The absence of any progress on Gift Aid reform in the pre-budget report has sent a wave of ‘disappointment’ across the sector, who were hoping for ‘more’.

Louise Richards, director of policy and campaigns at The Institute of Fundraising (IoF), which is part of a group that has worked with the government on the issue throughout this year said, “We are disappointed there has not been more action having invested in months of meetings with the Treasury and others on this over the year. Gift Aid is one of the most democratic and fairest ways to give and a cost effective way of helping charities, raising around £1bn a year. Considering charities are playing a frontline role in the delivery of services, as acknowledged by government, we are surprised they came back with nothing.”

The National Council of Voluntary Organisations (NCVO), ACEVO and The Charity Tax Group have expressed similar disappointment. Mark Astarita, director of fundraising at British Red Cross, said he was "terribly disappointed."

"Millions could have been gained by the sector with just the stroke of a pen. How sad is that?' he said.

The hope was that Alistair Darling would address the issue in the report, but the Chancellor gave no firm commitment simply promising to "continue to explore how best to support the third sector through the Gift Aid system".

Darling said the results of independent research being carried out by Warwick University into the effects of redirecting the Gift Aid on donations from higher-rate taxpayers from donors to charities would be published on the Treasury website on 15th December.

Richards said, “We understand the government’s desire to undertake independent research but we have a lot of experience and knowledge through input from our charity members and feel consultation with us would have been useful. Considering the research is being published in a week, the government must know what it includes.”

She added the worry was that the government would announce a need for further research on December 15th, adding, “We would be concerned by that, as this will merely mean an even longer wait for anything concrete. It may also take the consultation past the forthcoming General Election date.”

Richards said, with that in mind, the working group would be looking to initiate conversations with other political parties.

NCVO responded to the report saying, “We will work with sector partners to push the government to make a positive and right decision around Gift Aid reform as soon as possible, making the point that charities are playing a major frontline role in supporting communities right across the country to weather the recession and in delivering services to beneficiaries.”

While Mathieu Mori of the Charity Tax Group (CTG) welcomed the further discussions on Gift Aid reform.  He said, “The silence surrounding the treatment of charities in the report was deafening. Not once was the word ‘charity’’ mentioned and only a careful read through the PBR’s accompanying notes revealed some of the measures relevant to the sector.”

Mori said, two measures that will affect the sector particularly badly are the confirmation of the VAT rate going back to 17.5% from 1st January 2010 which it is estimated will cost the sector £60m to £70m per year and the increase of the national insurance rate by 0.5% from April 2011 which will cost charities an estimated £50m a year.

Charities Aid Foundation (CAF) chief executive John Low estimated that rises in national insurance and VAT will cost charities and their employees ‘hundreds of millions of pounds’.

On a more positive note many welcomed confirmation that the new substantial donors’ rules will be implemented and the announcement of £75m from the Dormant Bank Accounts Scheme to set up the Social Investment Wholesale Bank.

Low said, “This is could be a very significant step forward for UK charities and social enterprises seeking access to capital to enhance their social impact. We are delighted that government has responded to calls from CAF and others in the sector and plans to create an independent mission-driven bank operating exclusively at a wholesale level.”

However, there is concern that the investment may not be enough. Low said, “This alone will not be sufficient to establish a viable and sustainable wholesale investment bank. Together with further investment levered from elsewhere, it is vital that a continuing flow of funds from unclaimed assets is secured so that the true potential of this initiative can be realised for the benefit of society as a whole.”

NCVO agreed, saying, “This is a useful first step. NCVO has been actively lobbying on this issue for some time. However the money from dormant accounts alone will not be sufficient - the government should look to additional ways of capitalising the social investment bank. In our submission to the Office of the Third Sector we called for an initial cash injection from government of £50m in addition to a share of the unclaimed assets that become available."

Commenting on changes to substantial donor legislation, Low said: “We have always maintained that the existing rules were unnecessary because HMRC has sufficient legislation to prevent abuse. We are pleased that they have constructively engaged with charities to find a solution. We now need to see the legislation in detail but it looks as though they have listened and genuine donors should have nothing to fear.”

He concluded, “Regardless of this pre-budget report and the deep recession, the UK continues to have one of the most generous tax environments for charitable giving. As tax rises these benefits become even greater, especially for higher-rate taxpayers.”

According to a Third Sector report, Jenny Willott MP, the Liberal Democrat charity spokeswoman, says the Chancellor has "kicked the third sector well and truly into the long grass," with the report.