Database managers of fundraising systems could be forgiven for sitting on their heels and staying well out of the accounts department when the Government announces a change in the rate of VAT. After all, while many fundraising systems were originally based on sales ledgers, most charities do not have a sales ledger in the conventional sense and do not charge VAT on any of their fund raised income. There after all no VAT on a donation. Accountants will no doubt be talking to their suppliers about exactly what to do, and users of Iris accounting products will find the help desks ready with all the answers, but fundraisers may get overlooked.
Pausing to think about my charity clients however revealed quite a few scenarios
1. Corporate agreements may result in a conventional VATable invoice. Although the company is making a donation, because it is based on a service such as a proportion of sales of a particular branded product, VAT is applied.
2. Magazine subscriptions - online and offline. The rules around VAT on subscriptions is complex but certainly some of our clients do have a VAT element in their annual charge.
3. Membership subscriptions. Again, some do, some don't, depending on the components contained within the membership benefits. Most charity memberships are not subject to VAT but some of our clients do have a VAT element to their membership.
4. Product Orders. This is the most obvious section - whether bought online or offline that charity mug or T-shirt (or in the case of our CLAWS customers, that dog lead or cat collar) is going to attract VAT.
So, dig around in your system, find where the VAT rates are stored, and change them on Friday night ready for Monday morning.
One last consideration - are your items advertised gross or net? In general terms B2B items are advertised net, hence charities' understandable moans about adding VAT every time they buy something, and B2C is advertised gross - you don't expect to pay £11.75 for 10 litres of unleaded advertised at £1.00 per litre. If any of your subs or products are advertised including VAT, you may have change all your ticketing and your online pricing to reflect the new VAT rate - don't assume the system will do it for you - it might - it just depends at what point VAT is calculated in your system.
So, no VAT in fundraising? Quite the reverse unfortunately - good luck with the change over!
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