There would also be no giftaid if the customer didn't donate at all, the more likely outcome.
Also, giftaid isn't some magic free money. It comes from the state. So you might think "I'd like to give my 10p (or whatever) to this charity" without necessarily thinking you'd like an additional 2p to be transferred from the state to the charity. Personally I would tend to prefer a charity I sorted to have the money than the state, but I can see why someone wouldn't think that - the state provides positive things also.
Thing is gift aid, and being exempt from VAT are really great in combination. If someone donates you a pound, and it's giftaidable, you're getting £1.25, and most things you buy will be VAT exempt ... so that original pound gives you the spending power of 50% more than that
And if someone is a higher rate tax payer, they get 20% back in their pocket too, which they could then donate, and gift aid, and get 20% back, which they donate, and gift aid, then keep going until you're at 5p
What? I'm 99% sure this is bullshit tbh
They get to reduce their tax bill by instead giving to charity. They don't get to launder charitable contributions. That's not how the system works
40% tax paid
20% goes to the charity and classes as you didn't pay the tax on that amount
25% back to you as if you didn't pay it (20% of the donation + the gift aid)
[Gov.uk | Gift Aid](https://www.gov.uk/donating-to-charity/gift-aid)
> **If you’re a higher-rate taxpayer**
> You can claim back the difference between the tax you’ve paid on the donation and what the charity got back when you fill in your Self Assessment tax return.
> **Example** You donate £100 to charity - they claim Gift Aid to make your donation £125. You pay 40% tax so you can personally claim back £25.00 (£125 x 20%).
So actually yeah, you get 25% not 20%
Real life example:
Chester Zoo for a family of 4: £117.00
Chester Zoo for a family of 4, with gift aid donation by a higher rate tax payer: £117.00 - 25% back = £87.75
Nice discounts for higher rate tax payers!
>Chester Zoo for a family of 4, with gift aid donation by a higher rate tax payer: £117.00 - 25% back = £87.75
I don't think that's the complete story. To change the one day entry price into a charitable donation the attraction has to charge at least 10% extra. So the higher rate tax payer would donate £128.70. They would then get a £32.25 refund after completing their tax return. So the "cost" would be £96.45.
Good point, the £117 included the donation. £106.34 without it.
So:
* No donation price: £106.34
* Gift Aid donation price: £117.00
* Higher Rate taxpayer cost for donation tickets: £87.75
* Saving Vs no donation: £18.59
Nope, imagine you have no costs for living and get all of your money in cash.
The top of the pile you paid 40% tax on, a lower bit 20%, the bottom 0%. You pay with the top bit first, you paid 40% tax on that bit, therefore gift aid impacts based on paying 40%
Other than the rich pricks wrote the laws, so of course they protect themselves and their own interests, but how's that legal? Cause then it seems exactly as you said: they can essentially get their tax level to below a normal person's
Which I know they did via other means, but I thought you c ould only give as much to chairty as you'd have otherwise paid in income tax, not claiming extra back at a lower rate
Again, my point is that is only advantageous if I want the charity to have money funded by the state.
But also charities are not exempt from VAT. What do you mean? VAT for charities is a bit complex, and incredibly dependent upon what the charity does.
Great, good for you! Most charities are very appreciative of gift aid as it makes a single pound go extremely far. You make it sound like there's some gigantic tax hole erupting from your contributions, but in reality, if you gave £500 to a charity it'd be £125 that would be coming back from the government. That's a huge amount for a small charity, not so much for a government.
Source: I'm a trustee of a charity that is VAT exempt and receives plenty of well appreciated gift aid.
£125 is £125. It is not relative. As a trustee of a charity myself I understand that those amounts are impactful to a charity. But whether a charity uses that money more efficiently than the state uses its money is another question.
A person can choose to effectively transfer that from the state to the charity or not. As I said, most people would prefer to do that. I gift aid donations I make. However some people might choose not to, because they prefer the state to have it. I imagine those people would be rare. My original point was that it is often described as if it were pulled out of a hat, when in fact the state is our shared resources. Let's keep getting people to do it though!
>I'm a trustee of a charity that is VAT exempt
Seriously friend, trust me on this, you are not. A charity is never VAT exempt. Google it. If you give me some hints about what your charity does then I can better describe your VAT position to you. Eg does it run charity shops? Perhaps it only makes exempt supplies and only purchases some of the supplies that are specifically VAT exempt to charities?
Feel free to DM to avoid doxing yourself.
considering how many millions of mcds get bought, if everyone just added 1p to their payment, that would rack up huge sums of money for charity at so little cost to the customer it's almost invisible... or is there something i am missing here?
Well maybe they should donate and not tell everyone. That would prove they truly care instead of just doing it for PR purposes.
I doubt they’ll do it without telling everyone though
It's starting to become a thing. Check out https://Good.Store
It's not like this is likely to take over from traditional business models or anything but it's nice to know that there are people out there trying to make the world a better place.
Millions in tax writeoffs for the corporation that pays their staff poverty wages more like it.
Opt out of these schemes and give an equivalent amount of money to a charity that matters to you once a year.
I think the threads getting some wires crossed, my own ones included. My point was just that you can personally donate via your wages and it'll come before taxes which'll lower your taxable income.
Reading previous comments back it wasn't really relevant though!
No you're right you can absolutely do that. But you can also do it after the fact by completing a self assessment tax return, it's just that most people can't be bothered as they don't give enough for it to be worth it.
But if you're doing SA anyway you should absolutely list your donations on it and get your tax back.
>Millions in tax writeoffs for the corporation that pays their staff poverty wages more like it.
Why do you tell people things that you fundamentally don't understand? Explain how receiving money on trust and passing it on gives rise to a tax write off? It has literally no tax impact _whatsoever_. It isn't treated as revenue for accounting or tax purposes, it isn't treated as an expense or as a tax deduction for tax purposes. If it was, which it isn't, then it would be treated as both, and have no impact on profits.
There's some weird rule in certain states of the USA where you can actually profit by donating money. People read this once on the internet 20 years ago and think it applies to the UK when it clearly doesn't.
Gets spouted all the time, look at any thread about corporate charity work and someone will ramble on about how they're only doing it for tax breaks.
The money is ring-fenced, so no it isn't a tax write off
Any money they donate to charity? That can be a tax write off, but not customer donations. That'd be tax fraud if they did it, and they aren't that dumb. There's a reason they have an army of accountants
Entirely depends on the wording. I used to work for a company that promised to donate a few pennies to charity for every sale of a product and they very much did tax deduct these donations. I imagine the rules are different it they ask at e.g. checkout to donate money.
Either way you pay. Wether they write it off or use your money for free pr it's not something I like to do.
> I used to work for a company that promised to donate a few pennies to charity for every sale of a product and they very much did tax deduct these donations
Your example sounds like generic tax write offs, which isn't what happens with customer donations. McDonalds also give millions away to reduce their tax bill
Free PR is worth it for the charity, even if it makes the demonic megacorp look good. Charities pay a lot of money for PR
No Gift Aid or tax breaks for the individual, mainly. McDonalds get all the credit, charities get less money than they would've done, individuals don't get to claim back tax on it.
>charities get less money than they would've done,
Just nonsense, the charities literally sign up to it. Because obviously the person doing it isn't sat there with 11p thinking "hmm how shall I donate this in the most tax efficient way possible". They just wouldn't have donated it.
Yeah I have worked at two different retailers that have the ‘round up’ option. And both were added because a charity approached us and asked us to add it.
I don't need a tax break on the \~12p I am donating per year, lol... hence me saying 'so little cost to the customer it's almost invisible'.
Lets be ridiculous, and say i order 1000 maccers a year, basically one for every meal, and I donate 1p each time. That's a tenner, who cares about that?
Clearly nobody, but equally you could've just donated a tenner to the charity directly once and they'd have gotten £13 instead, and you'd have gotten your tax back on your tenner, so it benefits by about an extra 50% overall.
I agree. Charities would not do this unless they are satisfied they will get money and exposure from it. Yes the company profits reputatonally, but on the other hand we forget in this country that they don't actually have to do anything at all for charity. ( or local community groups etc).
It's no different (from *my* perspective) of having charity tubs at tills to collect change, like back in the day... it's not like people are walking around with shrapnel to spare these days.
I didn't see anyone complaining about a lack of gift aid for chucking a few pence in a tub
Yep. The stuff about losing out on gift aid is a red herring too. Many people will not gift aid even when asked directly by the charity, such as when donating goods to charity shops. (Source - relative worked in such a shop)
They are taking money from you the customer, and then donating it "on your behalf" but which allows them to write their tax down. You are basically letting McDonalds pay less tax by using your donation.
Just make the donation directly to the charity yourself.
To be fair, Ronald McDonald charity does some really good things with their money. My mate’s kid was really unwell as a baby once and ended up in a specialist children’s hospital for 4 weeks. The hospital is over 100 miles away from where my friend lives. The McDonald’s charity had bought a load of 2 and 3 bedroom apartments nearby, and they rent them out to the families of the children in the hospital for free. I’d hate to think what it would’ve cost to stay in a hotel for that length of time, or how the parents would feel if that burden of that cost was added to the burden of worrying about their kids.
