Charity retail in recovery but volunteers still in short supply
18 September: Shop closures during lockdown left a hole in charities’ budgets but continued rate reliefs and an extension to the retail grant scheme would help charity shops recover, according to Robin Osterley, Chief Executive of the Charity Retail Association.
ICAEW’s Charity Tax Update, an online seminar, will look at business rate reliefs for charities and their trading subsidiaries and examine the wider impact of COVID-19 on charity taxation.
Ahead of the seminar, ICAEW Insights spoke to Robin Osterley, Chief Executive of the Charity Retail Association (CRA), to give us an insight into the challenges faced by charity retail during the pandemic and explain why an extension of government support would aid the recovery and help charities fund their services.
Charity retail during lockdown
Government support has been crucial for the survival of charity retail during lockdown. The job retention scheme allowed charities to furlough their retail staff and shops benefitted from rate reliefs and retail grants. Most charity shops have reopened since lockdown measures eased in June, but sales are still below their pre-COVID level because many shops had to reduce their opening times, often due to volunteer shortages.
While donated goods poured into charity shops when they reopened, many of the 230,000 existing volunteers are still shielding and unable to return, which has prompted a recruitment drive for new volunteers.
Osterley is optimistic that charity retail will recover and continue to grow but stresses that it will take time to get back to normal. Unlike other retail businesses, charity shops cannot easily move to a digital platform because most of the stock is donated and therefore unpredictable. While some charities use e-commerce platform eBay to sell valuable stock, the appeal of charity shops lies in the browsing experience.
Before the pandemic, charities received 80% mandatory rate relief but were also able to apply for discretionary relief of the remaining 20%. According to Osterley, only one in seven charity shops received full rate relief before lockdown, but since then the government has granted full relief to retailers under the Expanded Retail Discount.
CRA and the Charity Tax Group (CTG) have called on government ministers to extend full relief beyond March 2021 so that charity shops and other retailers can weather the temporary reduction in sales. Osterley favours a permanent rate relief of 100% for charities, emphasising the positive contribution that charity shops make to the high street.
“We are working as closely as we can with government, Defra and local authorities to create an environment for charity shops which is as congenial as it possibly can be and give them a chance to do what they are best at - raising money for their parent charity,” said Osterley.
CRA and CTG also urge the government to remove restrictions on the Retail Hospitality and Leisure Grant Fund (RHGLF) scheme for charity retailers so they can claim grants for all their shops. Under current rules, state aid limits restrict grant applications which means that not all charity retail chains were able to claim the grant for each of their outlets.
A quick recovery is important for the most vulnerable members of our communities because surpluses from charity retail provide much-needed liquidity and funding for the services provided by charities. This is urgently required because charities are facing increased demand for their services but are unable to recover other income streams impacted by the pandemic, such as community fundraising, while social distancing measures are still in place.
Osterley believes that, in time, charity retail will continue its pre-pandemic growth. Not only because it offers a low-cost alternative but also because it captures the imagination of those that turn away from fast fashion out of environmental concerns and seek unique pre-loved pieces for their wardrobes and homes.
Click here to find out more information on ICAEW’s Charity Tax Update seminar.