Charity account


Z

Z

I was thinking of opening a charity account to keep a track of donations
which are irregular but currently from my personal account.

I there anything I need to know legalwise or finance-wise (e.g. annual
reporting) before I embark on this.
Are there special bank accounts for this purpose?
 
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J

Jonathan Bryce

Z said:
I was thinking of opening a charity account to keep a track of donations
which are irregular but currently from my personal account.

I there anything I need to know legalwise or finance-wise (e.g. annual
reporting) before I embark on this.
Not really.
Are there special bank accounts for this purpose?
You could use a normal bank account. Alternatively something like the
Charities Aid Foundation's CharityCard Account may be what you are looking
for. Basically, you Gift Aid your money into the account, and then ask
them to pay it to the charity of your choice.
 
G

GSV Three Minds in a Can

from the wonderful said:
I was thinking of opening a charity account to keep a track of
donations which are irregular but currently from my personal account.

I there anything I need to know legalwise or finance-wise (e.g. annual
reporting) before I embark on this.
Are there special bank accounts for this purpose?
I'd open a CAF (Charities Aid Foundation) account, and get credited with
the tax on whatever you put in (i.e. 40% tax payer can donate £600, and
get £1000 put in the a/c to give away). You get a CAF debit card, and
chequebook, iirc .. however you can ONLY donate to registered charities
from such an account, and they have minor hassle to extract their money
from CAF (not quite as easy as banking a cheque). That's what I did, way
back when I actually paid 40% tax (and have been giving it away ever
since).

Alternative is to go the 'gift aid' route for each donation, but that is
more hassle (and each charity then has to reclaim the tax from each
payment).
 
R

rob.

I'd open a CAF (Charities Aid Foundation) account, and get credited
with the tax on whatever you put in (i.e. 40% tax payer can donate
£600, and get £1000 put in the a/c to give away).
Isn't CAF just a registered charity? I would have thought the only way now
was to Gift Aid to them, in which case they get 28% extra, and if you pay
higher rate tax you can use the amount of Gift Aided donations you make to
lower your liability on your tax return.

I suppose you could have an old style covenant still running - but I thought
they only lasted 5 years.
 
Z

Z

GSV Three Minds in a Can said:
I'd open a CAF (Charities Aid Foundation) account, and get credited
with the tax on whatever you put in (i.e. 40% tax payer can donate
£600, and get £1000 put in the a/c to give away). You get a CAF debit
card, and chequebook, iirc .. however you can ONLY donate to registered
charities from such an account,
That's beneficial actually so I don't end up funding anything dodgy.
Then again there are some pretty dodgy registered charities.
and they have minor hassle to extract their money from CAF (not quite
as easy as banking a cheque). That's what I did, way back when I
actually paid 40% tax (and have been giving it away ever since).

Alternative is to go the 'gift aid' route for each donation, but that
is more hassle (and each charity then has to reclaim the tax from each
payment).
Goal is around 10 p.c. of income and as the tick boxes are usually about
GBP20, at my last income - unusually low for me with out of pocket
expenses for stuff my employer should have provided - this was over my
weekly budget.
Anything to keep the accounting easier and the payments regular.
 
A

Allan Gould

rob. said:
Isn't CAF just a registered charity? I would have thought the only way now
was to Gift Aid to them, in which case they get 28% extra, and if you pay
higher rate tax you can use the amount of Gift Aided donations you make to
lower your liability on your tax return.
CAF is a charity. You pay money (donation) into your CAF a/c, they
reclaim the basic rate tax and put it into your CAF a/c when it
arrives. If you are a higher rate tax payer, you claim higher rate
relief on the donation to CAF on your tax form.

CAF give you a CAF "cheque book" and CAF debit card which can be used to
make payments to charities & e.g. churches (which qualify for the same
reliefs). I've also been able to make donations to analagous
organizations (not-for-profits) in the USA via my CAF a/c. V. helpful
from time to time.

IIRC, there are other organisations similar to CAF, but they do not come
to mind at the moment.

NB: CAF take a 4% handling fee on each of your (grossed up) donations.

Allan
No connection with CAF, other than a happy customer
 
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G

GSV Three Minds in a Can

from the wonderful said:
Isn't CAF just a registered charity? I would have thought the only way now
was to Gift Aid to them, in which case they get 28% extra, and if you pay
higher rate tax you can use the amount of Gift Aided donations you make to
lower your liability on your tax return.
Yes, you're quite right - you can give still them £1000 for the cost to
you of £600, but it isn't quite as simple as I made out, since you do
have to reclaim some of the (above basic rate) tax from the IR yourself.
 
R

Ronald Raygun

rob. said:
I suppose you could have an old style covenant still running - but I
thought they only lasted 5 years.
They had no upper time limit, only a lower one, which was originally
7 years and latterly 4.

Inland Revenue have now stopped processing personal deeds of
covenant separately and they now just get lumped in with Gift Aid.
They've also made the whole process administratively much less
onerous. For instance, you (by which I mean charity treasurers)
no longer need to get donors to sign a chit each year confirming
how much they have donated that year.
 
