![]() ![]() On the one hand, a one-time sponsorship deal would not generally be considered to represent the "carrying on" of a business. Case law does not provide clear guidance in this area, although the distinction is clear enough at the extremes. A charity can engage in some business-like transactions, provided they are not operated regularly or continuously. "Carrying on" a business implies that the commercial activity is a continuous or regular operation.ġ0. Expenditures on a charitable program can be used to satisfy the disbursement quota, but not expenditures on a business.ĩ. For example, they are designed to relieve poverty by being set in accordance with the users' means, or to promote broad public participation in an educational program, such as waiving admission charges to an art exhibitĨ. The fees are set according to a charitable objective as opposed to a market objective.The program does not offer services comparable to those otherwise available in the marketplace.However, when a government pays a charity to provide a program to the public on the government's behalf, this revenue also needs to be considered, in addition to any fees paid by the public, when determining whether the intention of the program is to generate a profit.The fee structure is designed to defray the costs of the program rather than to generate a profit.The following are some of the indicators that a charitable program involving a fee is not a business: They include micro-enterprise programs, "training businesses" (which provide on-the-job training in vocational and life skills), and "social businesses" (which address the needs of people with disabilities)ħ. Other examples of fully acceptable charitable programs are identified in Registered Charities : Community Economic Development Programs. Examples of fees earned in the context of charitable programs include rent in low-income housing programs, university tuition fees, and museum admission.Footnote 8 They can cease to be charitable programs and become businesses if these elements are lost. Programs remain charitable as long as they manifest the two essential characteristics of charity-altruism and public benefit. The presence of fees does not necessarily mean that a program is non-charitable Footnote 7 or that the charity is engaging in a business activity. Fees are charged in the context of many charitable programs. Rather, it merely seeks to convert a donated asset into cash Footnote 6Ħ. Further, in selling off donated items, the charity does not assume the costs or level of risk usually associated with running a business. Selling donated good: This is not considered to be a commercial activity because businesses do not depend on donations to create their inventories.Since the activity is not commercial, it is not considered to be a business Soliciting donations: This is not considered to be a commercial activity because donors do not expect any good or service in return for their contributions.Some activities are intended to generate a profit but are not considered to be businesses: The expertise and experience of the person or organization that undertakes the activity: If the person or organization that is undertaking the activity has been selected for the position because of his/her/its commercial knowledge, skill, or experience, it may indicate that the activity is commercial in nature and so may be a businessĥ.The existence of profits in past years: When the activity has been carried on for some time, a history of it returning a profit would generally imply that a business exists.On the other hand, if the activity is structured so that it is incapable of returning a profit, then it is not a business In determining whether a particular activity is a business, it is the intention and capacity to make a profit at some point that are relevant. The potential to show a profit: Even if an activity does not yield a profit, it may nonetheless be capable of earning a profit.The intended course of action: If the rationale for operating a given activity is to generate a profit, then the activity is likely a business.Whether a particular activity of a charity is a business requires the facts and circumstances in each case to be considered in the light of certain criteria established by the courts: Footnote 5 In general terms, a business involves commercial activity-deriving revenues from providing goods or services-undertaken with the intention to earn profit. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |