Denise Copeland, Governance &

Charity Advice Manager8 November 2016

raising money, the rules explained

Fundraising • Lotteries • Public collections• Fundraising events• Trading

Key legislation for NI • Betting, Gaming, Lotteries and Amusements (NI) Order

1985 (amended by Betting and Lotteries (NI) Order 1994• House to House Charitable Collections Act (NI) 1952• House to House Charitable Collections Regulations (NI)

1952 & 1953• Police, Factories, etc (Miscellaneous Provisions) Act

1916’

NB The Gambling Act 2005 does not extend to NI

Code of Fundraising Practice - a detailed guide on both legislation and best practice

Lotteries

Lotteries• Small lotteries at exempt entertainments• Private lotteries• Societies’ lotteries

Small Lotteries at exempt entertainmentsMay be held as part of the following:

• a bazaar• sale of work or jumble sale• fete• dinner• dance• sporting or athletic event • other entertainment of similar character

The conditions are:• The whole proceeds of the event and lottery shall

be devoted to purposes other than private gain• Tickets only sold during the event• Winners announced on the premises • Lottery not the only inducement to public to attend• No fixed maximum ticket price• Police to be notified 7 days prior to the event

Private Lotteries

Must be promoted in NI by and for the following:• members of one society (not gaming) or• people who work together or• people who live together and • confine the sale of tickets to such people

(may sell tickets to non-members on own premises)

• Realise no more than £1,000 on the sale of tickets • The whole of the proceeds (after proper deductions)

must be devoted to the provision of prizes or applied to the purposes of the society

• Useful source of fundraising at an AGM• No fixed maximum ticket price

Societies’ Lotteries

One promoted by a society established and conducted wholly or mainly for:

• Charitable purposes or• Participation in or support of athletic sports or

games or cultural activities or• Not 1 or 2 but neither for commercial or

private gain

The society’s lottery must:Be promoted in Northern Ireland by:

• a society registered with the approved district council • be promoted in accordance with an approved lottery

scheme • all proceeds after lawful deductions, must be applied

to the purposes of the registered society

Can a GB or a ROI charity sell its raffle tickets in NI?•English or ROI charity with NI branch - cannot offer same prize throughout the UK or the island of Ireland

•NI branch must register lottery with district council as with any group here

•Sell tickets by mail/phone to an individual but they then are not permitted to sell the tickets to others in NI

Is a competition a lottery?

A competition involves an element of skill and is not a game of chance so is not covered by the rules of lottery legislation.

Good practice - look at the gambling commission’s guidance

Street collections

Street Collections

A permit must be obtained from PSNI to collect money through street collections or public places

A street is defined to include‘any highway and any public bridge, road, lane, footway, square, court, alley, or passage, whether a thoroughfare or not.’

Other public areas such as bus and rail stations, churches, supermarkets or shopping precincts do not fall under the current definition of ‘public place’ and therefore permission to collect should be sought from the relevant land owner.

House to House collections

House to house collections• Must obtain licence from PSNI for a collection in

a limited area• Exemption order may be obtained from Charities

Branch (DfC) for NI wide House-to-House collections only

• Charities to have written contracts with professional fundraisers and commercial participators

• Professional fundraisers will have to indicate which organisations will benefit and the amount of their remuneration

• Commercial participators will have to indicate organisation that will benefit, and the amount that will be given to the institution.

