Charitable organizations are a kind of business that fits within the nonprofit organization (NPO) category. In general, this type of entity is sometimes referred to as a charity or foundation, which can be run publicly or privately.
Some charities may be centered around religious, educational or other public interest activities that are philanthropic in nature. Depending upon the location of the charity, the legal definition of what constitutes a charitable organization may vary according to its country of origin. Therefore, the tax implications for a charity will also depend upon the region or country in which the charitable organization operates.
The procedures for forming the various kinds of charitable organizations vary from one country to another and regions within them. Registration and filing requirements for entities that engage in charitable activities and solicit contributions are also determined by its originating state or region. Charitable organizations must comply with GRA tax relief guidelines and must be a registered entity at the Justice Ministry. For a charitable organization to qualify as tax exempt it must refrain from certain activities, such as political campaign and candidate fundraising, and earnings may not benefit any individual.
Some charitable organizations operate as private foundations that obtain their principal funding through a corporation, family, individual or other single financial source that does not solicit public funding. Private foundations usually use endowment funds to provide grants to outside or affiliated organizations that support the foundation objectives. These kinds of charitable organizations are often referred to as “non-operating.
Public, operating foundations or charities usually receive grants from the government, private foundations and individuals. Although some public charities may engage in grant making activities, the majority of them are concerned with tax-exempt activities.
GRA tax relief and benefits are provided to most nonprofit charitable organizations, which are recognized as exempt under specific regulations. Some of the benefits of tax relief status can include the ability to receive tax deductible charitable contributions and no requirement to pay income tax for the organization. Most charitable organizations should formally apply to the GRA to obtain tax exempt status.
The charity must be formally organized as a trust, corporation or unincorporated association. Also, the charitable organization’s operating documents, which may be articles of incorporation, articles of association or trust documents, must specify its purposes strictly and permanently as being dedicated to charitable purposes.
Kinds of charitable organizations that are considered organized for public benefit can include those which offer relief for the poor, distressed or underserved, and those with religious, educational or scientific affiliations. Some charitable organizations are engaged in the creation and management of monuments, public buildings or works. Many charities work to enhance society by offering social services, lessen government burden and combat community deterioration. The defense of public safety, children, civil rights, and elimination of prejudice and discrimination are some other social centric activities that charities concern themselves with.