Charities Funds Act 1958
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A charitable organization or charity is an organization whose primary objectives are
philanthropy Philanthropy is a form of altruism that consists of "private initiatives, for the Public good (economics), public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private goo ...
and social well-being (e.g. educational, religious or other activities serving the public interest or common good). The legal definition of a charitable organization (and of charity) varies between countries and in some instances regions of the country. The regulation, the tax treatment, and the way in which charity law affects charitable organizations also vary. Charitable organizations may not use any of their funds to profit individual persons or entities. (However, some charitable organizations have come under scrutiny for spending a disproportionate amount of their income to pay the salaries of their leadership). Financial figures (e.g. tax refund, revenue from fundraising, revenue from sale of goods and services or revenue from investment) are indicators to assess the financial sustainability of a charity, especially to
charity evaluators Charity assessment is the process of analysis of the ''goodness'' of a non-profit organization in financial terms. Historically, charity evaluators have focused on the question of how much of contributed funds are used for the purpose(s) claimed b ...
. This information can impact a charity's reputation with donors and societies, and thus the charity's financial gains. Charitable organizations often depend partly on donations from businesses. Such donations to charitable organizations represent a major form of corporate philanthropy. In order to meet the exempt organizational test requirements, a charity has to be exclusively organized and operated. In order to receive and pass the exemption test, a charitable organization must follow the public interest and all exempt income should be for the public interest. For example, in many countries of the
Commonwealth A commonwealth is a traditional English term for a political community founded for the common good. Historically, it has been synonymous with "republic". The noun "commonwealth", meaning "public welfare, general good or advantage", dates from the ...
, charitable organizations must demonstrate that they provide a
public benefit In philosophy, economics, and political science, the common good (also commonwealth, general welfare, or public benefit) is either what is shared and beneficial for all or most members of a given community, or alternatively, what is achieved by c ...
.


History


Early systems

Until the mid-18th century, charity was mainly distributed through religious structures (such as the English Poor Laws of 1601),
almshouse An almshouse (also known as a bede-house, poorhouse, or hospital) was charitable housing provided to people in a particular community, especially during the medieval era. They were often targeted at the poor of a locality, at those from certain ...
s and bequests from the rich. Christianity, Judaism and Islam incorporated significant charitable elements from their very beginnings and ''dāna'' (alms-giving) has a long tradition in Hinduism, Jainism, Buddhism and Sikhism. Charities provided education, health, housing and even prisons. Almshouses were established throughout Europe in the Early Middle Ages to provide a place of residence for poor, old and distressed people;
King Athelstan King is the title given to a male monarch in a variety of contexts. The female equivalent is queen, which title is also given to the consort of a king. *In the context of prehistory, antiquity and contemporary indigenous peoples, the tit ...
of England (reigned 924–939) founded the first recorded almshouse in York in the 10th century.


Enlightenment charity

In the Enlightenment era, charitable and philanthropic activity among voluntary associations and rich benefactors became a widespread cultural practice. Societies, gentleman's clubs, and mutual associations began to flourish in England, and the upper-classes increasingly adopted a philanthropic attitude toward the disadvantaged. In England this new social activism was channeled into the establishment of charitable organizations; these proliferated from the middle of the 18th century. This emerging upper-class fashion for benevolence resulted in the incorporation of the first charitable organizations.
Captain Captain is a title, an appellative for the commanding officer of a military unit; the supreme leader of a navy ship, merchant ship, aeroplane, spacecraft, or other vessel; or the commander of a port, fire or police department, election precinct, e ...
Thomas Coram, appalled by the number of abandoned children living on the streets of London, set up the
Foundling Hospital The Foundling Hospital in London, England, was founded in 1739 by the philanthropic sea captain Thomas Coram. It was a children's home established for the "education and maintenance of exposed and deserted young children." The word "hospital" w ...
in 1741 to look after these unwanted orphans in Lamb's Conduit Fields,
Bloomsbury Bloomsbury is a district in the West End of London. It is considered a fashionable residential area, and is the location of numerous cultural, intellectual, and educational institutions. Bloomsbury is home of the British Museum, the largest mus ...
. This, the first such charity in the world, served as the precedent for incorporated associational charities in general.
Jonas Hanway Jonas Hanway (12 August 1712 – 5 September 1786), was a British philanthropist and Explorer, traveller. He was the first male Londoner to carry an umbrella and was a noted opponent of tea drinking. Life Hanway was born in Portsmouth, on the s ...
, another notable philanthropist of the Enlightenment era, established The Marine Society in 1756 as the first seafarer's charity, in a bid to aid the recruitment of men to the navy. By 1763 the Society had recruited over 10,000 men; an Act of Parliament incorporated it in 1772. Hanway was also instrumental in establishing the
Magdalen Hospital Magdalene asylums, also known as Magdalene laundries, were initially Protestant but later mostly Roman Catholic institutions that operated from the 18th to the late 20th centuries, ostensibly to house "fallen women". The term referred to femal ...
to rehabilitate
prostitute Prostitution is the business or practice of engaging in sexual activity in exchange for payment. The definition of "sexual activity" varies, and is often defined as an activity requiring physical contact (e.g., sexual intercourse, non-penet ...
s. These organizations were funded by subscription and run as voluntary associations. They raised public awareness of their activities through the emerging popular press and were generally held in high social regard – some charities received state recognition in the form of the royal charter. Charities also began to adopt campaigning roles, where they would champion a cause and lobby the government for legislative change. This included organized campaigns against the ill treatment of animals and children and the campaign that eventually succeeded at the turn of the 19th century in ending the slave trade throughout the British Empire and within its considerable sphere of influence. (This process was however a lengthy one, which finally concluded when Saudi Arabia abolished slavery in 1962.) The Enlightenment also saw growing philosophical debate between those who championed state intervention and those who believed that
private charities Private or privates may refer to: Music * "In Private", by Dusty Springfield from the 1990 album ''Reputation'' * Private (band), a Denmark-based band * Private (Ryōko Hirosue song), "Private" (Ryōko Hirosue song), from the 1999 album ''Private ...
should provide welfare. The Reverend Thomas Malthus (1766-1834), the political economist, criticized poor relief for paupers on economic and moral grounds and proposed leaving charity entirely to the private sector. His views became very influential and informed the
Victorian Victorian or Victorians may refer to: 19th century * Victorian era, British history during Queen Victoria's 19th-century reign ** Victorian architecture ** Victorian house ** Victorian decorative arts ** Victorian fashion ** Victorian literature ...
''laissez-faire'' attitude toward state intervention for the poor.


