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Charity's million pound tax boost

By Jennifer Clarke
BBC Radio 4's Money Box

Sue Ryder Care's Samantha Leach and Alan Hodges
The charity's Samantha Leach and Alan Hodges in Muswell Hill
It is a chilly morning in March and a pile of books lies in the doorway of the Sue Ryder Care charity shop in Muswell Hill, north London.

They are just some of the 20 million items given to the charity's 370 shops every year.

Donated goods pay a crucial part in helping it to raise the 13m it needs annually to fund its work caring for people with conditions such as multiple sclerosis, Parkinson's and cancer.

As such the books are gratefully received.

But they are also a lost opportunity.

Pioneering

Because for the last eighteen months, Sue Ryder Care has been pioneering an innovative scheme called 'Sign on the Line' which asks taxpayers donating unwanted goods to sign up to the Gift Aid scheme.

It means for us at the end of this financial year an extra 1m that we wouldn't have had
Alan Hodges, Sue Ryder Care
This enables the charity to collect an extra 28p in tax relief for every per pound raised by selling the items in its shops.

It has been possible to collect Gift Aid on cash contributions for several years. But Sue Ryder Care was the first charity to devise a scheme which would work for physical donations.

The charity's director of retail Alan Hodges told BBC Radio 4's Money Box programme what a difference 'Sign on the Line' had made:

"We can get Gift Aid on something like 5 million donations a year, so clothing, books, bric-a-brac, all sorts of items that customers give us," he said.

"It means for us at the end of this financial year an extra 1m that we wouldn't have had, had we not been using Gift Aid," he added.

"It's a wonderful trick to increase our funds."

Unique ID

Donors are asked to sign a short Gift Aid Declaration form which confirms that they are a UK tax payer, and gives the charity permission to sell the goods on their behalf.

Goods for sale with a special Gift Aid price tag
Goods are tagged with the Gift Aid donor's unique number
Each person is then allocated a unique number which appears on the price tag of all their goods.

Specially designed computer software then tracks the progress of each item to the point of sale and works out how much each individual's contribution has made.

Sue Ryder Care then sends quarterly updates with details of the totals raised and tax reclaimed. Higher rate tax payers can then use this information to claim a further rebate through their self-assessment tax return.

According to Alan Hodges, customers have responded positively so far, but he would like more people to get involved.

"At the moment about a quarter of the people say 'okay'.

"We'd love to increase that to half, and then we could probably double that 1m to 2m; so it's really raising public awareness of how beneficial Gift Aid can be," he said.

Audit trail

The key challenge facing the charity was developing a system with a sufficiently robust audit trail to satisfy HM Revenue and Customs (HMRC) - which administers the Gift Aid scheme - that it could link the money raised to an individual tax payer.

A pile of donated goods next to a Gift Aid sign
Eighty percent of goods sold in Sue Ryder shops are donated
Alan Hodges acknowledged there were significant set-up costs, but said the ongoing administrative overheads were only about 10% of the amount raised.

He is optimistic that this figure will fall in the future as the number of donors continues to grow.

Sue Ryder Care business manager Samantha Leahy trained the charity's retail staff to use the new scheme.

"There was an element of apprehension, because they could see that it was going to involve additional work.

"But very quickly when we started to see just how much extra money this was generating, that seemed to be enough motivation for the managers to take it on board," she said.

Boost

I'm at least 10 per cent up in terms of the number of bags I get through the door now
Samantha Leach, Sue Ryder Care
As well as boosting the charity's fundraising activity, she also believes the drive to get customers to sign up has helped cement individual shops' relationships with their donors.

"I remember one lady who had signed up and given us a small donation.

"When we'd explained what it was about, she'd gone home and had a really good clear out and come rushing into the shop and launched it across the shop at me and said "I'm number seven!".

"She was so proud of the fact that she had a donor ID number."

Ms Leach is convinced the scheme has helped increase both the quantity and quality of goods received.

"I would say I'm at least 10 per cent up in terms of the number of bags I get through the door now," she said.

'Sign on the Line' won a Third Sector Award for Enterprise last year, and a number of other charities have since developed their own version.

'Super-size'

The British Heart Foundation launched its Gift Aid scheme across its 530 shops in September 2007, and has so far raised 700,000.

Chief executive Ken Blair said it allowed the charity to "super-size" the donations it received at no extra cost to the donor.

Actress and PDSA supporter Sue Nicholls
Actress and PDSA supporter Sue Nicholls outside the Cheadle shop
The animal charity PDSA's Gift Aid initiative has signed up almost 50,000 members since it went live last September, allowing it to claim almost 250,000 from HMRC.

Help the Aged, which has operated a similar system in its 364 shops since last April says it has made a "fantastic difference" to the charity's income.

Oxfam, which already collects Gift Aid on high value items, hopes to offer the facility across all donations by the end of the year.

Simplification

But a spokesman called on the government to simplify the current Gift Aid legislation to make it easier to claim.

In fact the government has just published its response to a consultation about encouraging the take up of Gift Aid, setting out various proposals to ease the administrative burden on charities.

More action is promised in the future.

Meanwhile Sue Ryder Care's Alan Hodges remains optimistic that as people realise the importance of Gift Aid to charities like his, the scheme he helped pioneer could prove even more valuable in the future:

"About 25m a year extra from the tax man could come, were the whole charity retail sector to embrace this," he said.

And that should mean fewer donations are left - literally and metaphorically - out in the cold.

Money Box


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SEE ALSO
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13 Mar 08 |  Business
Charitable giving: Your questions
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