A charity, nonprofit, foundation, NGO, religious organisation, or social enterprise asks about accounting / tax / reporting specific to the nonprofit sector.
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General reference only
This Guide is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for your personal facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.
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[T1] IRC §501(c) categories
| Code | Type | Notable | |---|---|---| | **§501(c)(3)** | Charitable, religious, educational, scientific, literary | Donations deductible; public charity vs private foundation | | **§501(c)(4)** | Social welfare; advocacy organisations | Donations NOT deductible; political activity permitted | | **§501(c)(6)** | Business leagues, trade associations | Member dues deductible as business expense | | **§501(c)(7)** | Social clubs | Member-only | | **§501(c)(19)** | Veterans organisations | | | **§4947(a)(1)** | Charitable trusts | |
Public charity vs private foundation - public charity
Public charity: significant public support (>1/3 from broad public or government); fewer restrictions[T1]
Public charity vs private foundation - private foundation restrictions
Private foundation: typically family-funded; subject to 5% minimum payout (§4942), self-dealing rules (§4941), excess business holdings (§4943), prohibited investments (§4944), taxable expenditures (§4945)[T1]
Net investment income excise tax
1.39%§4940
Filing requirements
Form 1023 / 1024 application; Form 990 (public charity) / 990-PF (private foundation) / 990-EZ (small) / 990-N (smallest); Form 990-T for UBI; Schedule A (public support test); Schedule B (large donors)[T1]
Charity (CIO / trust / company limited by guarantee)
Charitable Incorporated Organisation — CIO, or trust, or company limited by guarantee
A sector overlay for charities, nonprofits, foundations, NGOs, religious organisations, and social enterprises.
[T1] IRC §501(c) categories
| Code | Type | Notable |
|---|---|---|
| §501(c)(3) | Charitable, religious, educational, scientific, literary | Donations deductible; public charity vs private foundation |
| §501(c)(4) | Social welfare; advocacy organisations | Donations NOT deductible; political activity permitted |
| §501(c)(6) | Business leagues, trade associations | Member dues deductible as business expense |
| §501(c)(7) | Social clubs | Member-only |
| §501(c)(19) | Veterans organisations | |
| §4947(a)(1) | Charitable trusts |
[T1] Country-specific; harmonisation limited. Major regimes:
Other major jurisdictions status table
| Country | Status |
|---|---|
| Canada | Registered Charity under Income Tax Act; T3010 annual filing |
| Australia | DGR (Deductible Gift Recipient) endorsement |
| South Africa | PBO (Public Benefit Organisation) §30 ITA; Section 18A donations deductible to donor |
| India | §12A / §80G registration |
| Singapore | IPC (Institution of a Public Character) |
| Hong Kong | §88 Inland Revenue Ordinance |
| Japan | Public-interest incorporated foundation |
Fund category definitions ([T1])
| Fund category | Definition |
|---|---|
| Unrestricted (net assets without donor restrictions — US ASC 958) | Donor-imposed restrictions exhausted or never applied |
| Donor-restricted (with restrictions — US ASC 958) | Donor specifies purpose or time |
| Endowment | Donor specifies permanent or term capital preservation |
| Quasi-endowment | Board-designated for long-term investment but not donor-restricted |
Charity VAT treatment by country ([T1])
| Country | Treatment |
|---|---|
| UK | Charity-specific zero-rated supplies (zero-rated charity sales of donated goods); reduced rate on fuel/power for charity buildings; relief on capital goods for charity buildings |
| EU | Article 132 PVD: exempt activities including health, education, social, cultural, sport, religious — but exemption is mandatory for the activity, not optional, and may not align with the charity's profitable activities |
| US | n/a (sales/use tax state-level; many states exempt nonprofit purchases) |
| Australia | GST-free supplies for charity (e.g., gifts received, donated goods sold) |
UK has limited DAF equivalents through Charities Aid Foundation and others.
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Other GLOBAL computations in the OpenAccountants Tax Library.