R

Ronald Raygun

Allan said:
CAF is a charity. You pay money (donation) into your CAF a/c, they
reclaim the basic rate tax and put it into your CAF a/c when it
arrives. If you are a higher rate tax payer, you claim higher rate
relief on the donation to CAF on your tax form.
So there is no difference to the donor bewteen giving via CAF and
giving directly to charities, except that the donor need not make
separate Gift Aid declarations to each of the charities to which
he wishes to donate, and need not keep track of a running total
for his tax form.
CAF give you a CAF "cheque book" and CAF debit card which can be used to
make payments to charities & e.g. churches (which qualify for the same
reliefs).
Indeed. The charity then has to send the "cheque" to CAF together
with their registration number and bank details, and CAF will then
wire the funds to the nominated account. Not too much hassle for
the charity, but it will cost the price of a stamp and envelope.
But it's not really an advantage for the charity to be able to
leave one name off the Gift Aid claim, which they'll be making
anyway. After all, once registered, they can accept Gift Aid,
and it's much simpler to ask a potential donor to make a simple
Gift Aid declaration than to go through the hassle of opening a
CAF account. The CAF scheme is simply not (yet?) popular enough.
As treasurer of my church, I make Gift Aid claims on behalf of
several dozen donors, but only one donor uses CAF.
I've also been able to make donations to analagous
organizations (not-for-profits) in the USA via my CAF a/c. V. helpful
from time to time.
That sounds worth having, I suppose, if you do that sort of thing
a lot.
NB: CAF take a 4% handling fee on each of your (grossed up) donations.
So they actually take more than 5% of your cash contribution.
Bloody hell! That's outrageous, for what little service they provide.
I didn't know that, as I have no experience of CAF as a donor, only
as a donee, and for me it does what it says on the tin. The donor
gives me a "cheque" for £100, I send it off, and £100 appears in
my charity's bank account a week or two later.

So presumably this handling fee is paid separately by the donor.
It appears to me to be a good reason for avoiding them. No wonder
people are more and more reluctant to give, when they realise at
how many levels funds are creamed off the top, particularly in the
case of overseas aid.
 
I

Iain Archer

Allan Gould wrote on Thu, 21 Oct 2004
CAF is a charity. You pay money (donation) into your CAF a/c, they
reclaim the basic rate tax and put it into your CAF a/c when it
arrives. If you are a higher rate tax payer, you claim higher rate
relief on the donation to CAF on your tax form.

CAF give you a CAF "cheque book" and CAF debit card which can be used
to make payments to charities & e.g. churches (which qualify for the
same reliefs). I've also been able to make donations to analagous
organizations (not-for-profits) in the USA via my CAF a/c. V. helpful
from time to time.

IIRC, there are other organisations similar to CAF, but they do not
come to mind at the moment.

NB: CAF take a 4% handling fee on each of your (grossed up) donations.
A mailing from them yesterday included details of a Tell a Friend
promotion: for every friend you get to sign up through it, both of
your accounts are topped up by GBP15. If anyone is thinking of
opening a CAF account, it would be wasteful not to take advantage of it.
 
R

Ronald Raygun

GSV said:
Yes, you're quite right - you can give still them £1000 for the cost to
you of £600, but it isn't quite as simple as I made out, since you do
have to reclaim some of the (above basic rate) tax from the IR yourself.
Indeed. What you do in the simple basic rate case is to earn £1000,
pay £220 tax, and give the remaining £780 to charity. The charity
then gets the £220 back from the taxman, thereby gaining the full
£1000 you earned.

In the higher rate case, the charity is still supposed to get the full
£1000 you earned, but is not involved in knowing what your tax rate is,
so you must give them £780 as before to see them right. But you've
already paid £400 tax and only have £600 available to give to the
charity, so you have to find an extra £180 from somewhere (borrow it
from the piggy-bank) to top up your "visible" donation. It is these
£180 you then claim back from the taxman, to re-stock the piggy-bank.
Then everyone's back where they should be: The tax man took £400 of
which he gave £220 to the charity and £180 to your piggy-bank. The
charity has the £1000 you earned. You have nothing more than before.
 
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M

Mike Scott

Ronald Raygun wrote:
....
So they actually take more than 5% of your cash contribution.
Bloody hell! That's outrageous, for what little service they provide.
I didn't know that, as I have no experience of CAF as a donor, only
as a donee, and for me it does what it says on the tin. The donor
gives me a "cheque" for £100, I send it off, and £100 appears in
my charity's bank account a week or two later.

So presumably this handling fee is paid separately by the donor.
It's effectively deducted from the reclaimed tax. The donor doesn't pay
it explicitly - he just doesn't have quite as much to give away as he
might have expected.
It appears to me to be a good reason for avoiding them. No wonder
people are more and more reluctant to give, when they realise at
how many levels funds are creamed off the top, particularly in the
case of overseas aid.
It's why I gave up with them. With the simpler tax forms for the
charity, the handling fee was ludicrous. IIRC it had just gone up
before I finally gave them the push a few years ago.
 
Z

Z

Jonathan Bryce said:
Not really.


You could use a normal bank account. Alternatively something like the
Charities Aid Foundation's CharityCard Account may be what you are looking
for. Basically, you Gift Aid your money into the account, and then ask
them to pay it to the charity of your choice.
That sounds fine, so I can pay in a certain percentage of my
salary/wages by standing order helping me set a budget then pay out when
a charity takes my fancy and contributions can be increased by gift aid
and interest.
What happens then if, say I collect donations from other people say for
them sponsoring me to do something for a non nominated charity, and the
funds with other funds were divvied up later to different charities
would the account then come under charity laws?
 
A

Allan Gould

A mailing from them yesterday included details of a Tell a Friend
promotion: for every friend you get to sign up through it, both of
your accounts are topped up by GBP15. If anyone is thinking of
opening a CAF account, it would be wasteful not to take advantage of it.
Ooooooooooooh: could you post any more details here? Someone told me
yesterday that they might be interested in opening a CAF account and we
could be £30 better off.

Allan
 
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