Charities Act new requirements have not been introduced yet

Trading considerations - Need to consider which classification your income generation falls under

Trading by charities Charities can benefit from tax exemptions on profits from: • Primary purpose trading• Ancillary trading• Some non primary purpose trading (small scale

exemptions)• Certain charity fundraising events and lotteriesSales of donated goods are not considered as trading

Primary purpose tradingTrading contributing directly to one or more of a charity’s purposes:• provision of educational services by a charitable school

in return for fees• sale of goods manufactured by disabled people who are

also the beneficiaries• provisional of residential accommodation by a residential

care charity in return for payment

Ancillary tradingTrading which contributes indirectly to the furtherance of the purposes of a charity• Will be treated as part of primary purpose trading• Trading is not regarded as ancillary to the carrying out of

a primary purpose simply because its purpose is to raise funds for the charity 

Examples of ancillary trading• The sale of food and drink in a restaurant by a theatre

charity to members of the audience• The sale in a charity shop of bought-in goods that are

related to the primary purposes of the charity eg literature providing advice and support for people with cancer

• The sale of confectionery, toiletries and flowers to patients and their visitors in a hospice

• The sale from a hospice café to patients and their visitors

What ancillary trading does not extend to:• sales from a charity shop of bought-in goods that are

unrelated to the charity’s objects eg sales of greeting cards and jewellery

• the sale of confectionery, toiletries and flowers to the general public

• sales from a hospice café to members of the general public

• The level of annual turnover which is said to be ancillary may have a bearing on whether or not the trade is really ancillary

Non-Primary Purpose Trading • Trading carried on with the sole aim of raising funds for a

charity• Charities may engage in limited non-primary purpose

trading ONLY if there is no significant risk involved to the charity’s assets

• No general exemption from corporation tax on the profits of non-primary purpose trading however may fall under the small scale exemption

The Small Scale Exemption• Exemption from corporation/income tax primarily on the

profits from small-scale non-primary purpose trading eg small scale selling of christmas cards or similar activities

• Applies only where all the relevant profits or income are applied for the charity’s purposes

The small-exemption – depends on the size of your total gross annual incomeTotal of all incoming resources in a particular chargeable period of the charity

Max permitted annual turnover of the relevant trading in that chargeable period

Under £20,000 £5,000

£20,000 to £200,000 25% of charity's total incoming resources

Over £200,000 £50,000

Fundraising events – non taxable income

• ball, dinner dance, disco, barn dance, dinner, lunch or barbecue• performance - concert, stage production and any other event which

has a paying audience• showing of a film; game of skill, contest or a quiz• fete, fair or festival, fireworks display; horticultural show• exhibition: art, history or science• bazaar, jumble sale, car boot sale, or good-as-new sale• sporting participation (including spectators): sponsored walk or

swim• sporting performance• participation in an endurance event• an auction of bought in goods - an auction of donated goods is zero

rated

Exercise• What are your current and/or proposed income

generating activities?• Do they fit within your Objects?• Will the activities push you over the permitted

HMRC threshold?

When to use a trading subsidiary• To carry out activities outside objects and

powers• Must be used for non-primary purpose trades

involving significant risk• Want to make it a viable business without

restrictions placed on it by rules for charities?• If the charity does not want to register for VAT• To keep liability separate from main organisation

Trading subsidiaries • Should have a business plan• Profits do not qualify for charity tax exemption• Transfer profits to the charity as a gift aid donation • Same restrictions on paying charity trustees apply to

those charity trustees who are directors of its trading subsidiary

• Trading subsidiary must pay a rent or fee for use of charity’s resources

• Charity may give a loan on proper commercial terms

Check your governing document

• Do you have the power to raise funds • Do you have the power to trade?• Do you have the power to establish a trading

subsidiary? • Do you have the power to enter into contracts?

Can a charity donate to another charity?

The fundraising activity should still have a link to advancing its charitable purposes, for example: • a community group that gets people together for

a coffee morning could give the proceeds to a cancer charity

• A sports club holding a tournament could also give the proceeds to another charity as it would be advancing amateur sport. 

Useful online resourceswww.nicva.org NICVA guidance on collections,lotteries

www.charitycommission.gov.uk CC35 Trustees, trading and tax

www.gov.uk HMRC exemptions guidance for charities/not-for-profits

www.diycommitteeguide.org governance online resources mapped to Good Governance Code

www.institute-of-fundraising.org.uk Code of Fundraising Practice

www.charitycommissionni.org.uk Charity Commission for N. Ireland