Home Forums Starting your journey Can this business be registered as a charity?

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  • #1000154
    citisix
    Member
    • Total posts: 3

    Hi Flying Solo,
    I’ve lurked the forums for a while but haven’t posted before. This is an amazing resource!

    A buddy and I are building a mobile app that is monetised with ads that we’ll be donating to one of several charities a user selects from a list. The more a user engages with the app, the more funds they will be able to donate.

    I’ve read the ATO charity guidelines but I’m still unsure if this can be registered as a charitable organisation.

    If we register it as a regular business, but all revenue is donated to charity from our business on our user’s behalf, is this then tax deductible? If anyone here has experience setting up a micro-charity or similar organisation, I would love some help!

    Thanks!

    #1223166
    Jason Ramage
    Participant
    • Total posts: 3,160

    Howdy

    Apologies, are you saying that the business making the apps (you and your mate) are making them for free or the revenue you earn from making them i being donated to the charities? Or are you saying, that the apps you build (after your business is paid) is donating the money earnt from the app that you built to charites?

    Furthermore, i am not sure a charity that is actually not doing any charitable work (meaning you are not actually doing charity efforts for the community and are more a ‘broker’) would qualify as a charity in its own rights..

    Just thoughts here, maybe give the ATO a call and explain in greater detail or reach out to an accountant ([USER=5318]@JamesMillar[/USER] )

    All the best and look forward to seeing you around

    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: hello@lucasarthur.net.au   P: 61 3 8324 0344    M: 61 412 244 888
    #1223167
    Greg_M
    Member
    • Total posts: 1,691

    I’ve had some peripheral exposure to setting up a charity via a client who has done it. It’s a pretty tough set of criteria to meet and it took him about a year to do it…and he had a lot of experience in the field, plus a very solid background in the sector it will operate.

    Try; https://www.acnc.gov.au/

    I would have thought it would be pretty simple to just claim a deduction on anything your business donates.

    #1223168
    Dash Freight
    Participant
    • Total posts: 91

    I believe you would be seen as a charitable fund raiser, rather than as a charity per se. There are separate regulations for fundraisers

    Rob Dash E: rob@dashfreight.com.au M: 61 423 136 053 Quotes: https://tinyurl.com/yae7tbj6 S: live:rd2221
    #1223169
    bb1
    Participant
    • Total posts: 4,472
    citisix, post: 269677, member: 117792 wrote:
    Hi Flying Solo,

    A buddy and I are building a mobile app that is monetised with ads that we’ll be donating to one of several charities a user selects from a list. The more a user engages with the app, the more funds they will be able to donate.

    I’m confused, yeah my permanent state, but if the money is going straight to the charity they nominate and the more they interact the more that gets donated. 2 questions:

    Why don’t they just donate directly, and therefor get the tax benefit themselves.?

    How do you make money?

    #1223170
    Dave – FS Concierge
    Moderator
    • Total posts: 2,526
    bb1, post: 269691, member: 53375 wrote:
    I’m confused, yeah my permanent state, but if the money is going straight to the charity they nominate and the more they interact the more that gets donated. 2 questions:

    Why don’t they just donate directly, and therefor get the tax benefit themselves.?

    How do you make money?

    Bert I think the advertiser pays (to have their ads shown), not the app user.

    #1223171
    citisix
    Member
    • Total posts: 3

    Thanks for your responses.

    The ads a user is exposed to in the app we’re building generates revenue, but the trade off is they can nominate which charity they’d like the ad revenue to go to.

    We won’t be doing charitable work directly – more of a charitable cause.

    It sounds like setting up a charity wouldn’t work. If we set up the business to donate all ad revenue to user-selected charities then claim it all back on tax, is that a reliable business model? Or are we better off taking a cut and claiming the remaining revenue in tax?

    We aren’t aiming for profit to be the primary aim, but obviously we’d like to cover some of our costs so it’s viable.

    #1223172
    Dave – FS Concierge
    Moderator
    • Total posts: 2,526

    Just to clarify, if you donate ALL ad revenue then “claim it all back on tax” you won’t actually get anything back, it just means you won’t have to pay tax on those earnings.

    Dave

    #1223173
    citisix
    Member
    • Total posts: 3
    Dave – FS Concierge, post: 269705, member: 49676 wrote:
    Just to clarify, if you donate ALL ad revenue then “claim it all back on tax” you won’t actually get anything back, it just means you won’t have to pay tax on those earnings.

    Dave

    Ahhh of course! Thank you for clarifying

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