In theory, practice-based commissioning (PBC) efficiency savings can fund equipment or services at the practice. However, if the need is urgent and you do not wish to rely on this uncertain source, or your practice is not in England, there are other ways to raise money. Raffles, auctions, sponsored walks and ‘fun runs’ are all ways to do it. Bear in mind though that fundraising activities and what the money raised is spent on must be ethical, and transparently so.
GPs and their staff, patients and voluntary organisations might wish to participate in fundraising activities. The cash raised must not benefit GPs personally. In its guidance, ‘Funding for Practices’, the GPC cautions that ‘patients must not be placed under any compulsion or obligation to make financial or other donations to benefit GP practices. Any such action by GPs could lead to criminal proceedings’. The guidance says that collecting boxes in the waiting room are not acceptable. Patients should not be given the impression that essential equipment will only be provided if enough cash is raised.
Spending money raised
Provided the items or services you buy are for the benefit of patients, the sky is the limit on what you can purchase. For example, the practice could buy BP monitoring equipment or install air conditioning.
Medical specialist accountant Jenny Stone, a partner at London firm Ramsay Brown and Partners, knows of a practice that rented paintings to make the surgery a more pleasant place for patients.
Setting up a charity
The GPC recommends setting up a charitable trust. However, there are set-up costs to pay and charities are highly regulated, so accountants advise doing this only if raising sums of £10,000 or more a year — the threshold at which setting up a charity becomes a legal requirement.
You need to apply to the Charity Commission to set up a charitable trust. The Commission will require you to register trustees, set out the trust’s accounts in a specific way, and submit an audited annual statement of accounts.
Paul Kendall, a partner at medical specialist accountancy firm Dodd & Co in Penrith recommends appointing partners from the practice and a patient who is, for example, a retired solicitor or bank manager, and therefore numerate, as trustees.
Separate bank account
If you set up a charity, it must have its own bank account. Even if the aim is to raise less than £10,000 a year, you should still open a separate bank account for the money.
Mr Kendall advises setting up a ‘Friends of [your practice name]’ account. ‘Have somebody other than a partner to be a co-signatory on the account,’ he says. The co-signatory could be the practice manager, a patient or anybody you think you can work with.
Avoiding income tax
Charities enjoy many tax exemptions. But even if you do not establish a charitable trust, the separate bank account for fundraising will help to avoid paying tax on the money raised or donated. The practice accountant can set off the expenditure on equipment or services against money paid into the account.
Ms Stone says: ‘When the income comes in, as long as you’re matching it with what it’s been spent on, there’s no profit to pay tax on.’
Donations to the practice
Patients may decide to make a donation to the practice, perhaps through their will. Regardless of the donation’s size, make clear in the practice accounts where the money has come from.
Small donations of, say £100, could be put into the main practice bank account. It will then be counted as practice income and you will have to pay tax on it. With a larger legacy — several thousand pounds, say — you might want to purchase something specific for patients or practice services with it, so the amount can be matched to an expense and there is no tax to pay.