Cash Boost for Charities Through Online UK Venture
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British company, Justgiving, has developed technology that allows charities to receive donations online. The venture claims this ability will mean extra cash for the causes.
The start-up has been working with the Inland Revenue to bring online the Gift Aid scheme, which was introduced by the Government last year. According to Justgiving, more than #1bn in tax is left unclaimed by charities every year because the donations are too small, but by putting the aid scheme online an automatic 28% tax bonus is expected on every pound donated by UK taxpayers.
Among other measures taken last April, the Treasury abolished the #250 minimum limit on donations eligible for tax reclaim under Gift Aid. This meant that every #1 donated could attract a 28p tax reclaim. The #1,200 maximum limit for Payroll Giving was abolished, and the Government announced a Treasury 10% matching bonus on all payroll gifts until 2003. The need to fill in paper forms was abolished, making it possible for donors to confirm their tax status to the charity over the phone or on the Internet.
Managing Director Anne-Marie Huby, formerly the UK executive director of 1999 Nobel Peace Prize winner Midecins Sans Frontihres, said the Internet offers huge opportunities for charities to raise more funds more efficiently, but the costs and difficulty of building and running a site are too high for most charities.
"Justgiving is an opportunity for every charity to get on the web and raise funds, and people can give knowing more of their money goes to the cause rather than the taxman or on overheads," she said. "We have brought the same advantages to the charity sector that the Internet brought to say the financial markets."
To date, charities such as Barnardo's, Marie Curie Cancer Care and CARE International are using the Justgiving technology on their own websites, enabling supporters to make single or regular donations online.
Justgiving's revenue model is transaction-based. If a charity wants the donation service via Justgiving's Web site, the start-up takes 5% of every donation and the incremental 28% reclaimed tax amount. If the charity implements Justgiving's technology on its own site, the venture takes 4%.
The company would not disclose how much funding it has taken, but it is enough to see the company for the next six months while revenues continue to grow, said Huby.
"We will return to the venture market later this year depending on our revenues over the next few months, which we expect to increase as the charities already on board let their users know of the new service she said. "It's viral marketing at its best," she said.
The site also enables donors to find out how their money is being used and offers information on the latest appeals. The Justgiving website allows people to build up a personal portfolio of charities and manage their gifts from one single account. Higher-rate taxpayers can simply print out their account page and attach it to their tax return to claim the deductions they are due.
The company also plans to broaden its services to include for example, payroll donation giving, and to take its service to other European countries.