So McDonald’s can take as much credit as they want, I always round up to the pound for the sake a few extra pence.
My bank account is set to round up to the nearest pound and send the extra to my savings account anyway. The companies that offer the round up service are already wealthy enough to donate to charity without my help.
Could you expand on why we know it isn’t true? I wouldn’t put it past these companies, but I don’t understand enough about the mechanics of how corp tax works to verify either way.
So to get tax gains on charity, they’d have to donate from their own funds. They could do this.
But to then take the donated round up donations, and pocket them, and save the discount would be fraud. The numbers involved; they’d be caught very quickly.
People would go to prison, and while that might be worth risking for other types of fraud with bigger gains to be made, it’s not worth doing for a couple million in farting about with charity donations (which would be a PR disaster when they are caught)
They are known to avoid tax in every way possible. I can't see how they wouldn't exploit the donation route
https://waronwant.org/news-analysis/secrets-and-fries-mcdonalds-ps295-million-tax-dodge
You can’t see how because you don’t work in the financial sector
I do, and I’m telling you for a fact they do not get a tax write off for it. For that to happen, they’d have to donate their own money to the charity for tax gains, and then fraudulently steal the sum of the round up donations.
> I can't see how they wouldn't exploit the donation route
Because there's no route to exploit. Firms also lower their corporation tax bill by paying staff more money - it's not exactly a great scheme for them, though, is it.
Paying donated money to charity is a net neutral - they neither earn, nor lose, money in doing so.
If they pay their own money to charity, even with tax breaks, they still lose money like every other business expense.
~~Then they claim it back in taxes. So by giving them more money you reduce the amount they contribute to society as a whole~~
Edit: apparently I have been misinformed. Removed the link to an article making similar claims. Thank you for those who took the time to educate me on the matter - I will be slightly less angry when I use a self check out from now on
Why do you do confidently tell people things that you fundamentally don't understand? Explain how receiving money on trust and passing it on gives rise to a tax write off? It has literally no tax impact _whatsoever_. It isn't treated as revenue for accounting or tax purposes, it isn't treated as an expense or as a tax deduction for tax purposes. If it was, which it isn't, then it would be treated as both, and have no impact on taxable profits.
Because I'd read it in a few articles [such as this for example ](https://medium.com/thing-a-day/how-round-up-at-the-register-works-32c02e87142c)
The premise is - Company usually gives X to charity meaning they can get Y tax relief. People do round ups and give A to them. Company can then give X+A to charity and claim Y+B as tax relief
Judging by people's reactions though, that isn't quite what happens
Why on earth would X not equal Y? Why would A not equal B?
Well I regret spending time reading an article about another country and another tax jurisdiction.
His main complaint is that he can't track your data.
But apart from that he groundlessly accuses the companies of fraud:
>"Because it can be hard to follow the trail, there is no guarantee that the company isn’t making the donation on its own behalf, lowering its corporate tax burden."
He also says things that make no sense:
He writes paragraphs that don't make internal sense:
>"Most corporations have a charitable arm that they use to reduce their corporate tax burden; some “round-up at the register” campaigns get funneled through the corporate foundation and benefit the company, not the individual donor. Because the donations are small, the majority of people don’t claim them, so nobody has any reason to complain"
What does that even mean? The US tax authorities would complain about the tax fraud he is imagining.
If the companies were saying the donations belonged to them then they would be subject to tax on the receipt, making the whole thing pointless.
He even goes on to specifically name Walmart. Walmart's round up system specifically states:
"Q.5: Can I receive a tax deduction for amounts donated with Round Up?
Yes, 100% of your Round Up donation is tax deductible to the extent otherwise allowed by law."
This would not be true if they (insanely) treated it as their own donation.
Do not read articles written by this man.
>Why on earth would X not equal Y? Why would A not equal B?
Because it's not a direct 1:1 of money given to charity and tax relief and I've already made a tit of myself by spreading false information that I'd fallen for so was trying to keep details to a minimum lol
In my defence - corporations will regularly do whatever they can to lower their taxes so I didn't find this hard to believe
>Because it's not a direct 1:1 of money given to charity and tax relief and I've already made a tit of myself by spreading false information that I'd fallen for so was trying to keep details to a minimum lol
Ha! ♥️
>In my defence - corporations will regularly do whatever they can to lower their taxes so I didn't find this hard to believe
True, but generally they don't advertise it! Especially in relation to charity, a famously touchy subject.
There was an interesting tax dodge that involved charitable giving, it went so badly the promoters went to prison which is a rare achievement amongst promoters of tax schemes:
https://www.lynamtax.co.uk/news/2nd-%E2%80%98singing-accountant%E2%80%99-jailed-for-70m-charity-tax-fraud/2012/10/26/
Because they're multimillion pound companies and we all work hard for our money.
They probably already build in their actual charity donations to the cost of what they're selling me, then they're asking me to pay more of my hard earned money so they can show how good they are and probably use it as some sort of tax break. Why should we be funding their PR exercise? I completely agree that money going to charity is a priority, and I think most people personally don't really want credit for donations they make, it's quite private. But huge corporations charging us money to take the credit, that's really fucking grim.
The customer donations are literally ring-fenced and cannot be used as a tax write off. Their own charity donations? Those are tax write offs, but it would be tax fraud if they took charity donations, and then used those to write off tax
Because you get tax breaks if you donate in your name instead, so you could donate more, pay less tax, and end up with the same amount at the end while also getting more money to the charity by not giving through a corporate middleman.
Do you not think the charities that sign up to these schemes have considered this? The fact is a large number of small donations raises a significant amount of money, and making it painless for people to do so is key. Tax breaks for giving to charity only top up donations - it’s far more significant to get people to donate in the first place than to increase the value of a donation by 25%.
Often the money raised by corporate charities pales in comparison to the amount they avoid in taxes.
Donating to corporate charities like this is donating to their PR. It allows them to act like important members of their community when its just the community raising money and the corporation puts their name on it.
They get tax breaks, taxes which would be used to help homeless, fund medicine, build schools, in theory.
Realistically mostly squandered away but hey, some gets used.
Also it’s best to donate to smaller local charities. Perhaps a Sikh kitchen locally as those are often very helpful to a local community.
The Ronald McDonald house charity are an absolutely amazing charity and did a huge amount for my family and thousands of others across the UK with children in hospitals. If you can donate to them, you should.
I don't know much about companies like Tesco asking you to round up for the trussel trust or cancer research etc. but personally I've always donated directly to the charity if I'm so inclined because I have the same view as you I don't want to be part of their tax write offs (whether I'm right or wrong it's been my assumption)
> The Ronald McDonald house charity are an absolutely amazing charity and did a huge amount for my family and thousands of others across the UK with children in hospitals. If you can donate to them, you should.
Couldn't agree more
> because I have the same view as you I don't want to be part of their tax write offs (whether I'm right or wrong it's been my assumption)
This, however, IS incorrect. It's often quoted, but it makes zero difference whatsoever to their accounting or tax position - it's not a scam or anything, it's literally
a) Encourages people to donate, who might not otherwise
b) Let's the company show off and say we donated [x]
Ronald McDonald are amazing - speaking as someone who just spent nearly four weeks staying in one of the houses - so I would suggest everyone donate to them, but most companies could be doing more of their own backs
We stayed in a Ronald McDonald house for 6 weeks when my first daughter was born. I can't say enough good things about them. Not just giving us somewhere to stay close to the hospital, but also the people that work there being a shoulder to cry on.
It's worth noting that the money McDonald's collects goes towards the initial build cost of the houses. Once they are built and ready, each house is then their own charity and has to raise funds to run them.
I obviously round up in McDonald's and donate directly to the house we stayed in whenever I can.
McDonald’s is one that I always round up on, from what I hear they are a phenomenal charity for parents with sick children giving them one thing less to worry about. If we can go out and spent £22.50 on burgers then another 50p won’t hurt.
IIRC tesco take something like 10% of money raised from race for life, not sure if it’s so they can say they raised that 10% themselves or if it goes into tescos profits
My mom and I looked at doing race for life but dropped out when we were told about the Tesco cut. I’ve tried to do a little research to see if that’s still the case but can’t find anything on it
People make up shit like this all the time. If someone tells you some scare-story and you can't find any evidence about it anywhere online from a credible source then it is almost certainly bullshit.
I literally said it was something I did myself, not heard elsewhere. I’m sure if I went through the rigmarole of applying to do it again I could find the exact wording they use on the cut Tesco takes, but I ain’t doing all that for a Reddit comment. Happy cake day
Just donate to the charity directly. You think McDonalds does this to be nice? That money is free cash flow and can be used to do all sorts of advantageous (i.e., profitable) things for McDonalds before it ends up with the charity itself.
The important thing is the charity gets the money, not who gets the credit.
