Plummer Parsons Charity Newsletter 8

Plummer Parsons Charity Newsletter 8

• 1.
  March 2012 News and Views from Plummer Parsons CHARITY newsletter… In a time of rising costs and shrinking funding, all charities are looking for ways to save money. This Charity Newsletter addresses three key areas which are of increasing importance. Please don’t hesitate to contact us further about this or any other matter. VAT and Cost-saving Opportunities One of the biggest financial burdens for charities is VAT, which can affect all charities whether they are big or small. The variety and nature of charities’ income streams often means that VAT compliance is harder for charities. However, there are ways to save or minimise VAT. The Revenue has put in place specific exemptions Finally there are other ways to save costs: utilising to help charities avoid VAT on certain expenditure your full 30 day credit period for payment of your and charities need to be aware of these bills is one way your charity can improve its cash exemptions so that they are not overcharged. flow over the short term; changing utility suppliers In particular, your charity needs to be aware of the or negotiating better prices; shopping around for VAT savings available if your activities involve any the best value with regards to insurance and other of the following: building work; any fundraising costs; looking at your office needs and considering involving advertising, collections or appeals; energy whether smaller premises would be an option; saving improvements to buildings; provision of reviewing contracts on equipment hire and leases; equipment to the disabled; purchases of minibuses leasing assets rather than purchasing them to for the disabled; heating of residential spread the costs over several years; reviewing all accommodation or charitable premises. the services you provide with a view to identifying areas where services could be cut back without Equally, if your charity is already registered for VAT affecting the charity’s overall aims; seeking out could you restructure your charity’s activities to other charity partners with a view to sharing costs; increase the amount of VAT you reclaim on considering whether you are overstaffed (but expenditure, perhaps by putting trading activities beware employment law!); outsourcing of activities through a separate company? (but ensure any self-employment is genuine or there are arm’s length contracts). www.plummer-parsons.co.uk/charity
• 2.
  March 2012 News and Views from Plummer Parsons CHARITY Increase personal donations by 25% Gift Aid donations are greatly beneficial to charities these days – as it can increase the value of donations by 25% at no extra cost to the donor. It is reckoned that Gift Aid is worth nearly £1 Along with gifts of money, it is also billion a year to charities and their donors. possible to gift aid certain assets like On making a monetary donation to a charity, shares and investments. Charity shops the donor is required to complete a Gift Aid have started to claim the sale proceeds declaration by indicating that he/she is a UK of donated goods also under Gift Aid taxpayer and will pay sufficient tax equal to the and receiving substantial Income tax reclaimed on the donation. The donor must Tax repayments. therefore ensure that he/she has paid income Since 1 April 2011, the “substantial donor” tax, otherwise he/she will have to pay it to legislation on charities has been lifted with the Revenue. new rules in place to catch “tainted” Gift Aid does not apply to: ➜ Gifts of money with conditions attaching ➜ Payments for goods or services 25% donations. This new legislation is for the purpose of detecting donors (or those connected to them) who have made a charitable donation for the specific purpose ➜ Set participation fees of receiving an advantage from the charity. ➜ Payments made using charity vouchers Gift Aid is such a valuable source of income or cheques to your charity. Make sure you are doing ➜ Loan waivers all that you can to maximise your claims ➜ Barter transactions and have considered all options available ➜ Gifts from companies to you. Retaining Funds? Justify your Reserves Reserves are that part of a charity’s funds reserves policy, the Regulations require this The Charities SORP requires trustees to include which are freely available to spend on any fact to be stated in the annual report. in their annual report: of the charity’s purposes (ie not restricted Future plans and budgets need to be ➜ a statement of their policy on reserves; or endowment funds), excluding amounts considered, particularly any uncertainty over ➜ the level of reserves held and an invested in tangible fixed assets held for future income or the risk of unexpected calls explanation of why they are held; the charity’s use and any amounts on the charity’s funds. Future plans, projects or designated for essential future spending. ➜ where material funds have been other spending needs might be identified that designated, the amount and the purpose cannot be met from the income of a single A reserves policy explains to existing and of the designation should be explained; year’s budget alone and therefore the charity potential funders, donors and other ➜ where designated funds are set aside for may need to consider maintaining reserves. stakeholders why a charity holds a particular future expenditure, the likely timing of amount of reserves. A good reserves policy Trustees then need to think about how much that expenditure. gives confidence to stakeholders that the might be required and how much is currently held as reserves: this is a charity’s reserves A charity with excess reserves should consider charity’s finances are being well managed policy. There is no single level or even a range whether these funds could be effectively spent and can also provide an indicator of future of reserves that is right for all charities. on the charity’s purposes. If a charity has more funding needs. Reserves policies should reflect the particular resources than it needs to fulfil all of all of its The Charities SORP (Statement of purposes then the trustees should contact us to needs of a charity and therefore it is essential Recommended Practice) requires Trustees to discuss whether the purposes of the charity that the trustees identify why funds are state the charity’s reserves policy within their should be amended to enable the charity to needed and how much is likely to be required annual report. If a charity operates without a operate more effectively. to meet these needs. Have we missed anything? Please address all enquiries, responses and other issues raised by this newsletter to: Is there anything in this Newsletter that you were expecting or hoping to read? Please do not hesitate to contact us direct as we will be more [email protected] than willing to provide you with extra information etc. Email us the details of others who would like to receive this newsletter. Eastbourne Hailsham Brighton 18 Hyde Gardens, 5 North Street, 4 Frederick Terrace, Frederick Place, Brighton, Eastbourne, BN21 4PT Hailsham, BN27 1DQ BN1 1AX T 01323 431200 F 01323 641767 T 01323 846622 F 01323 440594 T 01273 725123 F 01273 726123 [email protected] [email protected] [email protected]