Issue
When the Inland Revenue randomly selected LionHeart for a routine Gift Aid audit the charity knew that they had to be able to produce instantly any individual gift aid certificate it had ever received.
Since its introduction in 2000 UK charities have raised millions of extra pounds through Gift Aid. The proper accounting of gift aid certificates is essential to avoid the painful penalties that can be imposed retrospectively on charities by the Inland Revenue.
LionHeart is the occupational benevolent fund for members of the Royal Institute of Chartered Surveyors (RICS) with a balance sheet value of almost £10m and an annual income of around £1.5m. The 90,000 members of the RICS are encouraged regularly to donate to LionHeart whose objectives are to support them and their dependents. Gift Aid was first launched within LionHeart at the beginning of 2003. Since then the charity has amassed over 20,000 gift aid certificates many of them covering backdated donations to the beginning of the Gift Aid scheme.
At the time of the Inland Revenue’s first audit visit to LionHeart in April 2005 these certificates in many different paper sizes were stored away in an office cupboard in no particular order. On being asked to retrieve a specific sample for checking, LionHeart’s Head of Finance and Administration, Roger Chester, immediately recognised that a daunting challenge lay ahead: “the Inland Revenue rightly expects charities to be able to extract a named sample for checking. We couldn’t quickly do this without a very exhaustive manual search and so a project was quickly established to scan, index and store electronically every single form.”
Solution
LionHeart approached Quantor Scanning Limited. Specialists in high volume scanning, Quantor also has experience in the development of scanning software solutions and was well placed to advise LionHeart on the project specification.
Each record on LionHeart’s management software, the fundraising system Raisers Edge from Blackbaud software, has a unique identifier known as the ‘Cons_ID’ number. By making this reference a common identifier between the records in Raisers Edge and the scanned documents, it is possible to ensure that each gift aid certificate is correctly ‘attached’ to the appropriate donor. “This proved to be an extremely important aspect of the project,” says Roger Chester. “ Getting the indexing right was crucial to the project’s success.”
All LionHeart’s gift aid certificates are sent to Quantor’s office in Walsall for scanning. “This is a more complex process than it sounds and comprises numerous distinct phases”, says Quantor’s Managing Director, Clive Dunkey. “Essentially the process is threefold – document preparation, the scanning itself, and then the process of correctly indexing the scanned documents against LionHeart’s database. Throughout, a very clear and traceable audit trail is created so that every piece of paper is accurately tracked.”
Document preparation involves staff removing paper clips, staples and folds from all the documents to be scanned. If a document is made up of multiple pages a seperator page is inserted at the end of the document, which is automatically recognised by the scanner as indicating a multi-page document. The scanning itself is a simple and swift process as Quantor use top of the range Kodak i840 scanners capable of processing 160 pages a minutes. Each scanned imaged is automatically saved as a tiff file and given a unique file name.
The indexing phase is more complex and time-consuming. Using a look-up index of donor data the data entry clerk assigns the correct Cons_ID number to the image file. Current donor forms make this process even quicker by pre-printing the Cons_ID number on the declaration certificate itself, thereby requiring the clerk simply to type the number into the software. The scanned documents are then exported to CD as pdf files and automatically renamed to reflect the Cons_ID number and the project to which it relates.
Quality control is another aspect of the Quantor process that is taken very seriously. Rather than randomly test a sample and assume the remainder are of an acceptable quality, Quantor’s system generates a random sample of 25% of the total batch for checking. If more than 1% of these are incorrect, a further 25% is checked. This process continues until a sample of 25% with an error rate of less than 1% is found. Detailed reports are also generated to monitor the productivity and error rates of individual operators.
Back at LionHeart’s offices in Coventry the scanned images are copied from the CD onto the charity’s server and then integrated into the Raisers Edge system using a utility program devised by Roger Chester. Once complete, every scanned imaged is accessible directly from the donor’s entry in Raisers Edge making retrieval for the Inland Revenue or for any other purpose extremely quick and easy. Quantor can then securely destroy the original documentation.
“This may sound long-winded and expensive but compared with the possible penalties that the Inland Revenue could levy against the charity, this system is well worth it,” argues Roger Chester. “If we cannot provide full traceability of gift aid certification the Revenue could claim back tax and interest based on unverifiable items in sample applied to the total gift aid claimed by the charity.
Potentially this is a very considerable sum given that claims could go back to the day the Government launched the scheme in April 2000. So I view this project as an invaluable investment against potential loss of gift aid income.”
For their return visit to LionHeart the Inland Revenue requested a sample file of 200 gift aid certificates and all the associated documentation. “This was produced in a matter of hours,” says Roger Chester. “They went away very satisfied.”
Having proved its value with gift aid certificates, LionHeart is now extending the scanning principle to cover the beneficiary side of the organisation. Each year LionHeart closes between 400-500 beneficiary cases, individuals that have benefited from a donation or loan from LionHeart. All the documentation relating to these – ranging from one off donations to £20,000 interest free loans – is now scanned, indexed and stored in a way similar to gift aid certificates.
Asked whether it was necessary to outsource much of the work to a third party organisation, Roger Chester, was adamant: “Even if it were cheaper to do it in-house, which it certainly isn’t, scanning isn’t our core business. We exist to help our RICS members and their families. As it is we couldn’t possibly invest in the equipment, software and staff needed and match Quantor’s highly cost effective and secure service.”
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