How charity shops work

Charity shops are retail outlets selling mainly donated goods to raise funds for their parent charities. Charity shops can only be set up by charities (find out how here), and we estimate there are 10,200 in the UK. Here’s how they work.

Staff and volunteers

Most charity shops have a paid shop manager, working with a team of volunteers, who help to sort and sell the stock. A few charities have their shops run by volunteers entirely: many other organisations have found that employing a manager ‘pays for itself’, as these people can give more time, skills and attention to the role.

Dependent on retail operation size, there may be area or regional managers and a head of retail. There are also a growing number of specialist roles, such as online selling staff/volunteers and warehouse staff/volunteers.

There are around 26,100 full-time equivalent paid staff and 187,200 volunteers nationwide.

Rent, bills and tax

Charity shops have to pay rent on their premises, and bills for services like electricity and gas, like any other business.

Charity shops do get some tax concessions, as all shop profits go to fund the work of the charity, which provides public benefit. The key concessions are no VAT on the sale of donated goods, exemption from Corporation Tax, and 80 per cent mandatory non-domestic rate relief, which is funded by central Government.

Training

Paid staff and volunteers alike are given training on both retail matters – including health and safety – and the charity itself, so they understand what the organisation is working towards, as well as how to work safely in-store. Guidance is given on sales techniques and display, as well as security issues and health and safety. See Charity Retail Learning for training opportunities.

Acquiring stock

Most charity shops acquire their stock through people coming in with bags of donations. Some shops also do collections from houses, businesses and schools. If you have a large amount to give, it is often worth contacting a local shop to see if they can come and collect it from you.

More than 90% of charity shop sales are from donations. Some shops sell ‘bought-in’ goods – new goods which are sold for profit. The average charity shop sells around 6% new goods.

Unsaleable donations

Only 6% of clothing donated to charity shops is discarded as waste. Textiles that cannot be sold are usually sold to textile recyclers: these goods will either be recycled as fabric or exported as garments for sale overseas. We recommend a TRUST-accredited collector. For more on textile reprocessing, visit the Textile Recycling Association.

Books, records and other household goods can also be sold on to commercial collectors in this way.

Sorting donations

Donations are processed in the backroom. Bags are emptied onto a sorting table, and gloves worn as the donations are inspected. While some donors take great care to sort and clean their goods before giving them to charity, others are not so stringent, and charity shop workers need to beware of soiled or sharp items.

Cleaning donations

The majority of charity shops have steamers, which are used to clean and freshen up textiles.

Pricing

Pricing is often left up to shop and assistant managers, often using pricing guides supplied by the parent charity. Pricing guidance can often be provided by retail catalogues, or specialist magazines and websites. More valuable and unique items such as antiques will often be sold online to provide the widest possible audience.

Gift Aid

Many charity shops claim Gift Aid arising from the sale of donated goods, as well as cash donations. This scheme allows them to claim an extra 25 pence for every £1 a Gift-Aided donation raises. Participants will need to give their contact details to the charity shop when they make a donation. When the goods have been sold, they will be notified how much they have helped to raise for charity.

The value of charity shops

A charity shops’ primary purpose is to raise money for their parent charities. Alongside that, they bring huge value to their local community, support countless volunteers and boost their local high street. More and more we are finding that our members provide their charity’s core services from charity shops, such as training, support and guidance to name but a few.

This only adds to the hugely positive and enriching experience that charity shop volunteers have when they volunteer in a shop. Over a quarter of a million of volunteers pass through the doors each year in a variety of roles, often gaining life changing skills, confidence and sometimes even full time work.

When was the first charity shop opened?

In the 19th century The Salvation Army ran second hand clothing shops to provide the urban poor with cheap clothing. At the outbreak of World War Two, other charities such as the British Red Cross also started to operate shops as a way to raise money for the war effort and relieve hardship.

Modern charity shops as we understand them – retail units selling overwhelmingly donated goods to raise as much cash as possible for the parent charity – did not appear until after World War Two. The first of these was opened by Oxfam in 1947 and is still in operation today. Oxfam were swamped by donations from the public following its appeal for aid to alleviate the post-war situation in Greece. The success of this appeal yielded so many donations that it was decided to set up a shop in Oxford to sell a portion of these and to use the profits to further fund aid in Greece.

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Updated 19/08/2024