Submitted by Mike Grenville on Wed, 11 Nov 2009 12:55

O2 has reduced charges to charities from text donations made by O2 customers keeping just 10% of donated revenues.

From November charities of all sizes will now be able to receive an estimated extra 10p in the pound for text donations of up to £10 made via dedicated 70 prefix short codes through O2.

O2 says it will ensure registered UK charities that opt to use a dedicated short code will receive 90 per cent of the donation. O2 charges a small fee to cover its network costs, VAT on the cost of the text message, insurance against bad debt and a range of third party costs.

Reasonable And UnReasonable Fees

"I think 10% is a reasonable fee to cover our costs, comparable with the fees charged by online charity giving platforms, and better value than other fundraising activities such as professional street collections, direct mailing and telemarketing campaigns" said Simon Davis, from O2’s Sustainability team.

Joe Saxton (pictured speaking) - founder and driver of ideas at nfpSynergy and author of the 'Sending Out an SMS' report, welcomed the news. "To get an increased take up in text donations we need to work on getting charges lower. We've made progress, as just 1 year ago of every £1.50 donation only 95p went to charity."

Speaking at a 160characters MEF event, Saxton called on the other mobile operators to follow O2's lead. "With Virgin Mobile's current rates they could keep as much as £5 in every £10 donated to charity." Saxton noted that PhonePayPlus rules meant that this had to be spelled out in any publicity material which must surely be embarassing for them.

VAT Free

While VAT is no longer payable on charity donations made via text message, Saxton called on VAT to be taken of the fees for the related services as well. He agreed that using SMS for charities needs to be a fair deal for all. "It needs to be sustainable for all" he said "so that from the smallest to the largest charities can benefit". He added called on HMRC to make Gift Aid automatically included for donations by Text Message.

Charities eligible under the rules of HMRC are allocated a dedicated numeric short code for donations only. Five-digit SMS short codes beginning ‘70’ are now automatically considered a charity code and are eligible for the enhanced payout. However, VAT is still payable on the operator or aggregator’s costs. The Charity Short Codes are managed through the MDA website www.charitytext.org"

While saying that the mobile industry could help more in this area, Saxton said that "We expect to see a lot of progress in the next six months".