Growth during 19th century

During the 19th century a profusion of charitable organizations emerged to alleviate the awful conditions of the working class in the
slum A slum is a highly populated urban residential area consisting of densely packed housing units of weak build quality and often associated with poverty. The infrastructure in slums is often deteriorated or incomplete, and they are primarily inh ...
s. The
Labourer's Friend Society The Labourer's Friend Society was a society founded by Lord Shaftesbury in the United Kingdom in 1830 for the improvement of working class conditions. This included the promotion of allotment of land to labourers for "cottage husbandry" that later ...
, chaired by Lord Shaftesbury in the United Kingdom in 1830, aimed to improve working-class conditions. It promoted, for example, the allotment of land to labourers for "cottage husbandry" that later became the
allotment Allotment may refer to: * Allotment (Dawes Act), an area of land held by the US Government for the benefit of an individual Native American, under the Dawes Act of 1887 * Allotment (finance), a method by which a company allocates over-subscribed s ...
movement. In 1844 it became the first Model Dwellings Company – one of a group of organizations that sought to improve the housing conditions of the working classes by building new homes for them, at the same time receiving a competitive rate of return on any investment. This was one of the first housing associations, a philanthropic endeavour that flourished in the second half of the nineteenth century brought about by the growth of the middle class. Later associations included the Peabody Trust (originating in 1862) and the Guinness Trust (founded in 1890). The principle of philanthropic intention with capitalist return was given the label "five per cent philanthropy".Tarn, J.N. (1973) Five Per Cent Philanthropy. London: CUP There was strong growth in municipal charities. The Brougham Commission led on to the
Municipal Corporations Act 1835 The Municipal Corporations Act 1835 (5 & 6 Will 4 c 76), sometimes known as the Municipal Reform Act, was an Act of the Parliament of the United Kingdom that reformed local government in the incorporated boroughs of England and Wales. The legisl ...
, which reorganized multiple local charities by incorporating them into single entities under supervision from local government. Charities at the time, including the
Charity Organization Society The Charity Organisation Societies were founded in England in 1869 following the ' Goschen Minute' that sought to severely restrict outdoor relief distributed by the Poor Law Guardians. In the early 1870s a handful of local societies were formed w ...
(established in 1869) tended to discriminate between the "deserving poor" who would be provided with suitable relief and the "underserving" or "improvident poor" who were regarded as the cause of their own woes through their idleness. Charities tended to oppose the provision of welfare by the state, due to the perceived demoralizing effect. Although minimal state involvement was the dominant philosophy of the period, there was still significant government involvement in the shape of statutory regulation and even limited funding.
Philanthropy Philanthropy is a form of altruism that consists of "private initiatives, for the Public good (economics), public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private goo ...
became a very fashionable activity among the expanding middle classes in Britain and America.
Octavia Hill Octavia Hill (3 December 1838 – 13 August 1912) was an English Reform movement, social reformer, whose main concern was the welfare of the inhabitants of cities, especially London, in the second half of the nineteenth century. Born into a fa ...
(1838-1912) and John Ruskin (1819-1900) were an important force behind the development of social housing, and Andrew Carnegie (1835-1919) exemplified the large-scale philanthropy of the newly rich in industrialized America. In ''
Gospel of Wealth "Wealth", more commonly known as "The Gospel of Wealth", is an article written by Andrew Carnegie in June of 1889 that describes the responsibility of philanthropy by the new upper class of self-made rich. The article was published in the ''No ...
'' (1889), Carnegie wrote about the responsibilities of great wealth and the importance of social justice. He established
public libraries A public library is a library that is accessible by the general public and is usually funded from public sources, such as taxes. It is operated by librarians and library paraprofessionals, who are also civil servants. There are five fundamenta ...
throughout the English-speaking countries as well as contributing large sums to schools and universities. A little over ten years after his retirement, Carnegie had given away over 90% of his fortune. Towards the end of the 19th century, with the advent of the New Liberalism and the innovative work of Charles Booth on documenting working-class life in London, attitudes towards poverty began to change, which led to the first
social liberal Social liberalism (german: Sozialliberalismus, es, socioliberalismo, nl, Sociaalliberalisme), also known as new liberalism in the United Kingdom, modern liberalism, or simply liberalism in the contemporary United States, left-liberalism ...
welfare reforms, including the provision of old age pensions and free school-meals.


