e-Learning Foundation

Information

Gift Aid

Application of Gift Aid to individual donations
The opportunity for charities to boost the value of their funds through the Gift Aid scheme is significant. Charities can claim tax back from the Inland Revenue in respect of Gift Aid donations from individuals who are taxpayers. This is currently worth the equivalent of 25% of donations from such donors. However, it is important that schools fully understand the rules governing Gift Aid for individual donors and that the scheme is clearly explained to the individual donors.

There are two ways in which Gift Aid applies in the context of a school with an e-Learning Foundation programme. The first is where the school uses the e-Learning Foundation’s Donation Management Service (DMS). The other is where a local charity is registered in order to benefit directly from the Gift Aid, and also to meet all the administrative requirements of operating as a charity, collecting monthly parental donations and claiming Gift Aid from the Inland Revenue.

In both circumstances however the same Inland Revenue rules must be complied with.

Gift Aid - the benefit rules
The Gift Aid rules allow charities to provide donors with limited benefits in connection with their gifts. However, if specified statutory limits are exceeded then the donations may not qualify for Gift Aid. The Inland Revenue uses a three-stage test in considering whether donations qualify for Gift Aid when benefits are provided:

Does the donor receive a benefit or a person connected with the donor?
Is the benefit received as a direct consequence of the donation?
Does the value of the benefit exceed the Gift Aid limits?

The Case Studies at the end of these guidelines provide examples of arrangements that satisfy the Gift Aid rules, as well as ones that don’t.

The Guidelines
To help schools get on with planning and implementing their e-learning programmes and associated fund-raising, we have agreed a set of guidelines with the Inland Revenue who advise us that if they are followed then their three-stage test will be satisfied. If, however, there is any doubt then you should call the e-Learning Foundation in the first instance.

Present the scheme to donors as the means for the school(s) to provide their children with access to learning resources when and where they need them, especially when the pupils are not at school.
Focus the programme on the learning and not the laptop. Avoid presenting the programme as a “laptop scheme”.
Donations to the school’s programme should not be presented to parents as a means of purchasing a laptop. The school (or the leasing company), and not the parent or the pupil, will remain the owner and manager of the equipment until such time as the school chooses to dispose of it.
Make the nature of the donation clear.Gift Aid is a tax relief for gifts and not payments for goods or services. It is important that donors are clear about the nature of their donation i.e. their donation is not "buying" a computer but is a gift to the Foundation to help it achieve its objectives. Avoid programmes that ask for different donation levels for different computers, for odd amounts (e.g. £11.87 rather than £12), or for different periods of time, as these all cast doubts as to whether these are genuine donations.

Be able to demonstrate that use of the school computers by students is not related to their parents’ willingness or ability to contribute to the programme

The school or Local Authority should buy or lease the computers and make them available for use by all relevant students, whether or not their parents or guardians have contributed. You should take care to make this clear to parents when presenting the scheme to them. There should be no suggestion that participation in the programme is only open to those willing or able to contribute financially.

Be able to demonstrate that students do not in effect "own" a specific machine.
Individual students should have access to the equipment at the discretion of the teaching staff. Unless every child has their own machine, no individual piece of equipment should be linked to a particular individual and students’ work should be permanently saved on a floppy disk or on a central server so that more than one student can use the equipment. (Where students have exclusive access to a specific machine and are able to make personal use of it on a regular basis then the value of the benefit could exceed the Gift Aid limits).

Have systems in place to prevent non-educational use of the equipment
Due to the nature of the software licence that the school will enter into, it will be a contravention of the licence to use the computer for any purpose other than education. Schools must enter into a clear agreement with parents where computers are taken home for schoolwork and there should be robust systems and sanctions that are applied where the agreement is not adhered to.

Don't promise donors that they will eventually own a computer as a result of their donations
Any scheme that involves the transfer of ownership of a school computer to a donating parent at some point must be able to demonstrate that the arrangements are at arms length and are unrelated to any donations made to the Foundation e.g. they could be offered to all parents in a blind auction arrangement.

Make sure you make the Inland Revenue aware of all funding sources for ICT in your school(s).
The Inland Revenue is more disposed to approve of schemes where parental donations do not constitute the majority of the funds for ICT in the school(s) supported by your Foundation, as that reduces the direct link between the donation and the benefit and hence the value of the benefit. Should you be asked, ensure you make them aware of all funding involved i.e. school funds, Government programmes, LA support, business donations, e-Learning Foundation grants and other sources.

As the Inland Revenue may not be able to provide a view on your local arrangements ahead of you setting up, they have stated that they welcome the role of the e-Learning Foundation as a “conduit” for enquiries on whether particular local arrangements are eligible for tax relief under Gift Aid.

Change in tax status
It is important that, at least once a year, you re-confirm the tax status of all donors. If any donator is no longer paying sufficient tax on their income and/or capital gains to quality for as a Gift Aid donor you must notify us.

We have put together a few case studies as examples of where schemes have and have not been compliant.