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Charity shops: a bad deal for charities, a worse deal for taxpayers

Despite all their advantages – discounted business rates, free labour, free stock – charity shops raise very little money for the causes they are supposed to support. But still cost taxpayers up to £1.6bn.

I've written several times about the problems with the way in which the taxpayer finances the charitable sector via the state (all in it costs us a minimum of £6.5bn a year in lost tax revenue). But this week brought one of the most maddening illustrations of the way all this works yet.

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The True and Fair Foundation (which lobbies for more efficiency in the charitable sector and is much loathed by much of the sector) has been having a look at the finances of the charity shops that line pretty much every inch of our high streets.

There are now around 10,500. They get 80% off business rates. They pay nothing for their stock (it is mostly donated). And they pay very few of their staff (most workers are volunteers). They should be making a killing. But here's the shocking thing: they aren't. Despite all their advantages, a very large proportion of them bring in very little money for the charities they are supposed to support.

Overall, the shops made total (tax-free) profits of around £290m last year. But they got anything from £273m to £1.6bn worth of tax breaks alone the way. How's that for a lousy deal for taxpayers?

The shops keep a lot of volunteers busy and engaged with communities (which is nice); they clearly help with the recycling of used goods inside our economy (also nice); and they divert some cash from consumers and from HMRC to various charities (something this is nice, sometimes it is not).

But that all comes at a cost one that, from this report at least, looks to be rather too high.

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