Since 1901

During the 20th century charitable organizations such as
Oxfam Oxfam is a British-founded confederation of 21 independent charitable organizations focusing on the alleviation of global poverty, founded in 1942 and led by Oxfam International. History Founded at 17 Broad Street, Oxford, as the Oxford Co ...
(established in 1947),
Care International CARE (Cooperative for Assistance and Relief Everywhere, formerly Cooperative for American Remittances to Europe) is a major international humanitarian agency delivering emergency relief and long-term international development projects. Founded i ...
and
Amnesty International Amnesty International (also referred to as Amnesty or AI) is an international non-governmental organization focused on human rights, with its headquarters in the United Kingdom. The organization says it has more than ten million members and sup ...
greatly expanded, becoming large, multinational,
non-governmental organizations A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...
with very large budgets.


Since the 21st century

With the advent of the Internet, charitable organizations established a presence in online social media and started, for example, cyber-based humanitarian crowdfunding such as GoFundMe. Another charitable organization is Beyond the Crisis. This organization distributes food and resources to housing communities and homeless shelters in the U.S. It was established by young philanthropists Camden and Colton Francis.


By jurisdiction


Australia

The definition of charity in Australia is derived through English common law, originally from the
Charitable Uses Act 1601 The Charitable Uses Act of 1601 (known as the ''Statute of Elizabeth'') is an Act of Parliament, Act (43 Eliz I, c.4) of the Parliament of England. It was repealed by section 13(1) of the Mortmain and Charitable Uses Act 1888 (c.42) (but see sect ...
, and then through several centuries of case law based upon it. In 2002, the federal government established an inquiry into the definition of a charity. The inquiry proposed a statutory definition of a charity, based on the principles developed through case law. This resulted in the ''Charities Bill 2003'', which included limitations on involvement of charities in political campaigning, which many charities saw as an unwelcome departure from the case law. The government appointed a Board of Taxation inquiry to consult with charities on the bill. As a result of widespread criticism from charities, the government abandoned the bill. The government then introduced what became the ''Extension of Charitable Purpose Act 2004'', which did not attempt to codify the definition of a charitable purpose, but merely sought to clarify that certain purposes were charitable, whose charitable status had been subject to legal doubts. These purposes included childcare, self-help groups, and closed/contemplative religious orders. To publicly raise funds, a charity in Australia must register in each Australian jurisdiction in which it intends to raise funds. In Queensland, for example, charities must register with the Queensland
Office of Fair Trading The Office of Fair Trading (OFT) was a non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforced both consumer protection and competition law, acting as the United Kingdom's economic ...
. Also, any charity fundraising online must have approval in every Australian jurisdiction that requires them to do so, which is currently New South Wales, Queensland, Victoria, Tasmania, Western Australia, and the Australian Capital Territory. Many Australian charities have called on federal, state, and territory governments to enact uniform legislation to enable charities registered in a state or territory to be allowed to raise funds in all other Australian jurisdictions. The
Australian Charities and Not-For-Profits Commission The Australian Charities and Not-for-profits Commission (ACNC) is the regulatory authority for charities and not-for-profit organisations within Australia. The Commission was established in December 2012 as part of the ''Australian Charities ...
(ACNC) commenced operations in December 2012 and regulates the approximately 56,000 non-profit organizations with
tax exempt Tax exemption is the reduction or removal of a liability to make a compulsory payment that would otherwise be imposed by a ruling power upon persons, property, income, or transactions. Tax-exempt status may provide complete relief from taxes, redu ...
status, and about 600,000 other NPO in total and seeks to harmonise state-based fund-raising laws. A Public Benevolent Institution (PBI) is a particular type of charity whose main purpose is to relieve suffering in the community, whether though poverty, sickness, or disability. Examples of institutions which might qualify include hospices, providers of subsidised housing and some not-for-profit aged care services.


