Money: Charity shops and the cash that won't reach the needy
Sunday 02 February 1997
But few shoppers really know how much of the money they spend benefits charities. In fact, while the shops are a very useful source of income for charities, purchases are an inefficient way of donating your money. On average, 73p of every pounds 1 you spend is soaked up in the expenses of running the shops, according to a survey published last year by the magazine NGO Finance.
Charity shops have become big business. The annual income of the largest five chains of shops alone is now in the order of pounds 150m. At the same time, a number of shops have started selling new, as well as donated, goods and most of the big chains are using paid staff to work alongside the volunteers.
This is transforming the way outlets are run. "Chains which employ professional staff have revamped themselves from fund-raising opportunities to professional charity retail operations," says Chris Gallagher, head of retail at Barnado's.
The new approach has upset some local shops, which have complained of unfair competition since charity shops enjoy 80 per cent relief on business rates and may even, at the discretion of the local authority, not pay rates at all.
Stephen Alambritis, of the Federation of Small Businesses, says: "The system's unfair. Charity shops are going for prime sites, pushing new goods. We don't mind them doing commercial trading if there's a level [business rates] playing field."
The growth of charity shops, as well as threatening their privileged tax status, could also put pressure on some of the smaller charity outlets. "The growth is coming from the big chains, which are going for it as professional retailers," says Colin Sandford, chief executive of the British Heart Foundation's shops division. "There are also some tremendously professional, well-supported local charity shops, such those connected to hospices. It's the ones in between that will tend to get squeezed."
Charities' rivalry is over the volunteers and donated goods. Sarah Shekleton, of Oxfam, says: "There's no shortage of customers. Where it's becoming tough is getting donated goods. We're trying to make it more convenient for people to bring things to the shops via clothing banks or house-to-house collections."
Oxfam, with about 24,000 volunteers working in its shops, is one of the few big chains still principally staffed by volunteers. This helps contain costs. While the wage bill of most other chains accounts for 20 to 30 per cent of turnover, Oxfam's pay packets soak up only 8 per cent of the shops' turnover.
But this saving doesn't necessarily translate into proportionately more money for the charity. Charities that use paid staff say this factor helps each shop generate a higher income to offset other fixed costs such as rent and electricity; so they make a higher net profit.
Certainly, profits vary a lot between chains. The profits of the top 20 chains range from 42 per cent of income for the Salvation Army Trading Company to just 16 per cent for NCH for Children, according to the NGO Finance survey. One chain, run by the disability charity Capability Scotland, even made a net loss in the last financial year. "The loss is due to a vigorous acquisition policy. We're investing in new shops for the future," explains a spokeswoman.
While such short-term losses are the exception, it's clear that, in general, the profits made from the shops aren't that high. Even added to other trading activities, like direct mail, these profits account for less than 3 per cent of the total income of the leading 100 charities, according to the Barclays/NGO Finance Charity 100 index.
Charities, however, say that making the public more aware of shops' costs is not the answer. "We've nothing to hide," says John Tough, head of retail at British Red Cross. "It has to be understood that charity shops are not the most productive means of raising money. Paying for rent and so forth erodes our profits. The costs are very high, compared to, say, the 1 per cent administrative costs on a legacy.
"None the less, charity shops make roughly pounds 100m a year net profit for the charities sector as a whole."
The costs of charity shops also need to be seen in the light of the other retailers' take from charity-related goods. An amendment to the 1992 Charities Act means that retailers must now say how much money from each pack of charity Christmas cards goes to the stated charities. Last Christmas, the average donation was just 10p in the pound - and that was twice as good as the year before. The profit charities made from cards sold in their own shops was far higher.
The charities say there are also a number of other benefits to their shops. Howard Stirrup, head of shops for Help the Aged, says: "They're environmentally sound because they help recycle a lot of goods; they provide affordable second-hand items for people who may not be able to afford new goods. They offer helpers, who are often elderly, a way of making a positive contribution to society through their volunteer work. And they can provide useful work experience and training for people."
Shops in the high street can also help charities' campaigning work by maintaining their public profile. In the case of Oxfam, the shops are an outlet for its fair trade initiative, which supports overseas producers in poor countries by setting fair, agreed prices for goods, as well as providing training and other support.
Number Annual Annual Annual
of shops income costs profit
Oxfam 844 43.3m* 28.0m 15.2m
Imperial Cancer Research 474 26.0m 21.0m 5.0m
British Heart Foundation 300 24.6m 18.8m 5.8m
SCOPE 276 22.7m 17.5m 6.2m
Barnado's 315 18.0m 13.2m 4.8m
Help the Aged 322 16.5m 12.0m 4.5m
Cancer Res Campaign 227 14.5m 11.7m 2.8m
Age Concern England 400 9.6m 7.3m 2.2m
British Red Cross 355 8.9m 5.7m 3.2m
Save the Children Fund 158 6.6m 4.4m 2.2m
*Oxfam shops had an additional pounds 12.7m income from the sale of Oxfam Trading goods. The table shows the largest 10 charity shop chains, measured in terms of the total income generated. The information given is correct as at the date of the charities' last annual reports and accounts.
Source: NGO Finance, Oxfam, Cancer Research Campaign.
08 May 2015 10:30 PM
13 May 2015 07:34 AM
The Tories have appointed campaigner Ros Altmann to the post
30 April 2015 07:30 PM
06 May 2015 09:39 AM
One reader’s monthly direct debit charge has been increased by 62 per cent
05 May 2015 02:09 PM
Many Londoners who live in social housing estates are not allowed to switch because their landlord has ‘locked’ them in to buying from one supplier
24 April 2015 07:30 PM
01 May 2015 12:00 AM
More than £60m was paid out to more than 2 million prizewinners this month
28 April 2015 05:20 PM
Why can’t we just have open and honest charges, without all the cross-subsiding?
28 April 2015 03:50 PM
With the pound at a high against the euro, it pays to buy now before uncertainty post-election
17 April 2015 06:00 PM
23 April 2015 12:00 AM
Experts disagree about the 7% increase over the past year
22 April 2015 07:29 AM
Too many mortgages are being sold with misleading gimmicks
21 April 2015 09:54 AM
The firm’s revenues slumped by a third to £217 million in 2014
21 April 2015 12:00 AM
The average quote for a buildings and contents policy has fallen by 3.6 per cent
10 April 2015 07:00 PM
- 1 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 2 The ten most unequal developed countries in the world
- 3 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 4 New Zealand 'the best country to work as a prostitute', says sex worker advocacy group
- 5 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
The day that Britain resigned as a global power
Labour leadership: Battle lines are drawn as members battle over party's ideology at first hustings of the contest
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof