Evelyn Waugh once said "money is only useful when you get rid of it". Those following his maxim and giving to charity should surely use the most tax-efficient approach possible. Sadly too many charities report that they could do so much more if givers used the tax avenues available.

Charitable giving has fallen by 25 per cent since 1992 but personal wealth has doubled over that period.

The Gift Aid scheme is the best-known arrangement. By making a simple declaration that you pay at least basic rate tax, a charity can reclaim 28p in every pound donated from Revenue and Customs.

Following the cyclone disaster in Burma in May, both the Red Cross and the British umbrella body for aid organisations, the Disasters Emergency Committee, said thousands of pounds were lost simply through donors omitting to tick the Gift Aid box.

In March the Chancellor announced he would continue to allow the 190,000 registered charities which use Gift Aid to claim tax relief at 22 per cent, rather than have it reduced to the new basic 20 per cent rate.

Charities were fearful that they would have lost over £90m a year if this concession had not been made. However, the Treasury has set a three-year limit.

While street donations to collecting boxes are inefficient tax-wise as the anonymity means the extra tax element cannot be claimed, those who give either online or by telephone are urged to give the information for a claim to be made.

Charities say that donors do not seem to appreciate that they are not personally paying this extra sum.

There is a further bonus in using Gift Aid. Higher rate taxpayers can claim an extra 18p per pound through their tax return, which is the difference between basic and higher rate tax.

If there is concern that sponsorship money is being directed into too vague a cause, consult www.intelligentgiving.com which recommends schemes, such as Good Gifts which guarantee specific items.

A year's supply of tea at £15 would not only be sourced at a fair price from small producers in southern India but then distributed to the disabled, widows and poor in India.

Giving regularly helps charities and there is a scheme for employees, Give As You Earn.

You decide on the monthly contribution which is paid from your gross salary before taxation.

By ignoring payroll-giving, donors are letting charities loose out on £1bn annually, according to research by Oxfam last year.

Staff with the Royal Mail Group donated a record £2.6m through the scheme last year.

More than a quarter of employees now make monthly payroll donations, the highest rate of participation in any British company.

ShareGift is another way to help a charity. Any shares that are no longer required, perhaps obtained through demutualisation of a building society or when a utility was floated on the stock market, can be donated.

ShareGift bundles the same shares together to make the trade efficient and ensure the net proceeds go to charity. Stockbrokers Killik & Co execute the sales on a commission-free basis.

ShareGift gives away over £1m annually and likes to hear from donors of their favoured causes. Even after death, you can help a charity in a tax-efficient way. By donating to a charity in a will, the money given will be deducted from your estate before calculating inheritance tax. The Charities Aid Foundation is a useful source.

Giving unwanted items from clothing to antiques can certainly help a charity. The very first gift to Marie Curie Cancer Care was a diamond engagement ring. That simple act of generosity in 1948 allowed the charity to become established and grow into a body which now helps more than 25,000 people a year.

Consider taking out a donation card where your favourite charity benefits every time you spend. Last year a staggering £7.5bn was spent using 4.8m such cards.

The charity benefits in two ways – by an initial donation from the card issuer and by a percentage based on your purchases.

Halifax, for instance, pays £20 when starting either a Cancer Research UK or NSPCC card and then at 0.25 per cent of turnover.

Along with Bank of Scotland, they provide over 85 donation cards. MBNA Europe issues over 800 such cards.

The rates vary but, as an example, £25 is paid to the PDSA for a new card plus 0.25 per cent on purchases.

The Co-operative Bank is also one of the largest issuers in this field. It contributes £20 when a Shelter Visa card is opened and pay 0.25 per cent on turnover.

Their other cards support such charities as Actionaid, Children in Crisis, Christian Aid, Mothers' Union and the Ramblers Association.

Other providers are American Express, Beneficial (such as RSPCA Platinum) and The Royal Bank of Scotland (like Lifeboats' MasterCard).

If you wish to help someone abroad with the loan of your capital, consider lending through a micro-credit site like Kiva.org

The website tries to match donors with those needing equipment, such as perhaps African women selling local crafts who require materials. The organisation has had backing from former US President Bill Clinton.

The loss is your interest for a period of time, unless the person or body defaults on repaying the loan. While loans are not guaranteed, Kiva reports a default rate of only 0.3 per cent on $1.4m of loans.

One major tax reform that the Government has still not introduced is to give tax relief on charitable remainder trusts (lifetime legacies). In the US, where charitable giving is much higher, 40 per cent of all donations to educational, medical and arts charities come from this source and from trusts whose average size is $500,000 (£268,000).

Chairman of the Giving Forum Lord Best said: "People who are willing to give but are unable immediately to release their assets or wish to be sure that they will have a secure income during their lifetime, could place assets in a trust, with the benefits of tax relief and an assured income, while the chosen organisation could share in the profits of the trust and would receive the assets on the donor's death."

There are some novel ways to give to charity. A fee-free mortgage broker – Quotes4
Charity.co.uk – will donate 35 per cent of commission earned to charity. After completing an online application, advice is given by freephone or the internet.

On average each sale generates £100 for a charity, most of which is chosen by the client with the balance going to Quotes4Kids, whose first project was to build a computer laboratory for a Cambodian school.

Another idea is the internet-based auction – BuyOnceGiveTwice.co.uk – which has teamed up with over 50 charities.

The founders' inspiration was the high proportion of lots at charity auctions which had been sold but not used.

Case Study


Lucy Robertson, pictured, a 31-year-old art dealer, decided on an easy way for supporters for her recent charity run to maximise the tax for her chosen charity.

She opted for the Just Giving website which makes it easy for subscribers using the Gift Aid scheme. "It's a no brainer to get an extra 28p at the click of a button," says York-based Lucy.

That means that the charity can reclaim the basic rate tax on behalf of the donor.

She decided to go for the Great North Women's Run, a BUPA event, to raise funds for diabetes, from which her late father – a well-known antique dealer and museum creator – suffered. The disease affects 2.3 million people in Britain.

Lucy had not run since school days but trained for two months around the bridges of York. Together with her mother, Margaret, they raised over £1,400.

When not running or working, Lucy enjoys cooking, keeping fit and travelling.

She gives a little-known tip from eBay – the website asks successful sellers if they want to donate some of their proceeds to charity.