Many arts organisations use patron, friends’ or supporter schemes to obtain financial support. Supporter schemes are often structured as different packages (e.g. “gold”, “silver”, “bronze”) that supporters can sign up to with varying benefits attached to each package.
To assess if a supporter scheme is eligible for Gift Aid, the benefits the supporter (and persons connected with the supporter) are eligible to receive must be valued and then compared with the total supporter payment. If the total market value of all the benefits is within the donor benefit limits, the whole supporter payment can be Gift Aided. If not it may need to be split out.
For VAT purposes, if you provide donors with benefits in return for a required minimum payment, then the minimum payment is potentially within the scope of VAT as consideration for a business supply. However:
- HMRC accept you can ignore trivial benefits such as low cost membership badges, flags or stickers, and a listing of supporter names in charity literature or on a plaque
- HMRC accept a supporter payment can be split as part donation and part consideration for the benefits provided all the substantive benefits are available to non-supporters for less
- HRMC do not accept that the provision of charity literature and priority booking rights can be ignored for VAT (whereas they do accept this for Gift Aid).