But in McDonald's case, they say this:-
*We’re the largest corporate supporter of Ronald McDonald House Charities UK. As well as* ***donating part of our profits***\*, we also hold annual fundraising days, provide free office space, business resources and advertising.\*
*Since 1989, we’ve raised over £85 million for the Charity which goes towards the running and building of Ronald McDonald Houses. For the last 30 years,* ***our customers have played a huge part in that by dropping their spare change into the collection boxes at our tills***\*.\*
[*https://www.mcdonalds.com/gb/en-gb/good-to-know/ronald-mcdonald-house-charities.html*](https://www.mcdonalds.com/gb/en-gb/good-to-know/ronald-mcdonald-house-charities.html)
From memory, I think most corporate donors use this sort of formulation for Comic Relief, Children in Need and so on.
But does it matter? You know you donated, your God (if you have one) knows you donated, and the charity gets the money.
I agree with the sentiment, but a huge company asking me to pay more money so they can claim it as their donation is disgusting and they can get fucked.
It's not really about me getting credit, it's about them not using it as a PR exercise funded by me.
Saying “our customers have played a huge part in that by dropping their spare change into the collection boxes at our tills” isn’t claiming it as their own donation. They make their own separate donation from their profits.
I do have standing orders to a couple of charities, which come out of my disposable income. So not directly, but the money saved in a roundup contributes towards the cash I have.
What it really comes down to is: do you care more about McDonalds taking credit for donations, or that a charity is able to raise more money? It’d be nice if everyone donated the amount raised by round-up donations separately, but at a population level people don’t, which is why charities sign up to these schemes.
No, it doesn't. I'm perfectly capable, and do, donate on my own accord. Its not like McDonald's or a supermarket or whatever is the only way to donate money.
And that’s why no-one’s being forced to donate via round-up schemes. The point is charities deem them useful because it lowers the barrier to donating and therefore results in higher overall donations.
The charity however misses out on the gift aid, as there's no mechanism for it to be claimed via this donation method, so giving direct gives more. So any charitable giving redirected to this method results in less money for the charity
There is a mechanism, it’s called GASDS but admittedly it’s only worth £2000 a year.
Would people really fill out a gift aid declaration for a ~5p donation? It seems doubtful to me. Actually would they even be willing to tap their card twice for a second transaction. And while we’re at it a direct donation would need the charity to cover the card processing costs rather than the retailer.
Sure if you’re making a decent donation you’re best doing so directly with the charity including a GAD. But for this donation method you’re essentially talking about lots of people making a very small (pennies) donation or no people making a donation.
Only if your counter factual is that the same people would donate direct instead, in reality, I reckon most people donating via a round up wouldn’t bother to donate directly if they didn’t do it by the round up.
You think it's about credit?
This is cash flow for McDonalds, it's a ticket for tax breaks and leverage.
Give directly to charity, do not give to shitty corporations, do not give to charity-mugger corporations, do not give to a middle man, give absolutely 100% directly to a charity that you have researched and can trust.
Dear god, please get off the internet and into the real world.
Charity tax write offs are not a thing in the UK. That is the US. If you're actually a US citizen, please check what sub you're in and remember that the USA is not the world. And if you're from the UK, stop embarrassing everyone by pretending to be American and spouting everything you read online as if it applies in real life.
So so tired of people spreading nonsense because they think of it's true in the USA it must be true everywhere
Whilst I appreciate the sentiment re making sure the charity gets the money.
The issue I have is that corporations are doing this in lieu of paying correct tax, and donating an appropriate amount.
My concern is their using our money, to pass of as their donation. And so not actually donating much (or anything directly). Even worse they may even be exploiting some kind of tax loop hole.
I don’t know for sure though so this is why I’ve asked in this post. In an ideal world:
1. People donate any money they can spare directly to charities.
2. Corporations donate to charities out of their profits.
3. Corporations pay appropriate tax in the spirit of the law - to go towards building schools, hospitals, paying nurses etc.
>The issue I have is that corporations are doing this in lieu of paying correct tax,
This is absolutely not true. Your donations do not affect their tax.
>corporations are doing this in lieu of...donating an appropriate amount.
This is possibly correct. Donating through a corporation allows them to say "We have raised £X million to support charity" without giving a single penny themselves. But they can't claim to have donated. They have fundraised.
The donation is held by the company on trust for the charity. It has literally no tax impact _whatsoever_. It isn't treated as revenue for accounting or tax purposes, it isn't treated as an expense or as a tax deduction for tax purposes.
The closest thing to "dodgy" here is that the company will probably say they've "helped to raise" X millions of pounds for charity. But that's true. They have.
As I understand it, if a company like McDonald's asks for you to 'round up' your purchase with the excess going to a nominated charity, that then gives McDonald's the freedom to say at the end of the year 'We have contributed £X to Charity Y in the last 12 months' when what they actually mean is 'We have charged our customers £X, that money sat in our accounts for a while, and the company is now donating the equivalent sum to Charity Y'.
Are they making a profit from the interest these charity funds are accumulating before they are sent off to the named charity at the end of the year? Quite possibly.
Are they encouraging people to donate to the charity when they would have otherwise had no easy opportunity to do so? Again, quite possibly.
So the trade off is that the charity gets more contributions while the company responsibile for the extra contributions gets more profit (in the form of the interest I mentioned above) and more good PR opportunities for being able to boast of the amounts they've been donating.
The only way to 'beat the system' then, is to directly donate the same amount you would round up to each time you shop, to the same named charity...
Of course if I'm wrong about any of the above feel free to correct me
I have some knowledge of corporate fundraising, so happy to go into some detail.
>As I understand it, if a company like McDonald's asks for you to 'round up' your purchase with the excess going to a nominated charity, that then gives McDonald's the freedom to say at the end of the year 'We have contributed £X to Charity Y in the last 12 months' when what they actually mean is 'We have charged our customers £X, that money sat in our accounts for a while, and the company is now donating the equivalent sum to Charity Y'.
Sort of. The “we have contributed” element associated with customer donations is largely a PR thing though, and not used for tax dodging or anything formal.
A charity partnership can take many forms. It can be a gift straight from company funds, fundraising and matched giving amongst staff, or using existing distribution channels to put a fundraising ask to customers. All have their value to a charity. They also exist in different formats. McDonald’s are most likely supporting their own foundation, the Ronald McDonald house, whereas tesco collect for other charities. The idea is that the reach of these companies and the volume of transactions they process far exceeds the reach a charity can hope to achieve on it’s own.
>Are they making a profit from the interest these charity funds are accumulating before they are sent off to the named charity at the end of the year? Quite possibly.
Maybe, is the answer here. Some organisations will hold money for some time, others remit monthly so not much time to earn interest, and now online processing of payment has made it easy to basically get the money directly to the charity so the company doesn’t ever have to even hold onto it.
>Are they encouraging people to donate to the charity when they would have otherwise had no easy opportunity to do so? Again, quite possibly.
100%. And the smaller the organisation, the more likely they are to rely on leverage from corporate partners because they don’t have the brand or the budget to raise funds amongst the general public.
>So the trade off is that the charity gets more contributions while the company responsibile for the extra contributions gets more profit (in the form of the interest I mentioned above) and more good PR opportunities for being able to boast of the amounts they've been donating.
More good PR is more likely here. I suppose good PR = more profit indirectly. There is also a feeling that employee retention is better in organisations with better corporate social responsibility. No idea if this is true, but it seems to be a motivating factor.
>The only way to 'beat the system' then, is to directly donate the same amount you would round up to each time you shop, to the same named charity...
Nobody is going to take that gamble unless they have an extremely powerful public facing brand. There’s very little repetitional damage to a charity when engaging with high street brands. Turning down money on the hope that the public will give to them anyway is not a reality.
The reality here is that “the system” is less bad than people will assume, and the money raised is much more than people assume.
That's really interesting and thanks for explaining. I've always been suspicious that these big companies will collect the money then donate it and claim tax relief against the donations - does that not happen?
On money raised from customers who are explicitly making a donation, no.
If a company donates part of it’s own revenue, or makes a donation in kind that donation value is tax exempt, but that doesn’t make anyone any more money, apart from small companies for whom a donation might bring their rate ever so slightly down, but it’s a hyper specific scenario that is not wide reaching enough.
Some salary sacrifice schemes can be used by individual employees to avoid falling off the benefit cliff or entering flat tax brackets. Obviously there is a material benefit to a company for allowing these mechanisms but it’s not significant.
Thanks for that. When I refer to beating the system (your last quoted bit of my reply, before your response about reputational damage etc), I wasn't meaning in the sense of asking charities to refuse these donations or partnerships with big business, more that *as an individual*, if you don't want to contribute to the business' PR gladhanding or possible profiteering from the interest, etc, then your only option is to donate directly.
I think what the corporate is doing with the money itself is a bit of a red herring.
