We recently received a query from a MyPE reader who is failing to get information back from a local fund-raising entity as to how much money was raised from an event held last year and how much actually went to the nominated charity.
I can understand her frustration as she would dearly like to receive her certificate and confirmation that her donation DID go to a cause that is very dear to her heart.
Of course I was rather scathing and told her to just write off her donation and move on as her back and forth with the fund-raising company and the charity is just costing her time, money, grey hairs and stress lines. Far easier to believe in Karma and imagine the wheels turning against people who are intractable and downright nasty when dealing with members of the public who honestly believe that ALL of their donated money will go to their chosen charity.
Of course the amusing ding dong back and forth emails prompted me to finally get closure on what amounts of money a fund-raising entity MUST pass over to a charity and what time frame is required.
Lets face facts here – fund-raising companies also need to put petrol in their cars and food on the table. So long as it is for an economic car and reasonable food we will all be happy.
So off I went to the SARS web site and downloaded this document: Tax Exemption Guide for Public Benefit Organisations in South Africa. Reading the guide I felt my heart beating faster and my eyes glazing over as I didn’t quite know what I was looking for.
But, friendly Erika from KPMG, came to the rescue and put my little question in perspective thus; “A fund-raising entity must distribute at least 75% of funds raised to the Public Benefit Organisations for which it is raising funds by the end of the following tax year.”
So there you have it boys and girls – fund-raising entities may retain a maximum of 25% of the money collected in the name of charity to cover their costs, the rest must be handed over to their chosen PBO.
Lets get back to our reader then: You appear to be well within your rights to demand your promised certificate but as to having sight of the distribution account it appears that the fund-raising company involved has until the end of it’s next tax year to ensure that all funds have been distributed and accounted for in a proper manner. Of course the receiving charity may have other expectations that the fund-raising company is expected to deliver on.
SARS have a published list of PBO’s here: List of 18A Approved Organisations published on 30 September 2011 – as with any such list please check before assuming that someone is or is not registered.
