Charities may choose to trade either in pursuit of their objects or for fundraising. In the latter case, they may have to set up a trading subsidiary.
The Charity Commission publication CC35 - Trustees, trading and tax (http://www.charity-commission.gov.uk/publications/cc35.asp) outlines how charities may lawfully trade and when a subsidiary is necessary.
It says: “Compared to ordinary commercial companies, charities enjoy considerable advantages in the tax treatment they receive in relation to trading and trading profits.
“However this preferential treatment comes at a cost. While charities may trade more or less freely in pursuit of their charitable objectives, there are restrictions on engaging in trades the objective of which is to generate funds for the charity.
“In particular, charities may not engage in such commercially-oriented trades where a significant risk to their assets would be involved.
“Where trading (other than trading in pursuit of its charitable objects) involves significant risk to a charity’s assets, it must be undertaken by a trading subsidiary.”
GuideStar UK and its subsidiary trading company GuideStar Data Services have become part of the Directory of Social Change.
Arts organisations will have to start proving their value if they are to continue receiving government grants, a debate in London last night was told.
Community transport organisation HCT Group has teamed up with Bridges Ventures to design a new financial instrument for the sector that allows returns to investors to rise or fall in line with the organisation’s revenues and social impact.
The Shaw Trust is establishing an enterprise division that will set up trading companies that employ disabled people.
The Shaw Trust’s new chief executive is intent on creating a new enterprise division that employs disabled people itself – and makes a profit from it. Tania Mason reports
The sector has gone crazy. Charities running prisons? Thank god that the Charity Commission is stepping in as this is utter madness.
Age Concern Liverpool will sell a database of 20,000 older people to businesses wanting to tap into the ‘grey market’ as part of a new trading venture.
Donations to Oxfam shops have dropped by more than 12 per cent for the second year running, while the charity reports an increase in sales of donated items.
The British Lung Foundation has restructured its operations and created a new trading subsidiary that will deliver lung testing events for Primary Care Trusts across the country.
Conservation charity the Aspinall Foundation has set up its own face-to-face fundraising company, with a key player from Face2Face Fundraising at its helm.
The interim manager in charge of the St Stephen the Great Charitable Trust (SSG) has announced he is ready to start listening to offers for the insolvent charity's assets.
The British Heart Foundation’s calendar designed specifically for use on the desks of funeral directors has been awarded the title of Professional Fundraising's Charity Calendar of the Year.
Mary Portas, ‘Queen of Shops’, has opened her first boutique charity store for Save the Children in Edinburgh’s Stockbridge area to a waiting queue of 100 shoppers.
Everyone should visit a prison at least once, especially those who think running prisons is an appropriate activity for charities, so they know what is done in their name.
Christian book and bible charity IBS-STL UK is looking to sell all its operations and wind itself up after the implementation of a new IT system went badly wrong and capped off a succession of financial problems. It is the first time in recent history that a top-250 charity has chosen to wind up.
The National Trust has reported an across-the-board increase in its trading and membership this year. Visitor numbers at National Trust sites this October were up by 18 per cent on last October's figures, the trust’s director general Fiona Reynolds told National Trust members at the organisation’s AGM last Saturday, 7 November.
The charity Christmas card market is even less generous than the recent Which? report suggests, according to the Charities Advisory Trust. The Trust has labelled the recent Which? report on the state of the charity Christmas card as “incomplete”. Which? reported that the lowest percentage donation to charity from any Christmas card came from Next and House of Fraser, which each gave 6 per cent of the value of cards to a nominated charity.
In challenging times, charities will be exploring every possible means of raising money. Trustees need to be careful that these fundraising efforts do not inadvertently expose the charity to an unnecessary tax liability. How do trustees make sure they are getting it right? Trustees will need to think about their powers, the business case, and tax. Check the governing documents and see what you can do – and look out for any clauses that talk about the ability to trade. Don’t stop planning if the governing document appears to prevent you carrying out the plan, but remember the restriction.
Which?, the charity that campaigns for consumer value, is examining the potential for launching some own-brand products and services into markets that it judges currently give consumers a raw deal.
Charity shops have defied the recession and increased their profits by 4.1 per cent in the past year. While the gross income of the 5,035 charity shops in the sample fell by 3.1 per cent to £526.1m, their costs fell even further, by 4.9 per cent to £414.6m, leaving a collective profit of £111.5m. Charity shops have now increased their profits for four years running, and in eight of the last 11.
Heather Lamont asks whether the recent stock market revival reflects a sustainable economic recovery, or a return to boom and bust. After an extended period of share prices declines, especially over the winter of 2008-09, this spring equities at last began to show an improvement. What investors want to know now is whether the recent rally marks the beginning of a sustained recovery, or whether we should be bracing ourselves for a relapse.
Quite a few readers will know friends house in Euston in London, having attended a conference or other event there. Our nickname is ‘Quakers' but we call ourselves ‘friends' and the charity which looks after our centrally-managed work at friends house is called the Religious Society of Friends. As a Quaker, I've always loved Friends House. Quakers are a non-credal, non-hierarchical movement so it's not our head office or central office. I prefer to use positive language - it's a place where kindred spirits of all formal faiths and none can come and feel comfortable and welcome.
Charities reliant on clothing donations are being hit by companies posing as charities and commercial organisations taking goods as part of legitimate, but often exploitative, relationships with charities. Trading Standards in South Devon has seized a truckload of leaflets from a now-dissolved company, W&W Help Ltd, claiming to be a charity collecting clothing for the poor of Eastern Europe, while the Rainbow Trust Children’s Charity is considering its options regarding Homeless Children Limited, a company which has distributed clothing appeal leaflets using the name ‘Children’s Rainbow Trust Limited’.
Forewarned is forearmed: charities considering trading overseas should first get clued up about local tax laws
More than 100,000 eco-friendly designer shopping bags have been sold in the first week of hitting stores, raising over £50,000 for Marie Curie Cancer Care.
Venturesome, CAF's social investment fund, has published a paper aimed at finding common agreement on the language used to describe social enterprises. The paper outlines three different business models of social enterprise.
Do trading companies contain hidden liabilities for trustee and staff directors?
The Scottish Government has announced the creation of a £30m Scottish Investment Fund to help trading charities and social enterprises increase their turnover or become financially sustainable.
The Department of Trade and Industry has announced the winding up of a Manchester based publishing house that sold advertising space in ˜ghost' publications. The father and son company, Mirror Print Solutions, were found to have lied when they told advertisers that they were selling space with claims that the publications were connected to various charities, including Barnardo's, NSPCC, Macmillan Cancer Relief and Cancer UK (sic).
Fundraising services supplier, the Dialog Group International, has gone through a major shake-up following the voluntary administration of its UK operations: DialogueDirect Fundraising UK, Face2Face Fundraising UK, NTT Fundraising, Dialog Services and Integrity Recruitment.