Chancellor Gordon Brown has made good on his intention to create a new Gift Aid scheme. But how have museums and heritage sites responded?

Veronica Cowan picks her way through the rules surrounding Gift Aid and asks museums and heritage sites how they have responded to changes in ways they are allowed to claim it.

Museums and heritage sites are always looking for ways to conserve, survive, improve their offering and employ more staff. Gift Aid - a form of tax relief on charitable donations – gave sites a way to do this. For every £1 donated by a qualifying tax-payer they could claim back 28p from the Inland Revenue.

For a gift to be eligible no benefit could be given in return, but when the rules were changed in 2000, a grey area emerged that allowed charities, whose main purpose was preserving heritage property or conserving wildlife, to disregard admission as a 'benefit'.

For heritage sites that charged an admission fee (of course, many of our Museums don't) this was welcome news. As a result, sites like the Eden Project and the National Trust were able to begin claiming around £1 million a year from Gift Aid on admissions.

Eventually the Treasury cottoned on and the Chancellor objected that admission fees were merely being “badged” as donations without generating any additional giving from the person making the payment.

According to Mr Brown, that defeated the purpose of Gift Aid, which was supposed to encourage charitable giving. Thus he announced his plan to change the rules again, leaving charitable attractions to continue claiming Gift Aid on annual membership and Friends’ schemes, as they had before.

Gift Aid had made a huge difference to every kind of visitor attraction, from the largest to the smallest, including the Eden Project in Cornwall.

To head off this potential threat to a valuable income stream heritage attractions put together a powerful lobby group and the eventual upshot was that instead of abolishing Gift Aid on admission income, the Chancellor compromised. He extended it to more sites - to recognise the diversity and social utility of other charities - which, he said, were at a commercial disadvantage by being excluded.

After April 2006, Gift Aid can be claimed where admission is charged to view specified types of property 'preserved, maintained, kept or created by a charity in pursuance of its charitable purposes'.

This rules out commercial fund-raising activities, such as a funfair in the grounds of a museum, but brings into Gift Aid specific buildings, grounds, land, plants, animals, works of art, artefacts and property of a scientific nature.

According to Mark Nellthorp, Head of Charities at the newly-merged Inland Revenue and Customs & Excise (HMRC), the Chancellor wants to encourage commitment to the charities, beyond one-off payments from visitors.

Chatham Historic Dockyard

Before April, the charities that run our heritage sites only needed to ask a qualifying taxpayer to sign a donation form. Now donations made in lieu of admission charges will only be eligible for Gift Aid if either the donation is at least 10% more than the usual admission charge or it allows unlimited admission for at least a year whenever the property is open to the public in that period - save for special events on five days a year.

As recently reported on the 24-hour museum, the changes have prompted several museums, including The Tank Museum in Bovington, Historic Dockyards Chatham and The Vale and Downland Museum in Wantage to opt for the ‘annual memberships’ scheme in order to qualify.

This benefits people who live locally because they can make return visits, and the charities hope to gain from ‘spin-off’ benefits, like visitors spending in the shops and cafes.

Another site that has opted to issue a season ticket is Fishbourne Roman Palace near Chichester. Its commercial manager, Phil Davies explained that Fishbourne already has a members’ society and Friends’ scheme, and with the season ticket ”the visitor pays the normal admission price, which also attracts Gift Aid, and they get a ticket to come back as often as they like up to a year”.

The new rules means several regional museums are adopting 'annual memberships'. The Tank Museum, Bovington

There are other, more challenging options - such as asking visitors to pay an additional 10 per cent to attract Gift Aid. One museum that has chosen this is the Weald & Downland Open Air Museum at Singleton. An inducement in the form of a token – up to a certain value within the Gift Aid rules – is issued, which the donor can redeem in the shop or café.

The Beaulieu Motor Museum is also trying to make the new system work. “We did not want to throw it away”, said Margaret Rowles, public relations officer, “so we are offering a 12- month annual pass to the motor museum only, as that is the one that is run on a charitable basis.” The remainder of Beaulieu is not operated as a charity and staff have to monitor that the pass holders don’t go into the other attractions “or we could lose out,” she said.

The Ironbridge Gorge Museum was reported to have made £100,000 a year from the old admissions scheme, but have now also changed to an annual pass, because they thought the 10 per cent option might be difficult to sell, explained Richard Aldred, group media officer. “As our visitors are mainly tourists we won’t have too many repeat visits, and it is good public relations for local visitors”.

Some charities find the guidelines for operating the scheme unclear, reports Frances Garnham, assistant director at the Historic Houses Association “They find the new system confusing, with rules and caveats, and there is concern that some smaller houses are not gaining from it. The guidance on what inducements can be given is unclear.”

© Weald and Downland Open Air Museum

One of its members is Stanstead, whose manager James Cooper, said they had not been using the scheme before, but have started doing it since the changes. “We are trying the 10 per cent donation, and it is working well. We have selected a specific project for conservation – the blue drawing room – and we are not offering any inducement,” he reports.

Another member of the Historic Houses Association is Painswick Rococo Gardens. Paul Moir, its director, reports that they have lost £12,000 from the changes. “We are a small charity with volunteers who are not comfortable asking for an extra voluntary payment, but we are giving a voucher equivalent to the extra 10 per cent to be used in the shop.”

In his view, the old scheme’s credibility was damaged and he would prefer it to have been abandoned altogether because he thinks the big charities will gain and small ones lose out from the new system.

The National Trust is not opting for the season ticket because this would compete with its large membership scheme, which already attracts Gift Aid. Instead it is piloting the new 10 per-cent scheme at 27 of its properties, including Stourhead and Lindisfarne, reports Gill Raikes, director of fundraising.

Iron Bridge Gorge

“It is difficult to ask front-of- house staff to ask for the extra donation and we are piloting it as an opt-in, but I have a hunch that next year we will go for the opt-out, but make it clear that the 10 per cent is a voluntary donation.”

According to Ms. Raikes, some attractions are simply adding the 10 per cent to the admission charge, and “not presenting the normal admission price and the 10 per cent - so that it is clear the 10 per cent element is voluntary. ” She believes this to be outside the spirit of what the Chancellor wanted Gift Aid to achieve.

It sounds like it could be, if comments by the Head of Charities at the HMRC are anything to go by. Mr Nellthorpe has said that to attract Gift Aid, people have to make a conscious decision to donate 10 per-cent on top of the admission charge. “Asking them to opt in is preferable," he says, "but if they are asked to opt out it would have to be made clear it is a voluntary extra payment and done in such a way that the individual has a real choice.”

He has also warned that if his office gets complaints from visitors who feels they were 'hoodwinked' it could jeopardise the whole Gift Aid claim for a site, and his inspectors will be doing blind audits!

It seems as if the Gift Aid debate could run and run.