The MDA introduces a framework, which will allow charities to receive an additional 15% via text donations.

VAT is to be removed from charitable donations sent via text messages, following a major breakthrough for the UK charity sector, according to the Mobile Data Association (MDA).

The not-for-profit mobile trade association, the MDA, has announced a new framework that will mean charities of all sizes will receive an extra 15% for donations sent via text message, which in the past has only benefitted large national charitable events such as Comic Relief.

Central to the framework is the provision of a dedicated range of ‘short codes’ – starting with the number 70 – which will be used for charity donations only.

Network providers Vodafone, 3, Orange, O2 and T-Mobile have all approved the framework.

Martin Ballard, MDA Operations Director, has been the driving force behind the initiative. He said: “This is a really fantastic development both for the UK charitable sector and a great example of the mobile industry collaborating for a good cause.

“Mobile is a powerful way for people to support and donate to charities and this development makes the whole process clearer for all parties.”

Hannah Terrey, Head of Policy and Public Affairs at the Charities Aid Foundation (CAF), commented on the announcement: “It’s great news that the mobile phone companies have been able to agree a way forward to end this illegal practice which is unfair on donors and charities.”

Earlier this month, Win, a company that provides charity text donation services and ‘short code transactions’, became the first to waive its commission on donations to not-for-profit organisations. It announced it would waive its fee, which is usually between 5 – 10 pence per £1.50 donation, for charities and other third sector organisations using its services.

In a report by NfpSynergy in 2009, 41% of charities are still not using mobile phones as a response mechanism in fundraising campaigns. Although the charities understand the power of the tool, high tariffs charged by mobile phone operators is proving to be the biggest barrier to using the method. 48% of charities said they were looking into the potential of mobile phone use, and perhaps this move will provide an encouraging hand.

Joe Saxton, speaking on behalf of the Institute of Fundraising estimates that a figure of £100m could be reached through text donations in five years time, if charges continue to come down. This year, £7.8m was raised for Comic Relief through text donations.