As one fundraising website is suspended, we look at how the key players operate and whether all your money gets through
Millions of people generously pledge money online, sponsoring friends and colleagues to complete a sporting event for a charity. But how safe is the cash and how sure can donors be that their money will reach the charity?
Last week one online service, Charitygiving.co.uk, was suspended, with an estimated £250,000 of charitable donations missing, raising concerns for anyone who has donated via a fundraising website.
The Charity Commission, the independent regulator of charities in England and Wales, suspended the CharityGiving site after an inquiry into the registered charity that runs it, the Dove Trust. “It appears there is an estimated £250,000 shortfall between the funds CharityGiving holds and what it owes to charities,” said a Charity Commission spokesperson.
Approximately 7,000 people have been raising funds for charities via the portal but the commission, which has appointed an interim manager to investigate, has yet to establish which charities and donors are affected.
This is the first such scandal in the online fundraising sector – where individuals have, until now, generally assumed their donations are safe. CharityGiving is a tiny player in a market dominated by large, established portals including the world’s largest platform for charitable giving JustGiving and not-for-profit platforms run by financial services company Virgin Money and telecoms giant BT.
CharityGiving is also unusual in being run by a registered charity; hence the involvement of the Charity Commission as regulator. There is no dedicated regulator of fundraising platforms run by non-charities.
Aiming to put the suspension of CharityGiving into context, Michelle Russell, head of investigations and enforcement at the Charity Commission, said: “Our concerns are limited to the Dove Trust and the CharityGiving portal, and this should not undermine public confidence in online giving.”
The big players in the online fundraising sector were last week keenly reassuring donors and fundraisers shaken by the demise of CharityGiving.
JustGiving chief executive Zarine Kharas said: “The news that charitygiving.co.uk has closed should remind charities and donors to ensure they are giving through a route which separates out, and ring-fences, all donations from the provider itself.
“What has happened could not happen with us because every gross donation made via JustGiving goes into a separate trust account and is passed on to the relevant charity within three days of the donation being made. So if JustGiving were ever to go bust, all donations would be protected.”
When it comes to Virgin and BT, many will rely on the power of the brand name. A spokesperson for Virgin Money Giving, said: “We have access to the support, infrastructure and financial services expertise of the Virgin Money group to ensure that our service is both reliable and secure.
“The board of directors includes external members to substantiate governance and all donations that come to Virgin Money Giving are held in a ring-fenced trust account and passed in full to charities on a weekly basis.”
Gross donations paid in to BT MyDonate, also go straight into a trust account and are passed on to charities on a weekly basis via a BACS transfer, while the gift aid it collects gets passed on within a month.
But security is not the only factor donors and fundraisers should be aware of.
There are also differences in how much each of the websites charges charities for their service and, hence, how much of donors’ donations plus gift aid actually gets passed on.
When Guardian Money compared the main providers, we found that BT’s service is the best way for charities to receive the most from donations.
The biggest player in the sector, channelling £1.5bn to over 13,000 charities since its launch in 2001, JustGiving is a private company that recorded profits of £1.4m in 2011.
In the UK, where it reclaims an extra 25% on donations via the gift aid scheme, it charges charities £15 a month plus a fee of between 2% and 5% (volume discounts apply) on every donation. Card transaction fees of 1.3% are also deducted.
“We hand over 100% of each donation made to the relevant charity within days. We then reclaim the gift aid, which can take weeks, and take our fee out of that before passing it on to the charity,” a spokesperson says.
On a £10 donation plus £2.50 gift aid, a charity charged 2% commission will get £12.17 after deduction of 20p commission and 13p card transaction fee, while a charity charged 5% commission will get £11.87 after deduction of 50p commission and 13p card fee.
Virgin Money Giving
With more than 6,500 charities registered, Virgin Money Giving has delivered more than £200m to charity since it was established in 2009. As a not-for-profit operation, it says it charges “just enough to cover our running costs when operating at scale”.
Charities pay a one-off set-up fee of £100+VAT and are charged 2% of donations. A card processing fee is also deducted; 1.45% applies to all credit and debit cards except American Express, which is 1.6%. The processing fee for PayPal is also 1.6%.
On a £10 donation with £2.50 gift aid added, the charity will get £12.15 after deduction of 20p in commission and a 15p card processing fee.
Launched in 2011 as part of BT’s “better future” corporate responsibility programme, the company bears all the costs of providing the not-for-profit service so that charities pay no fees and get 100% of donations, with gift aid if applicable.
The only fees deducted are charges levied by the donor’s own credit/debit card company; a 15p flat rate fee for a debit card transaction of any size or a 1.3% credit card charge.
On a £10 donation with £2.50 gift aid added, the charity will get £12.35, with a 15p debit card deduction or £12.37 with a 13p credit card deduction.
BT claims: “Your chosen charity will receive up to 50p more for every £10 donated (excluding gift aid) through MyDonate when compared with other online fundraising services.”
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