Donations received and legal implications

[jack ward]

Hi,

Inquiring as to if a company can collect donations for a third party and take out costs and a profit margin out of this transaction. Failing this accept payment and split this in percentages into two separate accounts. EG. majority percentage transferred directly to the institution the donation is for and percentage transferred to the company for running expenses and capital.

 

[Lance]

Hi Jack,
Sounds dodgy. No one should be profiting from a donation. Donations are tax deductable but third party fees, costs and profit aren't so it makes the giving of donations no longer attractive. I would be refusing to donate and just do it directly if you are so inclined.

 

[Tim W]

Hi,

Inquiring as to if a company can collect donations for a third party and take out costs and a profit margin out of this transaction. Failing this accept payment and split this in percentages into two separate accounts. EG. majority percentage transferred directly to the institution the donation is for and percentage transferred to the company for running expenses and capital.

It can be done, although there are rules and licensing requirements before they can do it lawfully.
There needs to be a direct client-service provider relationship between the collector and the recipient.
Entities that do this are called "charity traders".