Public Benefit Test
Purposes must be charitable and operate for public benefit (post-Charities Act 2006 affirmation)[T1]
Charity Commission
Registers and regulates charities[T1]
Charity tax exemptions
Trading income generally exempt if primary purpose trading; ancillary trading limit per Extra-Statutory Concession C4[T1]
Gift Aid top-up
25%[T1]
Charities SORP
Statement of Recommended Practice under FRS 102 — sector-specific accounting[T1]
Gemeinnützige Körperschaft
Charitable corporation under §§51-68 AO[T1]
Spendenrecht
Donations deductible by donor up to 20% AGI / 4 per mille turnover (companies)[T1]
Categories
gemeinnützig (charitable), mildtätig (relieving distress), kirchlich (religious)[T1]
Filing
Steuererklärung + verbindliche Bestätigung from Finanzamt[T1]
Other major jurisdictions status table
| Country | Status | |---|---| | **Canada** | Registered Charity under Income Tax Act; T3010 annual filing | | **Australia** | DGR (Deductible Gift Recipient) endorsement | | **South Africa** | PBO (Public Benefit Organisation) §30 ITA; Section 18A donations deductible to donor | | **India** | §12A / §80G registration | | **Singapore** | IPC (Institution of a Public Character) | | **Hong Kong** | §88 Inland Revenue Ordinance | | **Japan** | Public-interest incorporated foundation |
Fund category definitions
| Fund category | Definition | |---|---| | **Unrestricted (net assets without donor restrictions — US ASC 958)** | Donor-imposed restrictions exhausted or never applied | | **Donor-restricted (with restrictions — US ASC 958)** | Donor specifies purpose or time | | **Endowment** | Donor specifies permanent or term capital preservation | | **Quasi-endowment** | Board-designated for long-term investment but not donor-restricted |[T1]
UK Charities SORP parallel categories
UK Charities SORP has parallel categories (unrestricted general funds; designated funds; restricted income funds; endowment funds — permanent and expendable).[T1]
UBI corporate tax
Tax-exempt organisations pay corporate income tax (21%) on income from any unrelated trade or business regularly carried on.[T1] IRC §511-514
§512(a)(6) silo rule
UBI computed separately for each unrelated trade or business (post-TCJA "silo" rule)[T1] §512(a)(6)
§513(c) advertising
Advertising as unrelated business[T1] §513(c)
§514 debt-financed income
Debt-financed income (rental income from leveraged property partly UBI)[T1] §514
§511(b) split-interest trusts
Split-interest trusts subject to UBI on the unrelated portion[T1] §511(b)
UBI exceptions
Volunteer-labour exception; Convenience exception; Donated goods exception; Bingo (in some jurisdictions); Royalties (passive royalty income generally not UBI)[T1]
Form 990-T
UBI return
Charity VAT treatment by country
| Country | Treatment | |---|---| | **UK** | Charity-specific zero-rated supplies (zero-rated charity sales of donated goods); reduced rate on fuel/power for charity buildings; relief on capital goods for charity buildings | | **EU** | Article 132 PVD: exempt activities including health, education, social, cultural, sport, religious — but exemption is mandatory for the activity, not optional, and may not align with the charity's profitable activities | | **US** | n/a (sales/use tax state-level; many states exempt nonprofit purchases) | | **Australia** | GST-free supplies for charity (e.g., gifts received, donated goods sold) |[T1]
§4941 Self-dealing
A per-se prohibition on most transactions between the foundation and "disqualified persons" (substantial contributors, foundation managers, families). 10% excise on disqualified person + 5% on manager.[T1] IRC §4941
§4942 Minimum distribution
5% of average net investment assets must be distributed annually for qualifying charitable purposes; 30% excise tax on undistributed amount.[T1] IRC §4942
§4943 Excess business holdings
Limits private foundation ownership of business enterprises to 20% (or 35% with limited exceptions); 10% excise.[T1] IRC §4943
§4944 Jeopardising investments
Investment that risks the foundation's carrying out its exempt purposes (highly speculative investments) — 10% excise.[T1] IRC §4944
§4945 Taxable expenditures
Certain prohibited expenditures (lobbying, voter registration, grants to non-charitable, etc.) — 20% excise + 100% if not corrected.[T1] IRC §4945
Donor-advised fund
A charitable account held at a sponsoring organisation. Donor receives immediate tax deduction; gets non-binding advisory right over investment and distribution.[T1]
§4966 DAF distributions excise
Distributions from a DAF to certain disqualified persons or to non-public-charity grantees attract excise tax.US §4966
US cross-border deduction rules
Deduction generally only for §170(c) US charity; foreign equivalent only via "friends of" intermediary or §4945 expenditure responsibility[T1]
EU cross-border case law
Persche/Stauffer case law extended deduction to equivalent EU charities (subject to equivalency determination)[T1]
UK equivalency requirements
HMRC equivalency requirements for foreign charities[T1]
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
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