Canada

Charities in Canada must be registered with the Charities Directorate of the Canada Revenue Agency. According to the Canada Revenue Agency:
A registered charity is an organization established and operated for charitable purposes, and must devote its resources to charitable activities. The charity must be resident in Canada, and cannot use its income to benefit its members. A charity also has to meet a public benefit test. To qualify under this test, an organization must show that: * its activities and purposes provide a tangible benefit to the public * those people who are eligible for benefits are either the public as a whole, or a significant section of it, in that they are not a restricted group or one where members share a private connection, such as social clubs or professional associations with specific membership * the charity's activities must be legal and must not be contrary to public policy To register as a charity, the organization has to be either incorporated or governed by a legal document called a trust or a constitution. This document has to explain the organization's purposes and structure.


France

Most French charities are registered under the statute of ''loi d'association de 1901'', a type of legal entity for non-profit NGOs. This statute is extremely common in France for any type of group that wants to be institutionalized (sports clubs, book clubs, support groups...) as it is very easy to set up and requires very little documentation. However, for an organisation under the statute of ''loi 1901'' to be considered a charity, it has to file while the authorities to come under the label of ''"association d'utilité publique"'' which means "NGO acting for the public interest". This label gives the NGO some tax exemptions.


Hungary

In Hungary, charities are called "Public benefit organizations" ( hu, Közhasznú szervezet). The term was introduced on 1 January 1997 by the Act on Public Benefit Organizations.


India

Under Indian law, legal entities such as charitable organizations, corporations, and managing bodies have been given the status of the " legal person" with legal rights, such as to sue and be sued, and to own and transfer property.Birds to holy rivers: A list of everything India considers "legal persons"
Quartz (publication) ''Quartz'' is an online news platform in English. It is focused on international business news. Quartz is privately held and was established in New York City in 2012. It is published in the United States with global business news and has specifi ...
, September 2019.


Ireland

In Ireland, the Charities Act (2009) legislated for the establishment of a "Charities Regulatory Authority", and the Charities Regulator was subsequently created (via a ministerial order) in 2014. This was the first legal framework for the registration of charities in Ireland. The Charities Regulator maintains a database of organizations which have granted charitable tax exemption, a list which was previously maintained by the Revenue Commissioners. Such organizations would have a CHY number for the Revenue Commissioners, a CRO number for the Companies Registration Office and a charity number for the Charities Regulator. The Irish Nonprofits Database was created by Irish Nonprofits Knowledge Exchange (INKEx) to act as a repository for regulatory and voluntarily disclosed information about Irish public benefit nonprofits.


Nigeria

Charitable organizations in Nigeria are registerable under "Part C" of the
Companies and Allied Matters Act, 2020 A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared go ...
. Under the law, the
Corporate Affairs Commission, Nigeria The Corporate Affairs Commission (CAC) of Nigeria was established in 1990 vide Companies and Allied Matters Act no 1 (CAMA) 1990 as amended, now on Act cap C20 Laws of Federation of Nigeria. Its establishment, structure, and funding are now governe ...
being the official Nigerian Corporate Registry, is empowered to maintain and regulate the formation, operation and dissolution of charitable organisations in Nigeria. Charitable organisations in Nigeria are exempted under §25(c) of the
Companies Income Tax Act (CITA) Cap. C21 LFN 2004 (as amended) A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared go ...
which exempts from income tax corporate organizations engaged wholly in ecclesiastical, charitable or educational activities. Similarly, §3 of Value Added Tax Act (VATA) Cap. V1 LFN 2004 (as amended), and the 1st Schedule to the VATA on exempted Goods and Services goods zero-rates goods and services purchased by any ecclesiastical, charitable or educational institutions in furtherance of their charitable mandates.


Poland

Public benefit organization ( pl, organizacja pożytku publicznego, often abbreviated OPP) is a term used in Polish law, introduced on 1 January 2004 by the statute on
public good Public good may refer to: * Public good (economics), an economic good that is both non-excludable and non-rivalrous * The common good, outcomes that are beneficial for all or most members of a community See also * Digital public goods Digital pu ...
activity and volunteering. Charitable organizations of public good are allowed to receive 1% of income tax from individuals, so they are "tax-deductible organizations". To receive such status, an organization has to be a non-governmental organization (political parties and trade unions do not qualify), involved in specific activities related to public good as described by the law, and be sufficiently transparent in its activities, governance and finances. Also data has shown that this evidence is to the point and makes sense. Polish charitable organizations with that status include Związek Harcerstwa Polskiego, Great Orchestra of Christmas Charity, KARTA Center, Institute of Public Affairs,
Silesian Fantasy Club Silesian Fantasy Club (or Silesian Science-Fiction Club, pl, Śląski Klub Fantastyki, ŚKF) is the oldest science fiction and fantasy fandom club in Silesia, Poland. Founded in 1981 in Katowice, it has been the organizer of Polcon, largest of P ...
, Polish Historical Society, and Polish chapter of Wikimedia Foundation.


