Thursday, June 20, 2013

Charities & Political Donations

Following on from my previous blog post there is one question that needs to be looked at further: Can charities make political donations?

This was prompted from the Iona Institute's most recent published accounts which saw €500 of 'political donations' made in 2011. And, presumably, there are other registered charities in Ireland also making political donations.

Under the scheme of tax relief for eligible charities in Ireland, Revenue requires that:
"...the applicant charity applies its income for charitable purposes only."
But can a political donation be part of the charity's work? The UK Charity Commission is quite specific on this:
"Charities must never support political parties. They cannot make political donations or give other financial support or resources."
But what does Ireland's Revenue say? I contacted them to ask about this specific example. They replied:
"...for reasons of taxpayer confidentiality, the Revenue Commissioners cannot comment upon the tax affairs of individual bodies. The role of the Revenue Commissioners in relation to charities is confined to determining the eligibility of applications from bodies of persons or trusts for exemption from certain taxes on the basis that they are established for charitable purposes. Revenue also operates controls and monitoring procedures to ensure that charities with the tax exemption comply with the terms of the exemption. 
"It should be noted that all the income of a body granted charitable tax exemption must be applied in furtherance of the body's charitable objectives."
To clarify here, Iona Institute's objectives are stated as "the promotion and advancement of religion and the education of the public with regard to marriage".

When I instead queried, in general, for non-specific charities, what the policy is, the reply was:
"In relation to the general phrase "a political donation" it is not known what is meant by this or the circumstances surrounding the donation and for what purpose the donation is made.
In a general sense the promotion of a cause that relates directly to the advancement or promotion of the charitable purposes of the body can be considered acceptable.
To determine the specific circumstances in any case one would have to have regard to all the circumstances of the particular donation and the charitable objects of the body making the donation and as advised already this is not possible as to do so would breach our obligation to observe confidentiality to all taxpayers."
Not that I'm picking on the Iona Institute, but they're the only example I have - so I contacted them to try and begin a dialogue on their finances (which are not available on their website) and I asked four of my TDs for assistance - TDs and councillors are always either extremely helpful or just don't bother to reply.

My TDs raised the issue with the Minister for Finance who had this response on the 15th of May 2013 (highlighted by me):
The charitable tax exemption scheme is administered by the Revenue Commissioners. In order to avail of the exemption, a body or trust must be established for charitable purposes only and must apply all of its income to charitable purposes. The Deputies are most likely aware that while bodies that hold a charitable tax exemption are not permitted to make donations that directly support political parties or candidates, they are however, permitted to apply their funds to activities that advance or promote their charitable purposes. Depending on the circumstances, these can include certain political lobbying and advocacy activities in support of their charitable purpose. 
Procedures are in place to ensure that bodies that are granted charitable tax exemption are subject to periodic reviews to ensure that the terms of the exemption continue to be fulfilled. All relevant matters, including matters which have been brought to the Revenue Commissioners attention, are taken into account in the context of such reviews.   
In regard to the specific issues raised by the Deputies, the Revenue Commissioners have indicated that in order to determine if any such item of expenditure satisfies the terms of a charitable tax exemption it is necessary to examine that expenditure, the context in which it was incurred and the charitable objects of the body incurring the expenditure in detail. 
If the Deputies wish to provide specific details then the Revenue Commissioners will investigate the issue/s to ensure the terms of the exemption/s in question are being adhered to.
So we did that - we provided specific details of the charity and their audited accounts showing that they had made a political donation. And the Minister for Finance replied...
The investigation of any registered charity is a matter for the Revenue Commissioners. In addition, I am advised by Revenue that, for reasons of taxpayer confidentiality, it cannot comment on the tax affairs of individual bodies. 
However, Revenue has assured me that bodies that are granted charitable tax exemption under Section 207 of the Taxes Consolidation Act 1997 are subject to reviews to ensure that they abide by the terms of the exemption.  These reviews include detailed examination of all relevant expenditure including any donations made. 
Where donations are found to have been made, Revenue must determine and be satisfied that the expenditure was in accordance with the terms of the charitable tax exemption and that it clearly related to the charitable objectives of the particular body.

The conclusion being that Revenue ARE satisfied that Iona Institute's political donation was in accordance with the terms of the charitable tax exemption, noting that charities are not permitted to donate to support political parties or candidates.


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