Charities to get 100% of text message donations
The days of on-street charity collectors could be numbered if a new digital donation platform takes off.
The Likecharity cloud-based application allows people to give money to charities through text messages, but unlike previous text service, the charity will get 100 per cent of the amount donated.
Donations via text were previously reduced by VAT charges and the costs levied to use the donation services.
Likecharity has partnered the six mobile providers in Ireland – Vodafone, O2, Meteor, Three, Tesco Mobile and eMobile – to provide the service to charities. Customers can donate through a free text message, which adds the donated amount directly to their phone bill or deducts the money from their mobile top-up.
The cost of sending the messages will be borne by the operators rather than the donor, and VAT is no longer deducted.
“Revenue have approved the principle that VAT shouldn’t be chargeable for mobile donations,” said founder of Likecharity Tadgh O’Toole.
“It’s been primarily a technical challenge with network operators to then facilitate that.”
Charities will instead pay a monthly fee to use the software
“We charge a software hosting fee for that which is unrelated to the donations made,” Mr O’Toole said.
However, the company has undertaken that the cost of using the platform will not rise above 5 per cent of the donations it generates through the platform, eliminating the risk of charities that do not use it as much as others being hit with a large bill.
“That’s really just a safety valve to make sure that the fees never become disproportionate to the amount of value the charities get,” he said.
Unicef, Focus Ireland, Debra Ireland and Headstrong have already signed up to the platform, and the company expects more major charities to follow.
It is hoped that the new service will make it more cost effective for charities to use text donation platforms, particularly for smaller amounts.
There are no exact figures for the amount of text donations, but Mr OToole, who founded the company in 2011, said it has traditionally had low takeup.
“It’s been low because of the service fees used. Our experience from talking to charities is that the medium hasn’t been viable, or they haven’t been comfortable using it due to the amount absorbed by VAT or service fees.
“It particularly fits where people want to donate smaller amounts – €2 or €3. It’s spur of the moment.”
More than 22 per cent of the donations received by 8,000 charities in Ireland are made through online donations and direct debits.
Mobile donations could also be used to appeal to younger users, he said.