Business, Legal & Accounting Glossary
n. 1) in general the sentiment of benevolence, doing good works, assisting the less fortunate, philanthropy and contributing to the general public. 2) an organization which exists to help those in need or provide educational, scientific, religious and artistic assistance to members of the public. Charities are usually corporations established under state guidelines and require IRS approval in order for contributions to them to be deductible from gross income by donors.
Charity involves granting of resources or services for economically underprivileged populace, public bodies, educational institutions or for religious purposes. Charitable organizations and non-profit organizations provide charitable services to targeted groups. Of this non-profit organizations mostly operate in a corporate business framework.
Whether an organization is a charitable one or not is determined by the law of a country. Broadly speaking a charity conforms to following characteristics.
Law of most countries demands a charity to be an ‘entity’. Corporation, partnership, unincorporated association and trust are all different types of entities. [Factors like activities, recognition, size, purpose and permanence determine whether an entity can be termed as an institution or not]. Any charitable institution normally excludes entities, which are controlled by a particular family.
Charity confers tax benefits on business and individual economic entities. However, nature and extent of tax benefits reaped depend on a country’s law. Normally tax benefits accrue from following charities.
Corporate houses undertake charity as a part of social responsibility. They engage in activities like road repairs, construction of educational institutions and medical facilities to name a few. This helps in corporate brand building. There are specific tax laws governing corporate charity.
Of late, charity research business has prospered in developing nations like India. Their main purpose is to seek accountability of allocation and use of charity funds. This is done to prevent misappropriation of funds and ensuring the delivery of benefits to targeted groups. Management consultants are often employed for this kind of projects. Starting from background checks, regulatory compliance to credibility with money, all small project details are looked into. (Developed nations often have NGO-rating systems for determining credibility and track record of these charitable organizations).
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This glossary post was last updated: 26th April, 2020 | 5 Views.