Singapore

The legal framework in Singapore is regulated in the Singapore Charities Act (Chapter 37). Charities in Singapore must be registered with the Charities Directorate of the Ministry of Community Development, Youth and Sports. One can also find specific organizations that are members of the
National Council of Social Service The National Council of Social Service (NCSS) is a statutory board under the Ministry of Social and Family Development of the Government of Singapore. The organisation is the national coordinating body for Voluntary Welfare Organisations (VWO ...
(NCSS) which is operated by the Ministry of Social and Family Development.


Ukraine

Legislation of charitable activity and obtainment of charitable organization status is regulated by the Civil Code of Ukraine and by Law of Ukraine Charitable Activities and Charitable Organizations. By Ukrainian law, there are three forms of charitable organizations: * A "charitable society" is a charitable organization created by at least two founders and operates on the basis of the charter or statute; * A "charitable institution" is a type of charitable trust, acts on the basis of the constituent or founding act; charitable organization whose founding act defines assets that one or several founders transfer to achieve the goals of charitable activity from such assets and/or income from such assets. A constituent act of a charitable institution may be contained in a will or testament. The founder or founders of the charitable institution do not participate in the management such charitable organization; * A "charitable fund" or "charitable foundation" is a charitable organization that operates on the basis of the charter; has participants or members and is managed by them; participants or members are not obliged to transfer any assets to such organization in order to achieve the goals of charitable activity; charitable foundation can be created by one or several founders. The assets of charitable fund can be formed by participants and/or other benefactors. The
Ministry of Justice of Ukraine The Ministry of Justice of Ukraine ( uk, Міністерство юстиції України) is the main body in the system of central government of Ukraine that regulates state legal policy. It is often abbreviated as "Мinjust" f Ukraine It ...
is the main registration authority for charitable organization registration and constitution. Individuals and legal entities, except for public authorities and local governments, can be the founders of charitable organizations. Charitable societies and charitable foundations may have (besides founders) other participants who have joined them in the way prescribed by the charters of such charitable associations or charitable foundations.
Aliens Alien primarily refers to: * Alien (law), a person in a country who is not a national of that country ** Enemy alien, the above in times of war * Extraterrestrial life, life which does not originate from Earth ** Specifically, intelligent extrate ...
(non-Ukrainian citizens and legal entities, corporations or non-governmental organizations) can be the founders and members of philanthropic organization in Ukraine. All funds received by a charitable organization that were used for charity purposes are exempt from taxation, but it requires obtaining of non-profit status from tax authority. Legalization needed for International charitable fund to make activity in Ukraine.


United Kingdom

Charity law within the UK varies among (i) England and Wales, (ii) Scotland and (iii) Northern Ireland, but the fundamental principles are the same. Most organizations that are charities are required to registered with the appropriate regulator for their jurisdiction, but significant exceptions apply so that many organizations are ''bona fide'' charities but do not appear on a public register. The registers are maintained by the
Charity Commission for England and Wales , type = Non-ministerial government department , seal = , seal_caption = , logo = Charity Commission for England and Wales logo.svg , logo_caption = , formed = , preceding1 = , d ...
and for Scotland by the Office of the Scottish Charity Regulator. The Charity Commission for Northern Ireland maintains a register of charities that have completed formal registration (see below). Organizations applying must meet the specific legal requirements summarized below, and have filing requirements with their regulator, and are subject to inspection or other forms of review. The oldest charity in the UK is The King's School, Canterbury established in 597. The
Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014 The Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014 is an Act of Parliament in the United Kingdom introduced in July 2013. The bill was sponsored by the Cabinet Office and the Department for Business, Inno ...
subjects charities to regulation by the Electoral Commission in the run-up to a general election.


