If you haven’t seen “Giving Charities a Helping Hand” by Jason Krupp at the New Zealand Initiative, take the time and have a read now.
“These are significant privileges, which is why it is important that only groups with a genuine charitable purpose be entitled to receive them.
“Yet as Giving Charities a Helping Hand argues, the regulations governing the sector have set the test of charitable purpose so high that many small groups cannot attain, or struggle to maintain, registered charity status. At the same time, commercial firms owned by charities are allowed to retain profits without paying tax on these funds. Indeed, there is little oversight over how these funds are used, and the current regulations create the potential for unfair completion in the market.
“This report puts forward three policy proposals to remedy this situation, namely to:
- re-examine the centuries-old definition of charitable purpose,
- restore much needed procedural fairness to the legislation, and
- Tax all for-profit firms equally, but make all donations to charity tax deductible.
“These reforms are aimed at helping the sector, with the benefits accruing to charities, and ultimately the communities and causes they serve.”