When it comes to managing a charity or a nonprofit organisation, cost-efficiency is a top priority. Many organisations start by using consumer mobile phone contracts, and it’s understandable. It’s convenient and cost-effective, especially when you’re just setting up. However, it’s essential to understand the potential pitfalls and risks involved, both for your charity and the individuals managing these contracts.

At SwitchAid, we’ve seen this scenario unfold many times while assisting numerous charities and good causes. In fact, approximately 30% of them use consumer mobile tariffs for their mobile needs. While it may seem like a good idea initially, we’re here to shed light on why it might not be the best long-term strategy. Let’s dive into the key reasons why charity CEOs should reconsider using consumer mobile phone contracts.

1. Benefits in Kind

One of the most critical issues with consumer mobile phone contracts is the treatment of these contracts as benefits in kind. When staff members pay for their mobile contracts personally and are later reimbursed by the organisation, they may be subject to taxation at their standard tax rate. This rate could be as high as 20%, 40%, or even 45%. Failing to pay the tax means the staff member is personally liable. This situation can lead to unexpected financial burdens for your employees and negatively impact their morale.

2. Ownership

Consumer mobile tariffs must be ordered in the consumer’s name, not in the organization’s name. This means that the individual legally owns that number. If they leave the organisation for any reason, they have the right to take that number with them. This might lead to complications when you’re trying to manage the continuity of service for your charity.

3. Credit Checks

When a staff member takes out a consumer mobile contract, it triggers a credit check on that individual. If they have a less-than-ideal credit history, it could lead to problems when securing contracts, and it may even impact the individuals chances of getting credit in the future.

4. Overspend Liability

Here’s a major concern: the staff member is personally liable for any overspend on their contract. In cases where the organisation reimburses them for these overspends, the staff member will still be taxed on any money reimbursed by the organisation. This not only creates a potential tax burden but also an uncomfortable financial situation for your employees.

5. Lack of Control

Relying on staff members to manage their own mobile contracts can result in a lack of control. Your organisation has to trust that they are keeping their contracts up to date and on the most cost-effective tariff for their needs. If they aren’t proactive in managing their contracts, this could lead to unnecessary expenses.

At SwitchAid, we understand that charities need to balance financial responsibility with providing essential services to the community. That’s why we offer a solution that bridges the gap between consumer mobile contracts and organisational contracts. We can recommend the right network, handsets, and SIM-only options with exclusive charitable tariffs designed to suit your needs.

Conclusion: In the world of charities and nonprofits, every penny counts. While consumer mobile phone contracts may seem like a convenient solution initially, they can pose significant risks and financial burdens for both the charity and the individuals involved. At SwitchAid, we’re committed to helping your organisation make informed, cost-effective decisions when it comes to mobile communications. By considering the potential dangers and exploring alternative options, you can ensure that your charity continues to thrive while providing crucial services to those who need it most.

Ready to make a positive change for your charity’s mobile communication needs? Speak to our expert team today by calling us at 0191 303 9404 or visiting our website: SwitchAid Charity Mobile Phone Deals.