Calling all Charities – Make the Most of Your Funds.

Covid-19 has and is having a significant impact on charities. The Institute of Fundraising has reported that 84% of charities received a decrease or significant decrease in their income, with 92% of charities suffering a fall in trading, with a projected loss of 48% of charities voluntary income and a 33% of total income.

We don’t, of course, have all of the answers but we can however offer some thoughts from within our own sector on how to support charitable institutions and help them make the most from the money they do have available in order to generate much needed income.

We know that a large majority of charities use mail for fundraising and/or supporter engagement. Fundraising professionals also rank direct mail ahead of other channels for bringing in donations, for building connections and for communicating with donors. With that in mind, let’s look at how to make legitimate savings and smarter choices.

VAT on Print

With charities unable to re-claim VAT, it is vital to ensure that wherever a zero rated item is applicable, it is rated and invoiced as such. Whilst it’s the suppliers responsibility to make sure that the correct VAT rate is applied, it is important for charities to understand the basic principles and plan accordingly.

The VAT status of print on paper is subject to a vast and often confusing array of criteria, but get it right and there are big savings to be made, particularly when putting together a mailing with several elements. In addition to regular zero rated printed items such as brochures and leaflets, there are other products that attract extra statutory concessions for charities such as:

Appeals Letters

Classed as a single or multiple sheet letter, pre-printed with the description of the cause, with the primary purpose of collecting donations. It must not have any form areas to complete and return with the donation.

An appeal letter that meets these criteria is zero rated, where a regular letter would be standard rated. Whilst you might not be able to include your donations forms, you can add a website address or a QR code to link donors to an online donations page.

Appeal Outer Envelopes

Overprinting your envelope with an appeal request that is related to its contents, or that distinguishes the envelope from the charities usual stationery makes them zero rated.

Adding additional graphics and messages to envelopes can be done in the same pass as the personalisation, so it shouldn’t add any additional costs unless there is excessive ink coverage.

Collection Boxes

Any receptacle for collecting money will be zero-rated, provided it is secure, capable of being sealed, clearly marked as a charity collection box and bear the name of the charity in a permanent way. Pre-printed card boxes would fall into this category and if supplied flat, be an easy and useful addition to a mailing.

Package Planning

Planning your campaign content carefully will make all the difference as to whether it is rated as standard or zero for VAT purposes.

In many cases, a few tweaks can result in the entire printed pack qualifying for a zero rate – even if it contains standard rated items.

Without getting too much into the nitty gritty, the zero rated items in your mailing need to be either greater in quantity or value in order to achieve a zero rating. The outer isn’t included in this calculation.

VAT on Postage

Regulations changed back in 2015 to mean that direct mailing charges, including postage could no longer be included as part of the zero rated single supply rule.

However there is a solution for registered charities and that is to enter into an agency agreement with a third party who can then treat the Royal Mail wholesale element of any mailing as a disbursement and pass this cost directly onto customers without any VAT attributable. It’s a process fully approved by HMRC.

VAT on Ancillary Services

Some services may be treated as ancillary to the supply of zero-rated printed matter when they are supplied by the person who has the contract to supply the completed printed matter. Services such as; creative design, and preparation of direct mail packs, such as printing using pre-sorted or unsorted data, amendments to supplied data or to remove ‘gone aways’ and deceased.

These services must be attached to the supply of printed matter and are seen as separate and distinct contracts to direct marketing services.


The impact of GDPR has been seen as prohibitive in mailings due to databases becoming smaller to comply with data protection laws, but we should not overlook the benefits.

Charities now have a clearer understanding of who is happy to receive communications from them, meaning that the remaining audience is more engaged and responsive, offering greater potential for fundraising.
There’s also an opportunity to ask your subscribed donors to share your causes and invite their friends and family to sign up, so you keep building a quality database.

Don’t forget you can also build on your existing database by profiling your donors and carrying out a partially addressed mailing.

Keep it Clean

Making sure your database is up to date and relevant can save you money on wasted postage. Arcane offer a FREE audit check to all our customers. We will use our suite of software to identify issues such as duplicates, gone-aways, home movers and deceased. We will supply you with a report and can supply a quotation for correcting any issues found.

Use the Most Cost Effective Format

You need to make sure your mailing items meet Royal Mail discount criteria, there are a number of initiatives to save costs on postage, such as Mailmark, Advertising and Sustainable mail.

In addition to set criteria for discounts, understanding the overall weight, volume and size limits for mailed items can shave hundreds of pounds off your postal costs.

Understanding the various discounts and criteria can be a complex task, but we are here to help you plan your mailing to help you get the best possible financial advantage.

We can offer advice at any stage of your mailing campaign, but particularly welcome enquiries at the planning stage as we may be able to steer you in a more cost effective direction. If you would like information on any of the areas covered in this article, please get in touch.