Members or Donors?

Membership schemes and donor care schemes often get confused.

Some organisations choose to call their supporters, beneficiaries or other stakeholders, ‘members’ and herein lies the confusion, because formal ‘membership’ must actually be tied to an organisation’s governing document.

Legal Understanding

Legally, members are either people and/or organisations who are defined as members in the organisation’s governing document and who have agreed to abide by the rules of the organisation.

The governing document will set out classes of membership, eligibility for and rights and benefits of each class of membership, how membership is terminated, the requirements for meetings and so on.

Setting up a Membership Structure

Before setting up a formal membership structure, you will need to check that you are legally able to do so. The Charity Commission should be able to help you. It is strongly recommended that professional advice is also sought.

When you are sure about the structure and the legality of the membership structuret, you should also contact Her Majesty's Revenue and Customs (HMRC) about any VAT implications.

Supporters Who are Not Officially Members

‘Members’ that are not prescribed in the governing document (in reality the supporters, beneficiaries or other stakeholders that have been informally called ‘members’) will only have the rights or obligations that the governing body agrees to give them.

‘Supporters’ or ‘friends’ may be required to pay a subscription and might receive benefits, such as a newsletter in return.

Memberships Schemes and Tax-Effective Giving


Membership or friendship schemes, either formal or not, but particularly if set up as part of the organisation’s donor care package, might affect an organisation's ability to claim Gift Aid.

Gift Aid can only be paid on donations. Membership subscriptions where the supporter receives goods, services or other benefits, such as discounts on goods or services in return are not eligible for Gift Aid unless the following donor benefit rules are followed:

  • If the total donation is £100 or less, the benefits should only be worth up to 25% of the total Gift Aid donation (net of tax) in the tax year.
  • If the total donations are from £101 to £1,000, the benefits can only be worth up to £25.
  • If the total donations are from £1,001 to £10,000, the benefits can only be worth up to 2.5% of the total donations.
  • If the total donations are over £10,000, the benefits can only be worth up to £250.
  • If the benefits received total more than the amounts stated above, the charity will not be able to reclaim the tax on the donation. Please do note that there may be VAT implications and you should seek advice from HMRC or from a professional expert.

More information about tax-effective giving is available on the Tax-Effective Giving section of our webiste. Make sure you know all the facts so that you can maximise your income.