Gift Aid for charity shops sales "is possible"
Howard Lake | 30 July 2005 | News
Gift Aid expert Barry Gower of GAIN says that he has come up with a way of claiming Gift Aid on sales in charity shops.
Charities are missing out on significant Gift Aid income from sales in charity shops, according to Barry Gower, who says his company can provide an approved method of redressing this.
Given that the total turnover from charity shops is nearly £500 million, it makes sense to convert as much of this as possible to Gift Aided income.
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Charities Aid Foundation research director Cathy Pharoah commented in Third Sector on 29 June that, while another 30% of charity income could be converted to Gift Aid, “the remaining 40 per cent, which mainly comes from cash pledges such as tin collections and purchases in charity shops, is much trickier to convert.”
So how is it possible to collect Gift Aid from charity shops’ income? Barry Gower told UK Fundraising: “The answer lies in the fact that charity shops are not ‘shops’ in the true sense of the word. Rather they are vehicles for converting gifts-in-kind into cash.”
As such, “there is no real sale for profit in the general sense of the word”. Sometimes charity shops take the goods, such as clothing and blankets, and pass them directly to the charity’s beneficiaries.In other cases, the donated goods are processed into other products, such as sub-standard clothing being converted into insulation or other material.
Charities using the eBay approach of selling goods online can also maximise their Gift Aid income, adds Gower.
According to Gower, the eBay approach “is quite an involved process which requires that the goods are a minimum value, usually around £30.00, the goods must be transported to a central location, and if not sold, taken back to the charity shop.”
After fees, VAT and eBay’s commission have been taken into account, Gower estimates that the charity shops nets only about 57% of the value that the item sold for on eBay.
When this is donated to the charity, it can claim the additional Gift Aid of 28%, bringing the net value to the charity to around 73%.
Gower says that GAIN , the Gift Aid Recovery Consultancy, has come up with a way of claiming Gift Aid on charity shop sales “which requires a minimum amount of effort”.
All of the Gift Aid recovery processing is undertaken by GAIN, “with no input or additional work required by the staff.”
Gower told UK Fundraising that “Our scheme complies with all the Inland Revenue’s requirements for claiming of Gift Aid which means that unfortunate claw-backs that some charities have experience can be avoided.”
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.