VAT waived for text donors

A campaign group led by Joe Saxton, head of nfpSynergy, and Hannah Terrey, head of policy and public affairs at CAF, has convinced the mobile phone industry to stop charging donors VAT on text donations. Their fight was supported by the Treasury which confirmed charities should not be paying VAT on text donations.

The value of a donation to charity by text message will therefore rise by 15 per cent as a result of a decision by the Mobile Data Association to stop deducting VAT from part of the donation.

Starting this week, a new system will allow registered charities to be allocated a five-digit short code beginning with ‘70'. When a donor uses it, the operators will be able to recognize the donation as charitable. They will still deduct their own charges and levy VAT on the charges, but VAT on the remaining amount will not be applied.

The system has been approved by mobile network operators Orange, 3, T-Mobile, Telefonica, 02 and Vodafone who will be responsible for ensuring charity users are legitimate by checking HM Revenue & Customs' charity search facility.

Former chair of the Institute of Fundraising, Joe Saxton, said: “This is a giant step forward. Currently VAT and other charges are putting charities and donors off donating by text. We estimate donations from this type of giving could reach £100 million in five years’ time if charges come down to around 5p-10p per text in total.”

“WIN, one of the companies that processes texts for mobile phone operators has agreed to process text donations for free. What we need now is for one of the socially aware mobile phone companies like Virgin or Vodafone to take the lead in lowering their charges. Richard Branson – we need you!”