Home – New Forums Money matters Donations to ‘for profit’ business?

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  • #987361
    bees
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    This may be more of a legal matter, but I didn’t know where to put it.

    We’d like to accept donations from the public on our website to enable us to supply our product free of charge to hospitals and neo natal wards.

    As a ‘for profit’ business we understand this will be a contribution rather than a donation, and we need to make it clear that they can’t claim a deduction for this. We also figure it will be classed as business income for us.

    Is there anything else we are overlooking in doing this? A quick search of google has not indicated that anything prevents this.

    Any ideas anyone?

    #1162362
    bluepenguin
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    I’m no expert, but would it be an option to sell products for a highly inflated price? i.e. “Buy this $5 pen for $50 and we’ll allocate $45 to our hospital fund.”

    #1162363
    Simply Money Honey
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    Hi Bees

    You are correct that people donating wouldn’t be entitled to a tax deduction for their donation.

    You would record the money received as income for tax purposes but you will also claim the costs of supplying this equipment to the hospitals as a deduction. Provided you spend all the money donated you wouldn’t pay any tax on this income.

    Another option is to look at setting up a registered charity for the donation component so that people could get a deduction. Or perhaps you could partner with the hospital if they have their own charity where you encourage people to donate to the hospital charity so they get a deduction and then the hospital spends the money with you on the equipment.

    Just some ideas to consider.

    Cheers

    Gabrielle

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