VAT and Fundraising

As there seems to be some confusion regarding VAT, we thought we would give you a bit of a refresher. Despite what you may have heard, the SU does not take any percentage or cut of fundraising - in most cases the "cut" is actually VAT, which is charged by law. The UK Government and HMRC specifies exact ways in which events / fundraising can be VAT e, and sometimes this will not apply to your activities or events that you are running.

When charities raise money, the money they raise is often VAT exempt. This means that the charity does not pay the 20% VAT on any funds they receive. However, there are times when a charity must pay VAT on fundraising.

If you are providing a service or event where the main aim is not to raise money for charity (even if the fundraising is a secondary aim), then you will be subject to VAT by law which is 20%. An example of this could be the Juggling Society decides to run a conference where they aim to have guest speakers, lunch, webinars, and are looking to raise money for the National Circus Charity. Because the society are providing access to an event, the money they take is not VAT exempt.

However, if you are running an event which is purely for fundraising, then this will be exempt from VAT. In this instance, you cannot charge for admission as you are then paying for access, which isn't VAT exempt.

An example: purchasing a poppy for a Remembrance service. You don't actually have to pay for a poppy because if you did, the charity would have to pay VAT on that sale. So instead, they suggest a minimum donation amount so that you are donating for the poppy rather than buying this. Societies can do the same with movie nights, pizza nights, bake sales, etc.

One way to ensure that your society donates money from events to charity, is by mentioning in advertising and sale of tickets that proceeds or profits will go to charity. You can either determine after the event the finances (total amount taken - costs = proceeds/profits) or you can pre-allocate a set amount per ticket. For example, you could have a £5 event ticket, allocate £3 to charity (which would be VAT exempt) and allow the other £2 to cover VAT, transaction charges, costs, etc.

This topic is one that can be confusing, so if you would like to have a chat with your coordinator about this then please book a meeting in.