GoFundMe CEO attacks rivals over Gift Aid
The head of crowdfunding platform GoFundMe has criticised rivals for running their businesses by taking a slice of Gift Aid.
Speaking to Sky News, Rob Solomon acknowledged that in the past, GoFundMe charged a 5% platform fee, but said: "We changed that a year ago and went to a voluntary tipping model."
This means that 100% of the charity tax incentive Gift Aid goes to the cause being supported "whereas some platforms take some of the Gift Aid," added Mr Solomon.
GoFundMe reports that it has raised more than $5bn (£3.9bn) globally since it launched in 2010, £200m of that coming from the UK. Almost four million individuals in the country have used it to make donations.
Mr Solomon said he believes the company challenges rivals by being a completely free platform to raise funds on, depending entirely on voluntary donations for its profits.
Asked if the move away from charging a 5% platform free had damaged the business, he said: "In order to make the shift, it had to be a viable business model." He added that the company's profits were on par with what it was making before the change.
A report earlier this year by consultancy Development Economics estimated that fundraising platforms would have collected £31m originally designated for charities over the decade to 2021.
Mr Solomon mentioned JustGiving as one rival who are allegedly making profits directly from money that could have been headed to charities.
JustGiving was also criticised by Labour MP Neil Coyle MP, who has campaigned against unethical profit-making practices by online crowdfunding platforms.
Mr Coyle told Sky News there had been some movement in this area.
He said: "JustGiving have announced they will scrap the policy of taking 5% profit from terror attacks and other major incidents. This is welcome.
"No one minds platforms covering their running and admin costs but picking the pockets of terror victims and their families was an outrageous practice and should never have happened.
"I have asked JustGiving to cough up the £500,000 profit they made from Grenfell and the terror attacks in my constituency and at the Manchester Arena. I hope it is forthcoming soon."
JustGiving disputes the comments, insisting the money it makes goes towards costs and is not profit.
Despite the criticism and hopes for change, the practice of taking a percentage of Gift Aid is entirely legal.
Steve Lucas of Development Economics told Sky News that following his report earlier this year, "and campaigning by vocal MPs – including Neil Coyle and Stephane Peacock", he had hoped for change.
"There were strong indications that this would be addressed in this year's budget," Mr Lucas added, stating that the indication was that government would help charities by closing the loophole allowing JustGiving to claim 5% of taxpayers' Gift Aid as a platform fee.
"It was hoped that a market-wide ban on this practice would be passed," he said, adding: "However, I was disappointed – along with many others – to see that Gift Aid was not even mentioned in the budget."
A Treasury spokesperson said: "The Great British public are so generous in giving their time and money to good causes, and we are all proud of that.
"We set out a number of measures at budget to support charities, including reducing administrative burdens so they can focus more time on what really matters.
"And we will continue to explore all options to ensure charities continue to get the most from the kind donations given to them by the public."
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A spokesperson for JustGiving said: "These comments are inaccurate. Our platform fee is not our profit – it is a small charge to cover the substantial cost of running a complex global technology business which has helped raise £3.5bn for good causes over the last decade and is supported and used by the UK's leading charities.
"Charities deserve the best – and more fundraisers choose JustGiving than any other platform because they raise more, net of fees, than cheaper or free alternatives."