Date of issue: 8th August 2006

TACKLING CREDIT/DEBIT CARD DONATIONS AND GIFT AID

Charities that receive donations by credit or debit card may be encountering difficulties when the donation is also made under Gift Aid, but Birmingham chartered accountants Clement Keys say the solution may be as simple as amending documentation.

When any organisation receives payment by credit or debit card and the cardholder is not present, the organisation has to obtain the card's three-digit security code. Since April this year, Visa and Mastercard have instructed organisations to destroy the code once the transaction is complete.

However, this rule is at odds with the regulations governing Gift Aid. In order to satisfy
HM Revenue & Customs, charities must maintain an audit trail relating to donations made under Gift Aid, so a problem arises when credit or debit card details, including the security code, are completed on the Gift Aid declaration itself.

"One way of resolving this issue is to revise the layout of the Gift Aid declaration so that the security code can be detached and destroyed," says Alan Robertson, partner and head of the Pension Scheme and Charities Unit at Clement Keys.

"The Institute of Fundraising has been looking into this and advises that the best way forward is for each individual charity to take up the issue with their clearing bank."