Institute of Fundraising: Time for reform on charging structure for text donations

Last week's announcement that tickets for Live 8 will be chosen by prize draw from text message applications, and that the mobile phone operators will not be looking to profit from this arrangement, has added weight to the Institute's call for mobile phone operators to extend the same thinking to charitable donations made via text.

In April, the Institute expressed concern that the charging structure that mobile phone operators apply to text donations was excessively high.

Donating money to charity is clearly a very different scenario to a commercial transaction, and the pricing structure should reflect this.

Text giving is an important way for charities to attract new and often younger donors to the cause, to attract donations and to engage donors in prize draws and other fundraising activities. Within the current pricing structure, however, text donations are not the most cost-effective form of fundraising, with donors facing service charges of 23-28p on a donation that is worth no more than one pound.

In a concerted drive to encourage mobile phone companies to lower the service charges on donations, the Institute has contacted the four major UK mobile phone operators to discuss the issue in further detail. We are seeking some long-term discounted charging structure that reflects the needs of their customers and the charities they are supporting. Having already met with O2, the platform for Live 8 text entries, the Institute has also arranged meetings with T-Mobile and Vodafone.

By making donations and charity prize draws more cost-effective for their customers, mobile phone operators have the opportunity to influence a key trend in charitable giving. Text donations are becoming an increasingly accessible medium for both donors and charities alike, and a more accessible pricing structure is all that is required to see text giving becoming a mainstream donation mechanism.

The prompt decision not to profit out of Live 8 is a great example of mobile phone operators responding positively at a key moment.

We hope to see this announcement encourage those companies to make text giving increasingly attractive for all charities.

This news follows the clarification from HM Revenue & Customs on the VAT treatment of donations by text messaging. Recent speculation that VAT is due on the whole amount paid by the donor has been clarified, with confirmation that 17.5 per cent VAT may be levied only on the amount paid in charges by the donor.

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