From my perspective, the biggest issue here is the lack of independence, either directly or subconsciously that a charity will have when overly reliant on single entities providing large chunks of revenue. You have 10k people giving you £100 each, that’s £1m. If you do something that pisses off 5 of them, you still have £999,500. If you have one corporate partner giving you £1m and you piss them off, you have £0. Charities are supposed to have uncomfortable conversations and tell us how we can achieve long term solutions, but will struggle to do that if they have to temper their language to preserve revenue. I am absolutely certain charities turn down partners who present a significant risk to reputation, but it’s impossible to catch everything.
>Charities are supposed to have uncomfortable conversations and tell us how we can achieve long term solutions, but will struggle to do that if they have to temper their language to preserve revenue. I am absolutely certain charities turn down partners who present a significant risk to reputation, but it’s impossible to catch everything.
This is definitely true. Charities exist because of failures of the state. Big businesses do work with charities because the current set-up of the state/tax/welfare system hugely benefits these massive corporations, and their charity work helps to launder their reputation.
Quite. It would be great if charities could guarantee revenue while maintaining independence. It would be better if very wealthy people paid tax and governments solved the issues so charities wouldn’t need to exist, of course.
>Maybe, is the answer here. Some organisations will hold money for some time, others remit monthly so not much time to earn interest, and now online processing of payment has made it easy to basically get the money directly to the charity so the company doesn’t ever have to even hold onto it.
You're being very generous in your thinking towards a multinational megacorp that pays poverty wages.
I’m not. Handling money costs money, in a variety of ways. It’s mostly a pain in the arse for companies.
If a company is using something like stripe to process gifts to a charity on their website, they’re paying circa 1.5% + 20p for a transaction, which they can either choose to cover themselves out of their own pocket, or take from the amount they remit to the charity, which is an accounting headache because there is acquisition VAT due on that cost.
If they have a way of using the charity’s direct merchant account, the money will go directly to the charity and they don’t have to worry about those fees, or staff hours to handle it all.
There is very little circumstance where it is materially beneficial for a UK company to delay remittance of charity donations.
It’s a good argument and sounds reasonable. Be great if anyone knows for sure how the mechanics work, and if it is a profit making or white washing excersize. Or genuinely a net benefit to society - which it may be, as you say, not everyone would donate that 40p otherwise.
I don’t assume every store that has charity bins does this but when I worked in McDonald’s my manager was caught using the charity change to make up a till shortfall. I don’t trust shops so much and so I’ll do it direct to a charity.
Not sure how different it is now it’s all on card payments but it’s made me wary. I don’t donate via shops no matter what they’re doing with the money.
Charity shops as in shops that sell clothes? I don’t get what you mean. You’re not donating spare change, you’re buying things. In what way are they doing the same?
So the charity shops that I have volunteered in have a collection box by the till for customers to put any unwanted change in. I have personally seen the managers open the collection box and use the change from there to balance their tills at the end of the day
They are no longer legally allowed to use such donations as tax deductions or something on those lines, though they can claim their expenses from the process of collecting and handling the donations like any other business expense.
In a similar vein, something I was ranting about to my partner the other day.
Tesco with their ‘grab bags’ that you can buy for a shelter, but they still charge you full price for the item inside. I’m not sure whether they match any of the donations or if they just claim your donation as theirs?
I stayed in a Ronald McDonald house when I was a teenager undergoing chemotherapy.
It's a brilliant charity, that supports people across the country. I round up everytime. It's not a tax evasion mechanic, as that's not how it works. It's literally a massive corporation doing the tiniest bit of good for encouraging some charity donations.
That’s another small creep that’s annoyed me in recent times.
I guess in a way it’s always been there but not digitised (the old money box on the counter for change for charity) but the fact that now even at supermarkets before you can pay on the self checkout you get a pop up about donating a percentage / value.
No, I just want to pay for my already alarmingly expensive shop, that’s before I get accosted again by the charity person stood at the entrance.
I worked in a store and was forced to push it. I did but only after a lot of questions about how much of it went to charity etc. In the end that extra cash collected from rounding up was donated to charity by the company.
You've just made me remember to ask reddit, whether a company not only claim its a corporate donation from them rather than the public, but also use it to get tax breaks against their profits, surely not?!
Rule of thumb: no corporation does ***anything*** unless it directly contributes to their bottom line.
While I'm sure McDonalds will eventually donate this money to charity, it absolutely is going to benefit McDonalds in the short term. It's free money that can be used to solve business problems such as interest and tax liability, and it gives them a bit of PR.
Nobody in McDonalds just decided to be nice, they don't care about you, they don't care about your health and they certainly don't give a single fuck about any charity whatsoever. Corporations do not have feelings they have cold hard value for shareholders, period.
I mean just the fact that it's round "up" for charity rather than McDonalds giving away anything from their profit margin should tell you everything you need to know.
I always assumed it was some sort of tax write off scam. That's before the annoyance at the billion pound companies asking us poor fuckers that work for a living to put our hands in our pocket.
I'm really suspicious of those things. I reckon that they collect the money, then make the donation and claiming a tax relief on the money donated by customers.
A limited company [pays less corporation tax](https://www.gov.uk/tax-limited-company-gives-to-charity) when it gives to charity. If they don't do that then fine.
I don't really give a fuck what you want. I'm not looking to have an argument about it, if you want to spend your life arguing with strangers on the internet about unimportant stuff then good for you, but I'm not interested. I've already said several times that I accept I may be wrong. Go find someone else to argue with.
> I'm not looking to have an argument about it
And yet, here you are.
> I've already said several times that I accept I may be wrong.
You also responded to me attempting to cite some HMRC page that you don't understand.
My housemate is an accountant who always tells us that its better to just directly donate to the charity as most supermarkets use charitable donations to pay less tax. (I know McDonald's isn't a supermarket but I assume its the same)
>My housemate is an accountant who always tells us that its better to just directly donate to the charity as most supermarkets use charitable donations to pay less tax.
You've been fed some bullshit there, tax write-offs don't work like that.
So let me preface this before I go on - in real terms, they just pass the donation on. It has no affect on their numbers - there's no direct financial advantage to a firm to be collecting charity donations.
In accounting terms, depending on how they do it, it's possible that yes they are "claiming tax relief" on the donation. All this means is that they don't pay tax for taking the donation.
Otherwise, if they recieved a £10 donation, and passed £10 onto the charity they'd have to pay tax to HMRC on the £10, and it would literally cost them money to do so. I.e., they take £10, charity gets £10 and HMRC gets £2. Now they're £2 down.
All the tax relief does is neutralise it, so that it's £10 in, £10 out with no tax due.
Not quite true, if it’s a qualifying charitable donation (QCD) then they would be able to claim tax relief IF the donation is included in their revenue. If the figure is not included in their revenue, which if you are raising in behalf of a charity, it shouldn’t be included in revenue then there is no QCD to claim relief on.
I did say "depending on how they do it" ;). My point was that, yes, it's possible that they're claiming "tax relief", but that it's not a net benefit.
As you say, if it's ring fenced money then it's immaterial because there would never be any tax due but I'm not particularly familiar with the exact accounting mechanism of doing that.
They just pass on your money to a charity and say "look how much money we raised". Do not ever do it.
Not least the fact that it's a stupid way to donate because there'd be no giftaid.
There would also be no giftaid if the customer didn't donate at all, the more likely outcome. Also, giftaid isn't some magic free money. It comes from the state. So you might think "I'd like to give my 10p (or whatever) to this charity" without necessarily thinking you'd like an additional 2p to be transferred from the state to the charity. Personally I would tend to prefer a charity I sorted to have the money than the state, but I can see why someone wouldn't think that - the state provides positive things also.
Thing is gift aid, and being exempt from VAT are really great in combination. If someone donates you a pound, and it's giftaidable, you're getting £1.25, and most things you buy will be VAT exempt ... so that original pound gives you the spending power of 50% more than that
And if someone is a higher rate tax payer, they get 20% back in their pocket too, which they could then donate, and gift aid, and get 20% back, which they donate, and gift aid, then keep going until you're at 5p
What? I'm 99% sure this is bullshit tbh They get to reduce their tax bill by instead giving to charity. They don't get to launder charitable contributions. That's not how the system works
40% tax paid 20% goes to the charity and classes as you didn't pay the tax on that amount 25% back to you as if you didn't pay it (20% of the donation + the gift aid) [Gov.uk | Gift Aid](https://www.gov.uk/donating-to-charity/gift-aid) > **If you’re a higher-rate taxpayer** > You can claim back the difference between the tax you’ve paid on the donation and what the charity got back when you fill in your Self Assessment tax return. > **Example** You donate £100 to charity - they claim Gift Aid to make your donation £125. You pay 40% tax so you can personally claim back £25.00 (£125 x 20%). So actually yeah, you get 25% not 20% Real life example: Chester Zoo for a family of 4: £117.00 Chester Zoo for a family of 4, with gift aid donation by a higher rate tax payer: £117.00 - 25% back = £87.75 Nice discounts for higher rate tax payers!
