Are commercially initiated charitable donations subject to regulation in the UK?

Question

I find that when I make purchases, pay for restaurant meals, make hotel reservations etc I am increasingly being asked if I wish to make a very small donation to charity - usually of an amount less than one pound.

If this raises money, that wouldn't otherwise be raised, for worthy causes it is a good thing. However there are one or two things that trouble me about it.

1. It presumably does not benefit from Gift Aid "grossing up".

2. Which "charities" are selected by the sponsor (it doesn't always say)? And are they always "registered charities"?

3. When the money is handed over, is it made to appear that the money comes from the commercial sponsor or from the customers buying e.g. their coffee?

4. Is the whole process subject to regulation by the Charities Commission, and audited to ensure that the money donated is correctly accounted for?

The essential question I am asking here in number 4.

Answer 1

1. Presumably not. There is no reason why it couldn't be gift-aided, but to do so would require you giving your address to give evidence that you are a UK tax payer (gift aid allows the charity to reclaim the tax you have paid, so only tax payers can provide it).

2. If it doesn't say, then only the company knows, but see below, the company can't just pocket the money.

3. Again, one would hope that the company acts transparently. But there is no requirement to give you individual credit. The company might also decide to make its own contribution into the same pot.

4. Yes, the word "Charity" and "Charitable purpose" are defined in the Charities act (2011), and collection for charities is overseen by the commission. Collecting money for "charity" and then not using it for charitable purposes would be fraud.

It would be quite legal and proper for the company to establish its own charity, such as the Ronald McDonald Houses (so families can live near to hospital when their children are sick). But it would not be proper to use the money for non-charitable purposes, such as paying staff. Supporting a local children's football team would be a charitable purpose, but paying for the boss's daughter to have horse riding lessons would not.

The definition of Charity is an institution established for "Charitable purposes" and the definition of "Charitable purposes is:

(a) the prevention or relief of poverty;
(b) the advancement of education;
(c) the advancement of religion;
(d) the advancement of health or the saving of lives;
(e) the advancement of citizenship or community development;
(f) the advancement of the arts, culture, heritage or science;
(g) the advancement of amateur sport;
(h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
(i) the advancement of environmental protection or improvement;
(j) the relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage;
(k) the advancement of animal welfare;
(l) the promotion of the efficiency of the armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services;

and

Is for public benefit. (CA 2011)

Note that while "Charity" is legally defined, "good causes" may include bodies and purposes that are not charities. Nevertheless, it would still be misrepresentation and fraud to collect for "good causes" and use the money in a way that is inconsistent with the normal understanding of the words.