England and Wales


=Definition

= Section 1
Charities Act 2011 The Charities Act 2011c 25 is a UK Act of Parliament. It consolidated the bulk of the Charities Act 2006, outstanding provisions of the Charities Act 1993, and various other enactments. Repeals Legislation repealed in its entirety by the 2011 A ...
provides the definition in England and Wales: :(1) For the purposes of the law of England and Wales, "charity" means an institution which— :(a) is established for charitable purposes only, and :(b) falls to be subject to the control of the High Court in the exercise of its jurisdiction with respect to charities. The
Charities Act 2011 The Charities Act 2011c 25 is a UK Act of Parliament. It consolidated the bulk of the Charities Act 2006, outstanding provisions of the Charities Act 1993, and various other enactments. Repeals Legislation repealed in its entirety by the 2011 A ...
provides the following list of charitable purposes: # the prevention or relief of
poverty Poverty is the state of having few material possessions or little income. Poverty can have diverse social, economic, and political causes and effects. When evaluating poverty in ...
# the advancement of education # the advancement of religion # the advancement of health or the saving of lives # the advancement of citizenship or community development # the advancement of the arts, culture, heritage or science # the advancement of amateur sport # the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity # the advancement of environmental protection or improvement # the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantage # the advancement of animal welfare # the promotion of the efficiency of the armed forces of the Crown or of the police, fire and rescue services or ambulance services # other purposes currently recognized as charitable and any new charitable purposes which are similar to another charitable purpose. A charity must also provide a public benefit. Before the Charities Act 2006, which introduced the definition now contained in the 2011 Act, the definition of charity arose from a list of charitable purposes in the
Charitable Uses Act 1601 The Charitable Uses Act of 1601 (known as the ''Statute of Elizabeth'') is an Act of Parliament, Act (43 Eliz I, c.4) of the Parliament of England. It was repealed by section 13(1) of the Mortmain and Charitable Uses Act 1888 (c.42) (but see sect ...
(also known as the Statute of Elizabeth), which had been interpreted and expanded into a considerable body of case law. In ''Commissioners for Special Purposes of Income Tax v. Pemsel'' (1891), Lord McNaughten identified four categories of charity which could be extracted from the Charitable Uses Act and which were the accepted definition of charity prior to the Charities Act 2006: # the relief of
poverty Poverty is the state of having few material possessions or little income. Poverty can have diverse social, economic, and political causes and effects. When evaluating poverty in ...
, # the advancement of education, # the advancement of religion, and # other purposes considered beneficial to the community. Charities in England and Wales – such as Age UK, the Royal Society for the Protection of Birds (
RSPB The Royal Society for the Protection of Birds (RSPB) is a Charitable_organization#United_Kingdom, charitable organisation registered in Charity Commission for England and Wales, England and Wales and in Office of the Scottish Charity Regulator, ...
) and the Royal Society for the Prevention of Cruelty to Animals ( RSPCA) – must comply with the 2011 Act regulating matters such as charity reports and accounts and fundraising.


=Structures

= , there are a number of types of legal structure for a charity in England and Wales: * Unincorporated association * Trust *
Company limited by guarantee In British, Australian, Bermudian, Hong Kong and Irish company law (and previously New Zealand), a company limited by guarantee (CLG) is a type of corporation used primarily (but not exclusively) for non-profit organisations that require legal pe ...
* Another incorporation, such as by royal charter *
Charitable incorporated organization A Charitable Incorporated Organisation (CIO) is a corporate form of business designed for (and only available to) charitable organisations in England and Wales, similar to (but with important differences from) a Scottish Charitable Incorporat ...
The unincorporated association is the most common form of organization within the voluntary sector in England and Wales. This is essentially a contractual arrangement between individuals who have agreed to come together to form an organization for a particular purpose. An unincorporated association will normally have as its governing document a constitution or set of rules, which will deal with such matters as the appointment of office bearers, and the rules governing membership. The organization is not though a separate legal entity, so it cannot start legal action, it cannot borrow money, and it cannot enter into contracts in its own name. Its officers can be personally liable if the charity is sued or has debts. A trust is essentially a relationship among three parties: the donor of some assets, the trustees who hold the assets, and the beneficiaries (those people who are eligible to benefit from the charity). When the trust has charitable purposes, and is a charity, the trust is known as a charitable trust. The governing document is the trust deed or declaration of trust, which comes into operation once it is signed by all the trustees. The main disadvantage of a trust is that, as with an unincorporated association, it does not have a separate legal entity and the trustees must themselves own property and enter into contracts. The trustees are also liable if the charity is sued or incurs liability. A company limited by guarantee is a private limited company where the liability of members is limited. A guarantee company does not have a share capital, but instead has members who are guarantors instead of shareholders. In the event of the company being wound up, the members agree to pay a nominal sum which can be as little as £1. A company limited by guarantee is a useful structure for a charity where it is desirable for the trustees to have the protection of limited liability. Also, the charity has legal personality, and so can enter into contracts, such as employment contracts in its own name. A small number of charities are incorporated by royal charter, a document which creates a corporation with legal personality (or, in some instances, transforms a charity incorporated as a company into a charity incorporated by royal charter). The charter must be approved by the
Privy Council A privy council is a body that advises the head of state of a state, typically, but not always, in the context of a monarchic government. The word "privy" means "private" or "secret"; thus, a privy council was originally a committee of the mon ...
before receiving royal assent. Although the nature of the charity will vary depending on the clauses enacted, generally a royal charter will offer a charity the same limited liability as a company and the ability to enter into contracts. The Charities Act 2006 legislated for a new legal form of incorporation designed specifically for charities, the
charitable incorporated organization A Charitable Incorporated Organisation (CIO) is a corporate form of business designed for (and only available to) charitable organisations in England and Wales, similar to (but with important differences from) a Scottish Charitable Incorporat ...
, with powers similar to a company but without the need to register as a company. Becoming a CIO was only made possible in 2013, with staggered introduction dates, with the charities with highest turnover eligible first. The word ''foundation'' is not generally used in England and Wales. Occasionally, a charity will use the word as part of its name, e.g. British Heart Foundation, but this has no legal significance and does not provide any information about either the work of the charity or how it is legally structured. The structure of the organization will be one of the types of structure described above.


