by Anna Neil | Nov 30, 2017 | Societies and Charities Articles |
2011 Article, updated November 2017 Is there a problem? There are a number of charitable institutions that will not, as a matter of policy, make grants or gifts to entities that are not also recognised or registered as charities. This has always struck me as a possibly “over-the-top” approach, perhaps demonstrating some lack of sophistication in the screening of grant applications. Even if the donee is a registered charity, poor donation decisions can still be made which may cause trouble. I believe there is nothing inherently wrong if a charity makes a gift, grant or donation to a non-charity as long as that gift, grant or donation is made and used for a charitable purpose. Of course, if the donee is not accepted as having “donee status” by the Inland Revenue Department (see below), the donor may not be able to obtain revenue advantages from the donation. If a donor charity declines to give to any entity unless it is also charitable, that still begs the question of whether its gifts will actually be used for charitable purposes. Analysing the issues Problems can arise because of the uncertainties that arise after any gift, grant or donation is made. It is inescapable that those potential problems still exist even when money is given to a charity; every donee needs to be taken on trust that they will use the gift, grant or donation for the intended charitable purpose. In Audits or Review of Accounts I referred to the inherent limitations in any audit or verification process – “no auditor is able to supervise every transaction to ensure that money received does...