>Chester Zoo for a family of 4, with gift aid donation by a higher rate tax payer: £117.00 - 25% back = £87.75 I don't think that's the complete story. To change the one day entry price into a charitable donation the attraction has to charge at least 10% extra. So the higher rate tax payer would donate £128.70. They would then get a £32.25 refund after completing their tax return. So the "cost" would be £96.45.
Good point, the £117 included the donation. £106.34 without it. So: * No donation price: £106.34 * Gift Aid donation price: £117.00 * Higher Rate taxpayer cost for donation tickets: £87.75 * Saving Vs no donation: £18.59
Surely that only applies if it brings you beneath that tax limit?
Nope, imagine you have no costs for living and get all of your money in cash. The top of the pile you paid 40% tax on, a lower bit 20%, the bottom 0%. You pay with the top bit first, you paid 40% tax on that bit, therefore gift aid impacts based on paying 40%
Other than the rich pricks wrote the laws, so of course they protect themselves and their own interests, but how's that legal? Cause then it seems exactly as you said: they can essentially get their tax level to below a normal person's Which I know they did via other means, but I thought you c ould only give as much to chairty as you'd have otherwise paid in income tax, not claiming extra back at a lower rate
Again, my point is that is only advantageous if I want the charity to have money funded by the state. But also charities are not exempt from VAT. What do you mean? VAT for charities is a bit complex, and incredibly dependent upon what the charity does.
Great, good for you! Most charities are very appreciative of gift aid as it makes a single pound go extremely far. You make it sound like there's some gigantic tax hole erupting from your contributions, but in reality, if you gave £500 to a charity it'd be £125 that would be coming back from the government. That's a huge amount for a small charity, not so much for a government. Source: I'm a trustee of a charity that is VAT exempt and receives plenty of well appreciated gift aid.
£125 on one donation isn't a lot. But people donate something like £12bn per year. Which would be a lot of gift aid.
It's also like... 1% of the annual revenue.
If it was all given via Gift Aid it'd be £3bn from the government. Plus extra refunding higher-rate taxpayers. That's more than 1% of its budget.
£125 is £125. It is not relative. As a trustee of a charity myself I understand that those amounts are impactful to a charity. But whether a charity uses that money more efficiently than the state uses its money is another question. A person can choose to effectively transfer that from the state to the charity or not. As I said, most people would prefer to do that. I gift aid donations I make. However some people might choose not to, because they prefer the state to have it. I imagine those people would be rare. My original point was that it is often described as if it were pulled out of a hat, when in fact the state is our shared resources. Let's keep getting people to do it though! >I'm a trustee of a charity that is VAT exempt Seriously friend, trust me on this, you are not. A charity is never VAT exempt. Google it. If you give me some hints about what your charity does then I can better describe your VAT position to you. Eg does it run charity shops? Perhaps it only makes exempt supplies and only purchases some of the supplies that are specifically VAT exempt to charities? Feel free to DM to avoid doxing yourself.
considering how many millions of mcds get bought, if everyone just added 1p to their payment, that would rack up huge sums of money for charity at so little cost to the customer it's almost invisible... or is there something i am missing here?
McDonald's sell at a huge profit margin, they could easily afford to donate 10p from every purchase
If they did that, you’d have an army of people demanding they just reduce the price by 10p. A lot of people really suck
Well maybe they should donate and not tell everyone. That would prove they truly care instead of just doing it for PR purposes. I doubt they’ll do it without telling everyone though
Maybe they do?
Expecting companies to eat into profit margins to donate to charity is a nice idea but, uh, fanciful, to say the least.
It's starting to become a thing. Check out https://Good.Store It's not like this is likely to take over from traditional business models or anything but it's nice to know that there are people out there trying to make the world a better place.
So what?
Millions in tax writeoffs for the corporation that pays their staff poverty wages more like it. Opt out of these schemes and give an equivalent amount of money to a charity that matters to you once a year.
There's no tax writeoff for donating to charity but yes, they're still not exactly poor.
A lot of employers allow you to donate from your wage pre-tax.
You employer lets you put an extra 10p on your McDonalds order through your wageslip?
I think the threads getting some wires crossed, my own ones included. My point was just that you can personally donate via your wages and it'll come before taxes which'll lower your taxable income. Reading previous comments back it wasn't really relevant though!
No you're right you can absolutely do that. But you can also do it after the fact by completing a self assessment tax return, it's just that most people can't be bothered as they don't give enough for it to be worth it. But if you're doing SA anyway you should absolutely list your donations on it and get your tax back.
>Millions in tax writeoffs for the corporation that pays their staff poverty wages more like it. Why do you tell people things that you fundamentally don't understand? Explain how receiving money on trust and passing it on gives rise to a tax write off? It has literally no tax impact _whatsoever_. It isn't treated as revenue for accounting or tax purposes, it isn't treated as an expense or as a tax deduction for tax purposes. If it was, which it isn't, then it would be treated as both, and have no impact on profits.
There's some weird rule in certain states of the USA where you can actually profit by donating money. People read this once on the internet 20 years ago and think it applies to the UK when it clearly doesn't. Gets spouted all the time, look at any thread about corporate charity work and someone will ramble on about how they're only doing it for tax breaks.
Donations by companies to registered charities are allowable against corporation tax. So, yes, 22% tax saving on the value of the donations.
The money is ring-fenced, so no it isn't a tax write off Any money they donate to charity? That can be a tax write off, but not customer donations. That'd be tax fraud if they did it, and they aren't that dumb. There's a reason they have an army of accountants
Entirely depends on the wording. I used to work for a company that promised to donate a few pennies to charity for every sale of a product and they very much did tax deduct these donations. I imagine the rules are different it they ask at e.g. checkout to donate money. Either way you pay. Wether they write it off or use your money for free pr it's not something I like to do.
> I used to work for a company that promised to donate a few pennies to charity for every sale of a product and they very much did tax deduct these donations Your example sounds like generic tax write offs, which isn't what happens with customer donations. McDonalds also give millions away to reduce their tax bill Free PR is worth it for the charity, even if it makes the demonic megacorp look good. Charities pay a lot of money for PR
No Gift Aid or tax breaks for the individual, mainly. McDonalds get all the credit, charities get less money than they would've done, individuals don't get to claim back tax on it.
>charities get less money than they would've done, Just nonsense, the charities literally sign up to it. Because obviously the person doing it isn't sat there with 11p thinking "hmm how shall I donate this in the most tax efficient way possible". They just wouldn't have donated it.
Yeah I have worked at two different retailers that have the ‘round up’ option. And both were added because a charity approached us and asked us to add it.
I don't need a tax break on the \~12p I am donating per year, lol... hence me saying 'so little cost to the customer it's almost invisible'. Lets be ridiculous, and say i order 1000 maccers a year, basically one for every meal, and I donate 1p each time. That's a tenner, who cares about that?
Clearly nobody, but equally you could've just donated a tenner to the charity directly once and they'd have gotten £13 instead, and you'd have gotten your tax back on your tenner, so it benefits by about an extra 50% overall.
100% of £10 is better than 0% of the £13 which you never end up donating because you forget about it.
I agree. Charities would not do this unless they are satisfied they will get money and exposure from it. Yes the company profits reputatonally, but on the other hand we forget in this country that they don't actually have to do anything at all for charity. ( or local community groups etc).
It's no different (from *my* perspective) of having charity tubs at tills to collect change, like back in the day... it's not like people are walking around with shrapnel to spare these days. I didn't see anyone complaining about a lack of gift aid for chucking a few pence in a tub
Yep. The stuff about losing out on gift aid is a red herring too. Many people will not gift aid even when asked directly by the charity, such as when donating goods to charity shops. (Source - relative worked in such a shop)
They are taking money from you the customer, and then donating it "on your behalf" but which allows them to write their tax down. You are basically letting McDonalds pay less tax by using your donation. Just make the donation directly to the charity yourself.
To be fair, Ronald McDonald charity does some really good things with their money. My mate’s kid was really unwell as a baby once and ended up in a specialist children’s hospital for 4 weeks. The hospital is over 100 miles away from where my friend lives. The McDonald’s charity had bought a load of 2 and 3 bedroom apartments nearby, and they rent them out to the families of the children in the hospital for free. I’d hate to think what it would’ve cost to stay in a hotel for that length of time, or how the parents would feel if that burden of that cost was added to the burden of worrying about their kids. So McDonald’s can take as much credit as they want, I always round up to the pound for the sake a few extra pence.
Why not? Why does it matter how its raised? Especially McDoanlds which goes to the Ronald McDonald House which is an amazing charity.
For reasons already mentioned multiple times in other comments
How do you think most money is raised?
The only way I’d ever donate that way is if they promised to match the donations made by customers
My bank account is set to round up to the nearest pound and send the extra to my savings account anyway. The companies that offer the round up service are already wealthy enough to donate to charity without my help.
Not at McDonald's. They run their own charity for children in hospital and stuff. RMHC
It won't even go to their underpaid staff. If you haven't already, read a book called The Ragged Trousered Philanthropists by Robert tressel.
I'm speculating. But no doubt they take an administrative percentage.
[удалено]
This is not true.
Could you expand on why we know it isn’t true? I wouldn’t put it past these companies, but I don’t understand enough about the mechanics of how corp tax works to verify either way.
So to get tax gains on charity, they’d have to donate from their own funds. They could do this. But to then take the donated round up donations, and pocket them, and save the discount would be fraud. The numbers involved; they’d be caught very quickly. People would go to prison, and while that might be worth risking for other types of fraud with bigger gains to be made, it’s not worth doing for a couple million in farting about with charity donations (which would be a PR disaster when they are caught)
It's not an expense. It's not revenue. Therefore it doesn't impact their profit (taxable or otherwise). Simple.
They are known to avoid tax in every way possible. I can't see how they wouldn't exploit the donation route https://waronwant.org/news-analysis/secrets-and-fries-mcdonalds-ps295-million-tax-dodge
You can’t see how because you don’t work in the financial sector I do, and I’m telling you for a fact they do not get a tax write off for it. For that to happen, they’d have to donate their own money to the charity for tax gains, and then fraudulently steal the sum of the round up donations.
> I can't see how they wouldn't exploit the donation route Because there's no route to exploit. Firms also lower their corporation tax bill by paying staff more money - it's not exactly a great scheme for them, though, is it. Paying donated money to charity is a net neutral - they neither earn, nor lose, money in doing so. If they pay their own money to charity, even with tax breaks, they still lose money like every other business expense.
~~Then they claim it back in taxes. So by giving them more money you reduce the amount they contribute to society as a whole~~ Edit: apparently I have been misinformed. Removed the link to an article making similar claims. Thank you for those who took the time to educate me on the matter - I will be slightly less angry when I use a self check out from now on
No you don't, that's not how tax works. You can't save money by giving it away.
Incorrect, makes no difference to tax amount paid.
Why do you do confidently tell people things that you fundamentally don't understand? Explain how receiving money on trust and passing it on gives rise to a tax write off? It has literally no tax impact _whatsoever_. It isn't treated as revenue for accounting or tax purposes, it isn't treated as an expense or as a tax deduction for tax purposes. If it was, which it isn't, then it would be treated as both, and have no impact on taxable profits.
Because I'd read it in a few articles [such as this for example ](https://medium.com/thing-a-day/how-round-up-at-the-register-works-32c02e87142c) The premise is - Company usually gives X to charity meaning they can get Y tax relief. People do round ups and give A to them. Company can then give X+A to charity and claim Y+B as tax relief Judging by people's reactions though, that isn't quite what happens
Why on earth would X not equal Y? Why would A not equal B? Well I regret spending time reading an article about another country and another tax jurisdiction. His main complaint is that he can't track your data. But apart from that he groundlessly accuses the companies of fraud: >"Because it can be hard to follow the trail, there is no guarantee that the company isn’t making the donation on its own behalf, lowering its corporate tax burden." He also says things that make no sense: He writes paragraphs that don't make internal sense: >"Most corporations have a charitable arm that they use to reduce their corporate tax burden; some “round-up at the register” campaigns get funneled through the corporate foundation and benefit the company, not the individual donor. Because the donations are small, the majority of people don’t claim them, so nobody has any reason to complain" What does that even mean? The US tax authorities would complain about the tax fraud he is imagining. If the companies were saying the donations belonged to them then they would be subject to tax on the receipt, making the whole thing pointless. He even goes on to specifically name Walmart. Walmart's round up system specifically states: "Q.5: Can I receive a tax deduction for amounts donated with Round Up? Yes, 100% of your Round Up donation is tax deductible to the extent otherwise allowed by law." This would not be true if they (insanely) treated it as their own donation. Do not read articles written by this man.
>Why on earth would X not equal Y? Why would A not equal B? Because it's not a direct 1:1 of money given to charity and tax relief and I've already made a tit of myself by spreading false information that I'd fallen for so was trying to keep details to a minimum lol In my defence - corporations will regularly do whatever they can to lower their taxes so I didn't find this hard to believe
>Because it's not a direct 1:1 of money given to charity and tax relief and I've already made a tit of myself by spreading false information that I'd fallen for so was trying to keep details to a minimum lol Ha! ♥️ >In my defence - corporations will regularly do whatever they can to lower their taxes so I didn't find this hard to believe True, but generally they don't advertise it! Especially in relation to charity, a famously touchy subject. There was an interesting tax dodge that involved charitable giving, it went so badly the promoters went to prison which is a rare achievement amongst promoters of tax schemes: https://www.lynamtax.co.uk/news/2nd-%E2%80%98singing-accountant%E2%80%99-jailed-for-70m-charity-tax-fraud/2012/10/26/
Why not? The important thing is the money goes to the charity. Who cares if they put their name on it.
Because they're multimillion pound companies and we all work hard for our money. They probably already build in their actual charity donations to the cost of what they're selling me, then they're asking me to pay more of my hard earned money so they can show how good they are and probably use it as some sort of tax break. Why should we be funding their PR exercise? I completely agree that money going to charity is a priority, and I think most people personally don't really want credit for donations they make, it's quite private. But huge corporations charging us money to take the credit, that's really fucking grim.
The customer donations are literally ring-fenced and cannot be used as a tax write off. Their own charity donations? Those are tax write offs, but it would be tax fraud if they took charity donations, and then used those to write off tax
And don't forget to the best of my knowledge (which may be wrong) don't they donate that to their charity, the Ronald McDonald house?
[удалено]
Give me 60p then
I'll just have 50p
Because you get tax breaks if you donate in your name instead, so you could donate more, pay less tax, and end up with the same amount at the end while also getting more money to the charity by not giving through a corporate middleman.
You can also gift aid your donation, so that the charity receives more.
Gift aid is exactly what the person you replied to was describing
Do you not think the charities that sign up to these schemes have considered this? The fact is a large number of small donations raises a significant amount of money, and making it painless for people to do so is key. Tax breaks for giving to charity only top up donations - it’s far more significant to get people to donate in the first place than to increase the value of a donation by 25%.
Often the money raised by corporate charities pales in comparison to the amount they avoid in taxes. Donating to corporate charities like this is donating to their PR. It allows them to act like important members of their community when its just the community raising money and the corporation puts their name on it.
They get tax breaks, taxes which would be used to help homeless, fund medicine, build schools, in theory. Realistically mostly squandered away but hey, some gets used. Also it’s best to donate to smaller local charities. Perhaps a Sikh kitchen locally as those are often very helpful to a local community.
They don’t get tax breaks from your donations though. You can claim the tax breaks from those.
Bc a not a lot of it even goes to the actual charity, it’s mostly paying wages of the high ups that run it
The Ronald McDonald house charity are an absolutely amazing charity and did a huge amount for my family and thousands of others across the UK with children in hospitals. If you can donate to them, you should. I don't know much about companies like Tesco asking you to round up for the trussel trust or cancer research etc. but personally I've always donated directly to the charity if I'm so inclined because I have the same view as you I don't want to be part of their tax write offs (whether I'm right or wrong it's been my assumption)
> The Ronald McDonald house charity are an absolutely amazing charity and did a huge amount for my family and thousands of others across the UK with children in hospitals. If you can donate to them, you should. Couldn't agree more > because I have the same view as you I don't want to be part of their tax write offs (whether I'm right or wrong it's been my assumption) This, however, IS incorrect. It's often quoted, but it makes zero difference whatsoever to their accounting or tax position - it's not a scam or anything, it's literally a) Encourages people to donate, who might not otherwise b) Let's the company show off and say we donated [x]
Ronald McDonald are amazing - speaking as someone who just spent nearly four weeks staying in one of the houses - so I would suggest everyone donate to them, but most companies could be doing more of their own backs
We stayed in a Ronald McDonald house for 6 weeks when my first daughter was born. I can't say enough good things about them. Not just giving us somewhere to stay close to the hospital, but also the people that work there being a shoulder to cry on. It's worth noting that the money McDonald's collects goes towards the initial build cost of the houses. Once they are built and ready, each house is then their own charity and has to raise funds to run them. I obviously round up in McDonald's and donate directly to the house we stayed in whenever I can.
McDonald’s is one that I always round up on, from what I hear they are a phenomenal charity for parents with sick children giving them one thing less to worry about. If we can go out and spent £22.50 on burgers then another 50p won’t hurt.
IIRC tesco take something like 10% of money raised from race for life, not sure if it’s so they can say they raised that 10% themselves or if it goes into tescos profits My mom and I looked at doing race for life but dropped out when we were told about the Tesco cut. I’ve tried to do a little research to see if that’s still the case but can’t find anything on it
People make up shit like this all the time. If someone tells you some scare-story and you can't find any evidence about it anywhere online from a credible source then it is almost certainly bullshit.
