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

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.

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.