Resources - Donations

Financial donations is a more conventional way of supporting charities and can appeal to businesses who prefer giving on an ad-hoc basis, or consider this a more suitable form for their company.  Both direct and indirect giving (donations that are split out through grants or funding bodies) can be of real benefit to voluntary organisations, as well as a clear demonstration of Corporate Social Responsibility.

• Documents and Support
• Donating in Hertfordshire
• Top Tips
• Case Studies
• Useful Links

Documents and Support

Giving to charity by business

A help sheet developed by HM Revenue and Customs is free to download.

Donating in Hertfordshire

Community Foundations and Trusts act as go-betweens dispersing funds on behalf of companies to local good causes. In Hertfordshire, there is:

• Hertfordshire Community Foundation,
• Stevenage Community Trust
• Dacorum Community Trust 

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Top Tips

• First Steps
• Forms of Financial Donation
• Gift Aid Explained
• Selecting a Donor and Monitoring the Donation
• Giving Back

First Steps:

The following considerations should identify the type of financial donation most appropriate for your business:

• Would your business consider building charitable donations into its budget?
• Would the long term benefits or added value of donating to charity be profitable for your business?
• Would you consider fund-raising activities within staff time?
• Is your business looking to develop relationships with voluntary sector organisations?
• Would capacity building voluntary sector organisations be of benefit to your business?

Forms of Financial Donation: 

Other forms of financial donations can include:

• Profit Percentage: Donating a percentage of annual profits can provide a long term and embedded approach to supporting charities.  The beneficiary does not have to remain the same but, for larger companys, this option can be consistent and does not comprimise financial planning.
• Payroll giving: If your employees have expressed an interest in donating to charities, payroll giving is an efficient option - and one which can be particularly beneficial to charities in line with tax exemptions.
• Pay day donations: For the high earners, this can be a meaningful act, and one that is endorsed by other prominent figures.  Donating one day's pay to a charity may make a relatively small difference to your montnly income - and a relatively big difference to a charity.
• Fund raising: Fund raising activities offer an opportunity for a collective effort that does not have to involve a direct financial donation from the business.  Supporting employees in arranging Red Nose Day events or organising festive donations can raise a financial contribution whilst improving team working and staff morale.  
• Matching fund raising: If your organisation is in a position to do this, matching any funds raised by employees can demonstrate social responsibility and your appreciation of employees' efforts. 
• Spontaneous giving: In recent years, tragedies such as the tsunami or 9/11, have led to episodes of spontaneous giving.  Organisations may consider how they will respond to situations like this and whether they are in a position to organise a fund for emergencies.  

Gift Aid Explained:

Gift Aid is a charitable initiative that was launched in 2000 and enables charities to claim back 28 pence for every pound from HM Revenue and Customs. 

• Donors must reveal their tax status and address: tax can only be reclaimed if it has come from your taxed salary.
• Any payments made over the telephone must orally request Gift Aid.
• Donating through direct debits from your taxed salary is also eligible and must be specified on the first donation.
• Gift Aid is more relevant to one off donations - payroll giving schemes deduct donations pre-tax and this means that there is no need for Gift Aid.
• Gift Aid has led to tax efficient forms of donation and revised the ways in which money is given to charity.  Putting £10 in a collection box could equal £12.80 in a direct debit donations.

Selecting a Donor and monitoring the donation

• Output not input.  Invest in a charity where the impact of their work is demonstrated and of value.  Avoid basing your choice on low administrative costs (this is not always the sign of a good charity) or on fund raising prowess.

• Realistic demands.  It is difficult to see exactly how your donation will be or has been spent and expecting a charity to report back on all their activities will be an inefficient drain on their resources.  Annual reports will provide a picture of the work undertaken by an organisation, and many charities exceed this basic level under their own initiative.

• Appropriate demands.  Tailor the level of your expectation to correspond to the organisation you are supporting.  A smaller, local charity may welcome more active involvement whilst engagement with a larger organisation with its own clear set of objectives is inappropriate.

• Unrestricted funding: Organisations not projects.  If you are looking to become involved in a specific project or initiative, donating money may not be the best option.  Charities can sometimes become constrained by project based donations or find themselves drawn between the donation's demands and their core objectives.  Consider each organisation individually and examine forms of giving such as sponsorship if a clearly defined scheme is important to your organisation.

• How much? The amount that is donated is obviously dependent on the organisation's budget and resources, but it is worth bearing in mind that very small contributions in this manner can be more costly than cost-effective and, in some cases, very large donations may not be appropriate for organisations that are accustomed to working on a smaller scale and not prepared for rapid growth.

• When? Whilst any donation is obviously greatly appreciated, it is more helpful to spread donations out over a year than to contribute one lump sum each year. Similarly, grant funded organisations can be better supported by multi-year distributions, i.s. the lump sum allocated out over the duration of the grant. This means that charities are better able to budget and prepare for the future.

Giving Back

Voluntary Sector Organisations can use the following suggestions to demonstrate their appreciation of donations and ensure that they continue attracting support:

• Transparency.  In order to support businesses' understanding of the operation and structure of VSOs, transparency and clear communication is essential.  How are contributions used? Is the organisation's budget available? How do you communicate value for money?

• Engagement.  Businesses are more likely to continue donating to charities if the involvement has exceeded a financial transaction.  If possible, invite donators to visit your organisation so that it can see how you work and how there money is spent.  Consider featuring their name on promotional materials or thanking them in newsletters. Explore other avenues for partnerships that may be of mutual benefit.

• Information.  Provide information about tax relief and ensure that any potential donors are aware of gift aid. Train all staff and volunteers in this area so that they are able to relay the information appropriately and efficiently.

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Case study 

Stevenage Community Trust

Stevenage Community Trust acts as a broker between the business and voluntary sectors. Large and small companies pay a regular subscription for the general support of local community projects. The Trust also uses its local knowledge to help other companies target their donations in support of specific causes, maximising benefits to all concerned.

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