=Registration

= Charitable organizations that have an income of more than £5,000, and for whom the law of England and Wales applies, must register with the
Charity Commission for England and Wales , type = Non-ministerial government department , seal = , seal_caption = , logo = Charity Commission for England and Wales logo.svg , logo_caption = , formed = , preceding1 = , d ...
, unless they are an "exempt" or "excepted" charity. For companies, the law of England and Wales will normally apply if the company itself is registered in England and Wales. In other cases, if the governing document does not make it clear, the law which applies will be the country with which the organization is most connected. When an organization's income does not exceed £5,000, it is not able to register as a charity with the Charity Commission for England and Wales. It can, however, register as a charity with HM Revenue and Customs for tax purposes only. With the rise in mandatory registration level, to £5,000 by The Charities Act 2006, smaller charities can be reliant upon HMRC recognition to evidence their charitable purpose and confirm their not-for-profit principles. Churches with an annual income of less than £100,000 need not register. Some charities which are called
exempt charities An exempt charity is an institution established in England and Wales for charitable purposes which is exempt from registration with, and oversight by, the Charity Commission for England and Wales. Exempt charities are largely institutions of furt ...
are not required to register with the Charity Commission and are not subject to any of the Charity Commission's supervisory powers. These charities include most universities and national museums and some other educational institutions. Other charities are excepted from the need to register, but are still subject to the supervision of the Charity Commission. The regulations on excepted charities have however been changed by the Charities Act 2006. Many excepted charities are religious charities.


Northern Ireland

The Charity Commission for Northern Ireland was established in 2009 and has received the names and details of over 7,000 organizations in Northern Ireland that have previously been granted charitable status for tax purposes (the "deemed list"). Compulsory registration of organizations from the deemed list began in December 2013, and it is expected to take three to four years to complete. The new Register of Charities i
publicly available on the CCNI website
and contains the details of those organizations who have so far been confirmed by the commission to exist for charitable purposes and the public benefit. The Commission estimates that there are between 5,000 and 11,500 charitable organizations to be formally registered in total.


Scotland

The 24,000 or so charities in Scotland are registered with the Office of the Scottish Charity Regulator (OSCR), which also publishes a register of charities online.


Taxation

Charitable organizations, including charitable trusts, are eligible for a complex set of reliefs and exemptions from taxation in the UK. These include reliefs and exemptions in relation to income tax, capital gains tax, inheritance tax, stamp duty land tax and value added tax. These tax exemptions have led to criticisms that private schools are able to use charitable status as a tax avoidance technique rather than because they offer a genuine charitable good.


United States

In the United States, a charitable organization is an organization operated for purposes that are beneficial to the public interest. There are different types of charitable organizations. Every U.S. and foreign charity that qualifies as tax-exempt under Section
501(c)(3) A 501(c)(3) organization is a United States corporation, trust, unincorporated association or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of the 29 types of 50 ...
of the
Internal Revenue Code The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 ...
is considered a "
private foundation A private foundation is a tax-exempt organization not relying on broad public support and generally claiming to serve humanitarian purposes. The Bill & Melinda Gates Foundation is the largest private foundation in the U.S. with over $38 billion ...
" ''unless'' it demonstrates to the IRS that it falls into another category. Generally, any organization that is not a private foundation (i.e., it qualifies as something else) is usually a public charity as described in Section 509(a) of the Internal Revenue Code.FoundationCenter.org
What is the difference between a private foundation and a public charity?
accessed 2009-06-20
In addition, a private foundation usually derives its principal funding from an individual, family, corporation, or some other single source and is more often than not a
grantmaker A grant is a fund given by an end entity grant – often a public body, charitable foundation, or a specialised grant-making institution – to an individual or another entity (usually, a non-profit organisation, sometimes a business or a local ...
and does not solicit funds from the public. In contrast, a foundation or public charity generally receives grants from individuals, government, and private foundations, and while some public charities engage in
grantmaking A grant is a fund given by an end entity grant – often a public body, charitable foundation, or a specialised grant-making institution – to an individual or another entity (usually, a non-profit organisation, sometimes a business or a local ...
activities, most conduct direct service or other tax-exempt activities. Foundations that are generally grantmakers (i.e. they use their
endowment Endowment most often refers to: *A term for human penis size It may also refer to: Finance *Financial endowment, pertaining to funds or property donated to institutions or individuals (e.g., college endowment) *Endowment mortgage, a mortgage to b ...
to make grants to other organizations, which in turn carry out the goals of the foundation indirectly) are usually called "grantmaker" or "non-operating" foundations. The requirements and procedures for forming charitable organizations vary from state to state, as do the registration and filing requirements for charitable organizations that conduct charitable activities, solicit charitable contributions, or hire professional fundraisers. In practice, the detailed definition of "charitable organization" is determined by the requirements of state law where the charitable organization operates, and the requirements for federal tax relief by the IRS. Resources exist to provide information, even rankings, of US charities.


