Corporate donations: how companies give, and what to ask for

Corporate donations are the money a company gives your charity without buying anything in return. That last part decides the rest: the relief the company claims, whether VAT lands on the payment, and what you can promise in the room.

I’m Kevin Durham, a charity auctioneer and event host. Corporate money arrives at a gala in four shapes, and the fundraisers who raise the most know which one they are asking for before they call.

This is general guidance, not tax advice. Your finance team or accountant should sign off anything that lands on a return.

What are corporate donations, and how are they different from sponsorship?

Corporate donations are gifts from a company that secure nothing related to its business in return. Sponsorship payments buy something: a logo on your screens, the right to sell at your event.

HMRC puts both in the same guide, because both reduce a company’s Corporation Tax bill. A limited company can give money, equipment or trading stock, land, property or shares, staff on secondment, or sponsorship payments, and deduct the value from its profits before tax.

The route changes the paperwork. Donated money goes in the “Qualifying donations” box of the tax return. Sponsorship and secondment costs are business expenses. Equipment goes through capital allowances.

One limit catches people out: the deduction can only take profits to zero. No trading loss, nothing to carry forward. That is part of why a business having a thin year may offer stock or staff time instead of cash.

Why does the difference matter for tax and VAT?

Because a donation sits outside VAT and sponsorship usually does not. VAT Notice 701/1, updated on 19 October 2026, says a donation is outside the scope of VAT provided it is freely given with nothing supplied in return.

Where your charity is obliged to give a sponsor a significant benefit, that sponsorship becomes a business activity taxable at the standard rate. HMRC’s list of significant benefits runs from naming the event after the sponsor and displaying their logo to free tickets, access to a gala evening and hospitality. A flag, a sticker or a name in a list of supporters is not significant.

For a small charity that is not VAT registered, one large sponsorship deal can be enough taxable income to push you over the registration limit. HMRC flags the risk itself.

If a company wants to do both, keep the parts apart. The donation is only safe where it sits outside the sponsorship agreement, or the agreement says which part is payment for services, and the benefits are not conditional on the gift.

How much can a company accept in return before it stops being a donation?

A company can accept a benefit worth up to 5% of a donation of £1,001 or more, capped at £2,500. Below that the limits tighten. HMRC’s table for donating money sets them out:

The limits also cover benefits given to anyone connected with the company, including close relatives. Two tickets for the managing director’s family count.

Cross the line and the payment is not disallowed, it is reclassified: where the benefit is related to the company, HMRC says it qualifies as a sponsorship payment instead. It is your VAT position that moves.

Three payments never qualify: a loan the charity will repay, a payment conditional on the charity buying property from the company, and a distribution of profits such as a dividend.

Can a company claim Gift Aid on corporate donations?

No. A company cannot claim Gift Aid, and nor can your charity. HMRC’s list of what you cannot claim names donations of money from a company.

“Corporate Gift Aid” is a loose nickname for the relief that replaces it. The company deducts the donation from its own profits before Corporation Tax, so the saving stays with the business rather than reaching you as a 25% top-up. The money you bank is the money they sent.

So never put a declaration in front of a company cheque, and never build a corporate ask on a figure that includes Gift Aid.

What counts as a gift in kind?

A gift in kind is anything a company gives that is not money: used equipment, items it makes or sells, land, shares, staff time. CAF’s Corporate Giving Report 2026 found recorded FTSE 100 charitable donations fell to £1.69 billion in 2025, the lowest since its survey began. Cash is tighter, so ask for goods and time.

• Used equipment. Furniture, computers, vans, tools. The company claims full capital allowances on the cost, provided it used the equipment itself.
• Trading stock. Items the company makes or sells. It leaves the gift out of its sales income, so it gets relief on the cost. For VAT it must account for items it gives away, but it can zero rate them where the gift is made specifically so your charity can sell, hire out or export them.
• Staff. A secondment, or an employee volunteering in work time, is deductible as a normal business expense while the company keeps paying them and running PAYE. Not available to community amateur sports clubs.

Put that VAT point in your ask. “We will sell this at auction” is the phrase that lets a VAT-registered donor zero rate the gift.

Sourcing lots in-house, guided by your auctioneer, keeps far more with the charity than a commission-based supplier does. A gift in kind from a local business is the purest version of that.

Where do matched giving and payroll giving fit?

Both are company money that arrives through employees rather than the finance director. Neither needs a new event.

With match funding, the employer matches what its staff raise or give, often pound for pound up to a cap. Ask your corporate table hosts before the night whether their employer runs a scheme. That answer changes what a pledge is worth.

Payroll Giving runs through PAYE. The donation comes out of pay before tax but after National Insurance, so it costs a higher-rate taxpayer less to give the same amount. The employer sets it up with an agency and can choose to pay the admin fee so the charity receives more.

One rule to remember: you cannot claim Gift Aid on Payroll Giving. The relief has already been given.

When a “donation” is really a commercial promotion

Some offers are neither. A business that promotes its own goods or services on the basis that it will contribute to your charity is a commercial participator, a term defined in section 58 of the Charities Act 1992.

That triggers real obligations. Section 6 of the Code of Fundraising Practice requires appropriate checks before you agree anything, and a written agreement before the promotion starts, stating how much you will get and how it is calculated.

“We’ll give you 50p from every jar sold and put your logo on the label” is a lovely offer and a regulated arrangement. Treat it as a contract, not a cheque.

What should you ask a company for?

Ask for one specific thing, in the shape that suits the company. Four asks cover almost every business you will approach:

1. A cash donation, with nothing promised beyond a thank you and a name in the supporter list.
2. A gift in kind for the auction or raffle, with “to sell at our event” in writing.
3. A match, where they back the live pledge up to an agreed cap.
4. Sponsorship, where they want the exposure and will accept an invoice.

A profitable company with a marketing budget often prefers the fourth. My post on corporate fundraising ideas covers the activity side once the route is agreed.

How to make the ask land

Go to a named person, not an inbox, and lead with the cause. The detail on letters, timing and follow-up sits in my guide to a donation request.

Then put three lines in writing: what they are giving, what they get back (even if that is only a mention), and who to invoice if it is sponsorship. That paragraph keeps both finance teams out of a row in February.

I would rather hear “donation, no benefits, no invoice” than a promised headline slot nobody has priced. The clean yes beats the big maybe.

Corporate donations on the night

Corporate donations do their best work when the room can see them. A matched pot announced before the live pledge changes how people give: every hand counts twice.

At an MS UK event I told the room up front where every pound was going: which lots gave the charity 100%, which only paid out above the reserve. The live pledge that night raised £8,300, all of it to the charity. I just turned the lights on. The charity’s team had built the trust.

So name the business that donated a lot, say what the charity keeps, and let the room reward them. A structured live pledge outperforms a lot-based auction at most galas, and a corporate match is the cheapest way to make it bigger.

Building the corporate side of a gala starts with a fundraising strategy, not with asks. A corporate charity auctioneer will tell you which of the four routes your room responds to. Call 07596 851647 and we can go through it.