consumer experience, technologies

MDA delivers VAT-free charity short codes

The Mobile Data Association has announced a dedicated Charity SMS Short Code range (70xxx), together wth a framework for managing donations through the UK’s mobile network operators.

In short, this new standard sees VAT (Value Added Tax) waived on donations made to registered charities via text messages to specific numbers: the 70xxx short code range. Taxes usually charged by mobile network operators can be passed directly to charitable organisations, meaning roughly 10p in the pound extra for charities.

Previously, this charitable billing model had only been set up on an ad hoc basis – most recently by Mobile Interactive Group (MIG) and Buongiorno, who collaborated for this year’s BBC Comic Relief event. The charity’s supporters donated more than £7.8 million in this way.

Now, any five-digit SMS Text Message Short Code beginning with the numbers 7-0 (seven zero) will automatically be considered a charity code which can be allocated those eligible under the rules of Her Majesty’s Revenue and Customs (HMRC).

Mobile users will be able to donate a number of amounts up to £10.00.

Long term UK-wide recognition of charity short codes will depend on their adoption, promotion and advertising in association with charities and their brands.

decorate a marathon course with a 70xxx short code?
decorate a marathon course with a 70xxx short code?

Significant credit should go to our MDA stalwart, Operations Director, Martin Ballard, for coordinating efforts with the mobile operators, getting the appropriate signoffs (no easy feat) and seeing this through with HMRC.

In a BBC report, Joe Saxton, former chair at the Institute of Fundraising, predicted that text donations could reach £100m in five years time if charges came down to between 5p to 10p per text in total.

Despite Charity Short Codes operating on a commercial basis, and as such being open to incurring charges, Saxton said that the aggregator, “WIN, one of the companies that processes texts for mobile phone operators has agreed to process text donations for free.”

So perhaps other Tier 1 aggregators will follow suit.

Either way, this is just the breakthrough the charity sector has needed in order to kick on with the promotion of donating by mobile.

Long proven as one of advertising’s most effective direct call-to-action media, it’s high time for the charitable sector to enjoy the power of the mobile short code.

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Further detail

Judging the eligibility of charities will be the responsibility of service providers, using the HMRC Charity Search facility. Organisations can register with HMRC directly for inclusion. Charity Short Codes will be allocated initially by the relevant MNO.

Mobile Network Operators and Mobile Data Aggregators, which have also been involved in the Framework’s development, will offer a normal commercial service which attracts VAT. Only the donation proportion of a mobile payment is VAT-free.

Discussions with the MNOs to broker the framework took place under the regular non disclosure agreement which the MDA has with them. Therefore, the framework needed to remain confidential until agreements had been reached and approved. There may be a period required for all aggregators to formalise an appropriate management process.

The full document, The Mobile Data Association Framework For Charitable Donations, can be downloaded from the MDA’s new charitytext.org website.

BBC Business website story

Telegraph website story

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