Federal tax relief

Federal tax law provides tax benefits to nonprofit organizations recognized as exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code (IRC). The benefits of 501(c)(3) status include exemption from federal income tax as well as eligibility to receive tax deductible charitable contributions. There was a total of $281.86 billion tax deductible donations by individuals in 2017. To qualify for 501(c)(3) status most organizations must apply to the Internal Revenue Service (IRS) for such status. Several requirements must be met for a charitable organization to obtain 501(c)(3) status. These include the organization being organized as a corporation, trust, or unincorporated association, and the organization's organizing document (such as the articles of incorporation, trust documents, or articles of association) must limit its purposes to being charitable, and permanently dedicate its assets to charitable purposes. The organization must refrain from undertaking a number of other activities such as participating in the political campaigns of candidates for local, state or federal office, and must ensure that its earnings do not benefit any individual. Most tax exempt organizations are required to file annual financial reports (
IRS Form 990 Form 990 (officially, the "Return of Organization Exempt From Income Tax") is a United States Internal Revenue Service form that provides the public with financial information about a nonprofit organization. It is often the only source of such i ...
) at the state and federal level. A tax exempt organization's 990 and some other forms are required to be made available to public scrutiny. The types of charitable organization that are considered by the IRS to be organized for the public benefit include those that are organized for: * Relief of the poor, the distressed, or the underprivileged * Advancement of religion * Advancement of education or science * Construction or maintenance of public buildings, monuments, or works * Lessening the burdens of government * Lessening of neighborhood tensions * Elimination of prejudice and discrimination * Defense of human and civil rights secured by law * Combating community deterioration and juvenile delinquency.Publication 557: Tax-Exempt Status for Your Organization
. ''Internal Revenue Service''. January 2018. p. 27.
A number of other organizations may also qualify for exempt status, including those organized for religious, scientific, literary and educational purposes, as well as those for testing for public safety and for fostering national or international amateur sports competition, and for the prevention of cruelty to children or animals.


Criticism

Charity has received criticism. These criticisms include charity only addressing the symptoms of a problem instead of the causes of a problem, charity being a worse substitute for change that does not fix the fundamental injustices in the structures and values of a society, charity not providing the best solutions to problems in a society, charity resulting in less state funding of essential services, charity leading to favoritism instead of fairness, tax incentives for charity resulting in the worsening of social inequalities by reducing the revenue a state has available for social projects, inefficient charitable giving, charities misusing their funds, and some charities attaching conditions to their giving of aid. Economist Robert Reich criticized the practice of billionaires giving some of their money to charity, calling it mostly "self-serving rubbish". Mathew Snow of
American socialist American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the "United States" or "America" ** Americans, citizens and nationals of the United States of America ** American ancestry, p ...
magazine ''Jacobin'' criticized charity for "creating an individualized 'culture of giving'" instead of "challenging capitalism's institutionalized taking."


Charity regulators

*
Australian Charities and Not-for-profits Commission The Australian Charities and Not-for-profits Commission (ACNC) is the regulatory authority for charities and not-for-profit organisations within Australia. The Commission was established in December 2012 as part of the ''Australian Charities ...
* Canada Revenue Agency *
Charity Commission for England and Wales , type = Non-ministerial government department , seal = , seal_caption = , logo = Charity Commission for England and Wales logo.svg , logo_caption = , formed = , preceding1 = , d ...
* Charity Commission for Northern Ireland *
Inland Revenue Department (Hong Kong) The Inland Revenue Department (IRD) is the Hong Kong government department responsible for collecting taxes and duties. History The Inland Revenue Department was established on 1 April 1947. Initially it administered only one piece of legisla ...
* Office of the Scottish Charity Regulator * United States Internal Revenue Service


See also

* Aid agency * Charitable trust *
Charity watchdog Charity assessment is the process of analysis of the ''goodness'' of a non-profit organization in financial terms. Historically, charity evaluators have focused on the question of how much of contributed funds are used for the purpose(s) claimed b ...
* Cy-près doctrine * Foundation *
Grants Grant or Grants may refer to: Places *Grant County (disambiguation) Australia * Grant, Queensland, a locality in the Barcaldine Region, Queensland, Australia United Kingdom *Castle Grant United States * Grant, Alabama *Grant, Inyo County, C ...
* Nonprofit organization * Governance * Social enterprise * Mutual aid, alternative to charity *
World Giving Index The World Giving Index (WGI) is an annual report published by the Charities Aid Foundation, using data gathered by Gallup, and ranks over 140 countries in the world according to how charitable they are. The aim of the World Giving Index is to pro ...
*
List of charities accused of ties to terrorism This is a list of charities accused of ties to terrorism. A number of charities have been accused or convicted in court of using their revenues to fund terrorism or revolutionary movements, rather than for the humanitarian purposes for which cont ...


References


External links

* {{Authority control Types of organization Wills and trusts