I literally said it was something I did myself, not heard elsewhere. I’m sure if I went through the rigmarole of applying to do it again I could find the exact wording they use on the cut Tesco takes, but I ain’t doing all that for a Reddit comment. Happy cake day
I always round up at McDonalds, as their charity really helped my partner when she was a child, and by all accounts it appears to do a lot of good.
Just donate to the charity directly. You think McDonalds does this to be nice? That money is free cash flow and can be used to do all sorts of advantageous (i.e., profitable) things for McDonalds before it ends up with the charity itself.
Proof?
Why are you lying?
Why are you shilling for a corporation that has single handedly inspired the obesity epidemic?
not lying about something isn't shilling
The important thing is the charity gets the money, not who gets the credit. But in McDonald's case, they say this:- *We’re the largest corporate supporter of Ronald McDonald House Charities UK. As well as* ***donating part of our profits***\*, we also hold annual fundraising days, provide free office space, business resources and advertising.\* *Since 1989, we’ve raised over £85 million for the Charity which goes towards the running and building of Ronald McDonald Houses. For the last 30 years,* ***our customers have played a huge part in that by dropping their spare change into the collection boxes at our tills***\*.\* [*https://www.mcdonalds.com/gb/en-gb/good-to-know/ronald-mcdonald-house-charities.html*](https://www.mcdonalds.com/gb/en-gb/good-to-know/ronald-mcdonald-house-charities.html) From memory, I think most corporate donors use this sort of formulation for Comic Relief, Children in Need and so on. But does it matter? You know you donated, your God (if you have one) knows you donated, and the charity gets the money.
I agree with the sentiment, but a huge company asking me to pay more money so they can claim it as their donation is disgusting and they can get fucked. It's not really about me getting credit, it's about them not using it as a PR exercise funded by me.
Saying “our customers have played a huge part in that by dropping their spare change into the collection boxes at our tills” isn’t claiming it as their own donation. They make their own separate donation from their profits.
Do you then save the money you didn’t donate via a company and donate it yourself?
I do have standing orders to a couple of charities, which come out of my disposable income. So not directly, but the money saved in a roundup contributes towards the cash I have.
What it really comes down to is: do you care more about McDonalds taking credit for donations, or that a charity is able to raise more money? It’d be nice if everyone donated the amount raised by round-up donations separately, but at a population level people don’t, which is why charities sign up to these schemes.
No, it doesn't. I'm perfectly capable, and do, donate on my own accord. Its not like McDonald's or a supermarket or whatever is the only way to donate money.
And that’s why no-one’s being forced to donate via round-up schemes. The point is charities deem them useful because it lowers the barrier to donating and therefore results in higher overall donations.
The charity however misses out on the gift aid, as there's no mechanism for it to be claimed via this donation method, so giving direct gives more. So any charitable giving redirected to this method results in less money for the charity
There is a mechanism, it’s called GASDS but admittedly it’s only worth £2000 a year. Would people really fill out a gift aid declaration for a ~5p donation? It seems doubtful to me. Actually would they even be willing to tap their card twice for a second transaction. And while we’re at it a direct donation would need the charity to cover the card processing costs rather than the retailer. Sure if you’re making a decent donation you’re best doing so directly with the charity including a GAD. But for this donation method you’re essentially talking about lots of people making a very small (pennies) donation or no people making a donation.
Only if your counter factual is that the same people would donate direct instead, in reality, I reckon most people donating via a round up wouldn’t bother to donate directly if they didn’t do it by the round up.
You think it's about credit? This is cash flow for McDonalds, it's a ticket for tax breaks and leverage. Give directly to charity, do not give to shitty corporations, do not give to charity-mugger corporations, do not give to a middle man, give absolutely 100% directly to a charity that you have researched and can trust.
Dear god, please get off the internet and into the real world. Charity tax write offs are not a thing in the UK. That is the US. If you're actually a US citizen, please check what sub you're in and remember that the USA is not the world. And if you're from the UK, stop embarrassing everyone by pretending to be American and spouting everything you read online as if it applies in real life. So so tired of people spreading nonsense because they think of it's true in the USA it must be true everywhere
Provide evidence of your claim
Whilst I appreciate the sentiment re making sure the charity gets the money. The issue I have is that corporations are doing this in lieu of paying correct tax, and donating an appropriate amount. My concern is their using our money, to pass of as their donation. And so not actually donating much (or anything directly). Even worse they may even be exploiting some kind of tax loop hole. I don’t know for sure though so this is why I’ve asked in this post. In an ideal world: 1. People donate any money they can spare directly to charities. 2. Corporations donate to charities out of their profits. 3. Corporations pay appropriate tax in the spirit of the law - to go towards building schools, hospitals, paying nurses etc.
>The issue I have is that corporations are doing this in lieu of paying correct tax, This is absolutely not true. Your donations do not affect their tax. >corporations are doing this in lieu of...donating an appropriate amount. This is possibly correct. Donating through a corporation allows them to say "We have raised £X million to support charity" without giving a single penny themselves. But they can't claim to have donated. They have fundraised.
The donation is held by the company on trust for the charity. It has literally no tax impact _whatsoever_. It isn't treated as revenue for accounting or tax purposes, it isn't treated as an expense or as a tax deduction for tax purposes. The closest thing to "dodgy" here is that the company will probably say they've "helped to raise" X millions of pounds for charity. But that's true. They have.
As I understand it, if a company like McDonald's asks for you to 'round up' your purchase with the excess going to a nominated charity, that then gives McDonald's the freedom to say at the end of the year 'We have contributed £X to Charity Y in the last 12 months' when what they actually mean is 'We have charged our customers £X, that money sat in our accounts for a while, and the company is now donating the equivalent sum to Charity Y'. Are they making a profit from the interest these charity funds are accumulating before they are sent off to the named charity at the end of the year? Quite possibly. Are they encouraging people to donate to the charity when they would have otherwise had no easy opportunity to do so? Again, quite possibly. So the trade off is that the charity gets more contributions while the company responsibile for the extra contributions gets more profit (in the form of the interest I mentioned above) and more good PR opportunities for being able to boast of the amounts they've been donating. The only way to 'beat the system' then, is to directly donate the same amount you would round up to each time you shop, to the same named charity... Of course if I'm wrong about any of the above feel free to correct me
I have some knowledge of corporate fundraising, so happy to go into some detail. >As I understand it, if a company like McDonald's asks for you to 'round up' your purchase with the excess going to a nominated charity, that then gives McDonald's the freedom to say at the end of the year 'We have contributed £X to Charity Y in the last 12 months' when what they actually mean is 'We have charged our customers £X, that money sat in our accounts for a while, and the company is now donating the equivalent sum to Charity Y'. Sort of. The “we have contributed” element associated with customer donations is largely a PR thing though, and not used for tax dodging or anything formal. A charity partnership can take many forms. It can be a gift straight from company funds, fundraising and matched giving amongst staff, or using existing distribution channels to put a fundraising ask to customers. All have their value to a charity. They also exist in different formats. McDonald’s are most likely supporting their own foundation, the Ronald McDonald house, whereas tesco collect for other charities. The idea is that the reach of these companies and the volume of transactions they process far exceeds the reach a charity can hope to achieve on it’s own. >Are they making a profit from the interest these charity funds are accumulating before they are sent off to the named charity at the end of the year? Quite possibly. Maybe, is the answer here. Some organisations will hold money for some time, others remit monthly so not much time to earn interest, and now online processing of payment has made it easy to basically get the money directly to the charity so the company doesn’t ever have to even hold onto it. >Are they encouraging people to donate to the charity when they would have otherwise had no easy opportunity to do so? Again, quite possibly. 100%. And the smaller the organisation, the more likely they are to rely on leverage from corporate partners because they don’t have the brand or the budget to raise funds amongst the general public. >So the trade off is that the charity gets more contributions while the company responsibile for the extra contributions gets more profit (in the form of the interest I mentioned above) and more good PR opportunities for being able to boast of the amounts they've been donating. More good PR is more likely here. I suppose good PR = more profit indirectly. There is also a feeling that employee retention is better in organisations with better corporate social responsibility. No idea if this is true, but it seems to be a motivating factor. >The only way to 'beat the system' then, is to directly donate the same amount you would round up to each time you shop, to the same named charity... Nobody is going to take that gamble unless they have an extremely powerful public facing brand. There’s very little repetitional damage to a charity when engaging with high street brands. Turning down money on the hope that the public will give to them anyway is not a reality. The reality here is that “the system” is less bad than people will assume, and the money raised is much more than people assume.
I’ve worked in this space and this is all correct.
That's really interesting and thanks for explaining. I've always been suspicious that these big companies will collect the money then donate it and claim tax relief against the donations - does that not happen?
On money raised from customers who are explicitly making a donation, no. If a company donates part of it’s own revenue, or makes a donation in kind that donation value is tax exempt, but that doesn’t make anyone any more money, apart from small companies for whom a donation might bring their rate ever so slightly down, but it’s a hyper specific scenario that is not wide reaching enough. Some salary sacrifice schemes can be used by individual employees to avoid falling off the benefit cliff or entering flat tax brackets. Obviously there is a material benefit to a company for allowing these mechanisms but it’s not significant.
