be expressed as “For every £1 you donate; we receive an extra 25p from the government at no cost to you.”

Next, place easy-to-find and clear prompts across your donation journey, particularly on your website and social media platforms. These prompts should highlight the option to add Gift Aid to their donation.

In addition, consider sending dedicated emails or newsletters explaining the Gift Aid scheme. This can be backed up with success stories showing the difference the extra money has made to your cause.

Finally, keep the sign-up process simple and straightforward. Too many steps or complications can deter donors. Consider creating a short, easy-to-follow guide or video showing people how to sign up when they donate.

Other Factors to Consider

While Gift Aid is a valuable tool for improving donor retention, it’s not the only factor to consider. To retain donors, you need to provide excellent donor stewardship, meaningful impact updates, and opportunities for engagement.

You also need to ensure that your donation process is user-friendly and secure. Gift Aid is just one piece of the puzzle, but it can help you improve your overall donor retention strategy.

Contact GoodtoGive for Gift Aid Support

If you are looking to claim Gift Aid for a charity GoodtoGive can help you. Many charitable organisations have gained the tools required to streamline their finances and make the most of donations. To find out more about our gift aid management service and charity accounting services, get in touch with a member of our team at 020 7731 2041.