By Elliot Green
17 May 18
On Wednesday last week, Tracey Crouch MP, Parliamentary Under Secretary of State for Sport and Civil Society, generously took time to meet Wonderful.org founder, Kieron James. We were able to present our thoughts about fundraising regulation, the need for greater transparency in the fees and charges made by fundraising platforms and our concerns about the destination of funds generated by the tax relief scheme, Gift Aid. We are very grateful for this meeting and all opportunities for meaningful discourse are valuable if we are to restore trust in a sector where trust really should be taken for granted.
Why did we meet?
During a parliamentary debate led by our local MP, Mary Robinson in November last year, the Minister responded to questions about transparency and Gift Aid and an invitation to provide further input from interested parties was offered.
Since then, the Wonderful Organisation has been involved in revisions to the Fundraising Code of Practice and its accompanying Guidance Notes, submitting our formal response to the Consultation which closed in March. We were grateful for the opportunity to raise a number of points directly with the Minister. As Mary Robinson stated last year, “People like using online platforms because they provide a hassle-free way to present a fundraising case and allow individual donors to set up their own mini-fundraising campaigns for causes close to their hearts. With large sums being donated and handled, it is important there is transparency.”
Our view on fees
At Wonderful.org, we make no charge to charities, fundraisers and donors. We make no deductions from Gift Aid either, but we fully accept that fundraisers and donors have many reasons for choosing a fundraising platform. Deductions from donations form only one (albeit important) element of the decision-making process. However, if decision making is to be rational, information must be to hand at the point decisions are made.
Charges should be displayed as a single amount at the point of donation, not in a complicated illustration of what might be charged linked from the footer of a website. Arriving at a supermarket checkout to be told “sorry, you can only take 92% of your apples or maybe 93%, but that depends which card you use to pay” would of course be unacceptable. To extend this analogy, obfuscating practices (which seem peculiar to our sector) make matters far worse. It’s highly likely you’ll never know how many apples are actually missing from your groceries.
Describing platform fees and transaction fees separately further reduces clarity. However, this approach is common on fundraising websites and represents a neat way of distancing the platform’s costs from card-processing fees. By adopting this stance, card fees are perceived as a charge levied by a third party and therefore out of the platform’s control. The reality is that they are no different from web hosting or any other cost which scales with business activity (be it a for-profit or non-profit organisation). They should be treated exactly the same way - factored in to the overall cost of operating the service.
If a donor makes a £10 donation, the amount the charity will receive from that donation needs to be displayed clearly (not an amount minus additional card-processing charges; not an amount which might vary according to the type of payment card used; not an amount which varies based upon whether the donor offers to meet some or all of the platform’s costs). With web technology and payment systems available to fundraising platforms today, there really is no excuse for anything other than clarity - unless there’s another reason for opacity.
A simple solution
The fee (or combination of fees) should be shown as a single percentage with associated values clearly displayed too. Fees should be shown after the Gift Aid box has been checked (and associated declarations made), ensuring complete transparency at the point the donation is made.
During our meeting, we also raised the important matter of Gift Aid, which we resolutely believe to be a tax relief scheme intended to benefit charities. Gift Aid should be used for, and directed exclusively to, charitable causes. As we stated in our response to the Consultation on the Fundraising Code of Practice (citing a National Audit Office statement regarding Gift Aid from 2013): “Tax relief on donations reflects a long-held principle, consistently accepted by Parliament, that charitable income should be exempt from taxation where that income is used for charitable purposes. Gift Aid and other reliefs on donations are current mechanisms for achieving this.”
We believe that deriving shareholder benefit is not a charitable purpose and using Gift Aid to remunerate fundraising platforms (or any other intermediaries) is contrary to the spirit and the letter of this long-held principle.
Charity Tax Commission Consultation
The Charity Tax Commission is now seeking views on whether the £3.7bn of tax reliefs that charities receive each year is generating maximum public benefit. The last comprehensive government review of charity taxation and reliefs took place over 20 years ago. Since then, the charity sector and the environment in which it operates have changed dramatically. The sector has grown significantly in scale, and charities now do more, including playing a much bigger role in the delivery of public services.
Meanwhile, Britain’s departure from the EU opens up potential opportunities to review a number of issues related to the tax treatment of charities. The aim of the commission is to ensure that the tax system and the reliefs it offers are still operating in a way that generates the maximum public benefit.
This call for evidence seeks views from interested parties including members of the public. If you share our vision for Gift Aid (and even if you don’t!), we would urge you to respond.