Are there any charity shops in your local town? Do you use them? Would you welcome more, or prefer to see fewer on your High Street? Do you think they are an important part of your community? Charity shops have been quite a hot topic in recent months, with much interest focussed on their value in an uncertain economic climate as well as their role within town structures. With over 9,000 outlets providing a profit of over £150 million per year, charity shops are undoubtedly an important sector in UK business. So how do they operate? And what’s their real value: to their charities, customers and local area?
What is a charity shop?
Simply put, a charity shop is a retail outlet selling goods that are, for the most part, second-hand and donated to raise funds for a parent charity. Largely a British invention, the first charity shop was opened in the late 1940s after Oxfam appealed for help after World War II. It was swamped with so many public donations – mainly clothes and blankets – that a shop was set up in Oxford to sell these and use the profits to fund post-war aid. Now it is estimated that there are over 9,000 charity shops in the UK, run by a network of over 160,000 staff – the majority of these being volunteers. To achieve and retain charity shop status, outlets must sell mostly donated goods.
Charity Shop Goods
• 87% of goods sold are donated
• Some textiles (clothing and fabric) that are unsuitable for sale (for example, some shops do not sell donated underwear) are sent overseas
• Glass, wood and the remaining textiles that cannot be sold are recycled
• 2% of donated goods are disposed of as waste
The Economics – Rent, Bills, Tax and Profit
Charity shops do have to pay rent and bills on their premises, just like any other shop, but are offered special reductions under UK tax law because they serve a “charitable purpose”. The key benefits are 0% VAT payable on donated goods and an 80% rate relief, which is funded by the Government. The cost of running a charity shop accounts for around 80% of its turnover, with the remaining 20% as profit for the parent charity. Latest figures suggest that the charity retail sector achieved profits of £153.1 million in 2011, up 12% over the previous year.
Charity Shops in the News
The financial aspects mentioned above have been under scrutiny recently, with TV shopping expert Mary Portas proposing a limit on the number of charity shops able to claim rate relief. In her recommendations to the All-Party Parliamentary Group made last October, she also suggested a cap on the number of charity shops in town centres. However, her official review report of December 2011 showed general support for the place of charity shops in retail, and instead focussed on attracting new and independent retailers into shopping areas.
Charity Shop Customers
Top 5 Reasons for Donating to Charity Shops
1 To help other people who can’t afford to buy new items
2= It’s a convenient place to take things I no longer need
2= I want to support a specific charity/cause I care about
4 I want to support charities (in general)
5 It’s easy to get to/in an area I often visit
Top 5 Reasons for Visiting Charity Shops
1 Low prices/good value for money
2 I want to support a charity
3 I want to support a specific charity I care about
4 Wide range of second-hand items for sale
5 Fun to browse/good experience
Research suggests charity shop customers are quite generous toward charities in general. More than half say they make one-off donations to charity, and they are more likely to do voluntary work and leave money to charity in their will than non-customers. Other findings show that the biggest reason given for not using charity shops was a reluctance to buy second-hand goods. Men and young people are the least likely to buy from or donate to charity shops, with many saying that there is nothing of interest for them to buy or that they believe they do not have anything of any value to donate.
The Social Aspects of Charity Shops
There’s no argument that charity shops provide a service that is both needed and appreciated. Alongside the financial advantages to customers of selling low cost items, they give opportunities for flexible voluntary working. This can be important in getting individuals into – or returning to – a working environment and help boost self-esteem and social confidence. Furthermore, they raise the profile of the parent charity by offering information and advice to users. This is crucial to their operation, and can help develop support networks in the local area.