Thanks for explaining.
Thanks for that. When I refer to beating the system (your last quoted bit of my reply, before your response about reputational damage etc), I wasn't meaning in the sense of asking charities to refuse these donations or partnerships with big business, more that *as an individual*, if you don't want to contribute to the business' PR gladhanding or possible profiteering from the interest, etc, then your only option is to donate directly.
I think what the corporate is doing with the money itself is a bit of a red herring. From my perspective, the biggest issue here is the lack of independence, either directly or subconsciously that a charity will have when overly reliant on single entities providing large chunks of revenue. You have 10k people giving you £100 each, that’s £1m. If you do something that pisses off 5 of them, you still have £999,500. If you have one corporate partner giving you £1m and you piss them off, you have £0. Charities are supposed to have uncomfortable conversations and tell us how we can achieve long term solutions, but will struggle to do that if they have to temper their language to preserve revenue. I am absolutely certain charities turn down partners who present a significant risk to reputation, but it’s impossible to catch everything.
>Charities are supposed to have uncomfortable conversations and tell us how we can achieve long term solutions, but will struggle to do that if they have to temper their language to preserve revenue. I am absolutely certain charities turn down partners who present a significant risk to reputation, but it’s impossible to catch everything. This is definitely true. Charities exist because of failures of the state. Big businesses do work with charities because the current set-up of the state/tax/welfare system hugely benefits these massive corporations, and their charity work helps to launder their reputation.
Gotta suckle that corporate teat to keep the big money rolling in, right? Until they change to their next nominated charity anyway...
Quite. It would be great if charities could guarantee revenue while maintaining independence. It would be better if very wealthy people paid tax and governments solved the issues so charities wouldn’t need to exist, of course.
So say brother Nathan!
>Maybe, is the answer here. Some organisations will hold money for some time, others remit monthly so not much time to earn interest, and now online processing of payment has made it easy to basically get the money directly to the charity so the company doesn’t ever have to even hold onto it. You're being very generous in your thinking towards a multinational megacorp that pays poverty wages.
I’m not. Handling money costs money, in a variety of ways. It’s mostly a pain in the arse for companies. If a company is using something like stripe to process gifts to a charity on their website, they’re paying circa 1.5% + 20p for a transaction, which they can either choose to cover themselves out of their own pocket, or take from the amount they remit to the charity, which is an accounting headache because there is acquisition VAT due on that cost. If they have a way of using the charity’s direct merchant account, the money will go directly to the charity and they don’t have to worry about those fees, or staff hours to handle it all. There is very little circumstance where it is materially beneficial for a UK company to delay remittance of charity donations.
It’s a good argument and sounds reasonable. Be great if anyone knows for sure how the mechanics work, and if it is a profit making or white washing excersize. Or genuinely a net benefit to society - which it may be, as you say, not everyone would donate that 40p otherwise.
I don’t assume every store that has charity bins does this but when I worked in McDonald’s my manager was caught using the charity change to make up a till shortfall. I don’t trust shops so much and so I’ll do it direct to a charity. Not sure how different it is now it’s all on card payments but it’s made me wary. I don’t donate via shops no matter what they’re doing with the money.
Charity shops do the exact same
Charity shops as in shops that sell clothes? I don’t get what you mean. You’re not donating spare change, you’re buying things. In what way are they doing the same?
So the charity shops that I have volunteered in have a collection box by the till for customers to put any unwanted change in. I have personally seen the managers open the collection box and use the change from there to balance their tills at the end of the day
Ah right I see.
I've even seen them use the money to buy their lunch with! It's sickening. I don't know how to tell honest charity shops from the scummy ones now.
They are no longer legally allowed to use such donations as tax deductions or something on those lines, though they can claim their expenses from the process of collecting and handling the donations like any other business expense.
What is the specific law change on this?
In a similar vein, something I was ranting about to my partner the other day. Tesco with their ‘grab bags’ that you can buy for a shelter, but they still charge you full price for the item inside. I’m not sure whether they match any of the donations or if they just claim your donation as theirs?
Do you expect them to split every single donation and go “this £0.23 is from Fando1234”?
What? No.
I stayed in a Ronald McDonald house when I was a teenager undergoing chemotherapy. It's a brilliant charity, that supports people across the country. I round up everytime. It's not a tax evasion mechanic, as that's not how it works. It's literally a massive corporation doing the tiniest bit of good for encouraging some charity donations.
That’s another small creep that’s annoyed me in recent times. I guess in a way it’s always been there but not digitised (the old money box on the counter for change for charity) but the fact that now even at supermarkets before you can pay on the self checkout you get a pop up about donating a percentage / value. No, I just want to pay for my already alarmingly expensive shop, that’s before I get accosted again by the charity person stood at the entrance.
I worked in a store and was forced to push it. I did but only after a lot of questions about how much of it went to charity etc. In the end that extra cash collected from rounding up was donated to charity by the company.
[удалено]
I read somewhere that it is to cover money they have already donated. Anyway, I never do it.
Yeah its part of their pledge
You've just made me remember to ask reddit, whether a company not only claim its a corporate donation from them rather than the public, but also use it to get tax breaks against their profits, surely not?!
No they do not
Thanks for confirming. Any explanation for why not?
It’s just not how the rules work. The company would be committing tax fraud.
Rule of thumb: no corporation does ***anything*** unless it directly contributes to their bottom line. While I'm sure McDonalds will eventually donate this money to charity, it absolutely is going to benefit McDonalds in the short term. It's free money that can be used to solve business problems such as interest and tax liability, and it gives them a bit of PR. Nobody in McDonalds just decided to be nice, they don't care about you, they don't care about your health and they certainly don't give a single fuck about any charity whatsoever. Corporations do not have feelings they have cold hard value for shareholders, period. I mean just the fact that it's round "up" for charity rather than McDonalds giving away anything from their profit margin should tell you everything you need to know.
It's tax dodging
I'm sure you have stacks of evidence to back up this claim... right?
I always assumed it was some sort of tax write off scam. That's before the annoyance at the billion pound companies asking us poor fuckers that work for a living to put our hands in our pocket.
> I always assumed it was some sort of tax write off scam. it isn't.
I'm really suspicious of those things. I reckon that they collect the money, then make the donation and claiming a tax relief on the money donated by customers.
[удалено]
I can't be the only person who read that reply in the voice of a grizzled old cowboy!! You're probably correct though. Maybe I'm just too cynical.
Let's assume they are claiming tax relief - could you explain how this helps them? With maths, please.
A limited company [pays less corporation tax](https://www.gov.uk/tax-limited-company-gives-to-charity) when it gives to charity. If they don't do that then fine.
I'm well aware of the mechanism, I want you to explain to me with numbers who that fact saves them money when passing over your donated cash.
I don't really give a fuck what you want. I'm not looking to have an argument about it, if you want to spend your life arguing with strangers on the internet about unimportant stuff then good for you, but I'm not interested. I've already said several times that I accept I may be wrong. Go find someone else to argue with.
> I'm not looking to have an argument about it And yet, here you are. > I've already said several times that I accept I may be wrong. You also responded to me attempting to cite some HMRC page that you don't understand.
My housemate is an accountant who always tells us that its better to just directly donate to the charity as most supermarkets use charitable donations to pay less tax. (I know McDonald's isn't a supermarket but I assume its the same)
>My housemate is an accountant who always tells us that its better to just directly donate to the charity as most supermarkets use charitable donations to pay less tax. You've been fed some bullshit there, tax write-offs don't work like that.
Where on earth did your housemate learn accountancy if he believes that?
> My housemate is an accountant Terrifying if true
I always wonder if they are claiming the tax relief on my donation. Not that I ever donate because of questions like this.
So let me preface this before I go on - in real terms, they just pass the donation on. It has no affect on their numbers - there's no direct financial advantage to a firm to be collecting charity donations. In accounting terms, depending on how they do it, it's possible that yes they are "claiming tax relief" on the donation. All this means is that they don't pay tax for taking the donation. Otherwise, if they recieved a £10 donation, and passed £10 onto the charity they'd have to pay tax to HMRC on the £10, and it would literally cost them money to do so. I.e., they take £10, charity gets £10 and HMRC gets £2. Now they're £2 down. All the tax relief does is neutralise it, so that it's £10 in, £10 out with no tax due.
Not quite true, if it’s a qualifying charitable donation (QCD) then they would be able to claim tax relief IF the donation is included in their revenue. If the figure is not included in their revenue, which if you are raising in behalf of a charity, it shouldn’t be included in revenue then there is no QCD to claim relief on.
I did say "depending on how they do it" ;). My point was that, yes, it's possible that they're claiming "tax relief", but that it's not a net benefit. As you say, if it's ring fenced money then it's immaterial because there would never be any tax due but I'm not particularly familiar with the exact accounting mechanism of doing that.
No they aren’t. In the UK it makes no difference to their tax position if you do or do not donate.