How can a club accept donations in a legally secure manner?
March 23, 2022 | 40,00 EUR | answered by Thomas Tressel
Dear Attorney specializing in association law,
My name is Friedhelm Ehrenbreit and I am a board member of a non-profit organization that cares for underprivileged children. Lately, we have been receiving more offers of donations from supporters who wish to financially support us. However, we are unsure of how to legally accept donations to avoid any potential legal consequences.
Our current situation is that we have mainly relied on membership fees as a source of income and have no experience with fundraising and donation management. Nevertheless, we would like to use the financial support to expand our services for underprivileged children and improve the quality of care we provide.
Our concerns mainly revolve around the correct handling of donations, tax aspects, and compliance with legal requirements in association law. We want to ensure that our organization does not make any legal mistakes and that the donations are used properly.
Therefore, my question to you as an expert in association law is: How can our organization legally accept donations? Are there specific regulations or formalities that we need to adhere to? What are the tax implications for our organization and for the donors? What methods are available to ensure that the donations are used for their intended purpose and in compliance with the law?
Thank you in advance for your support and expertise.
Sincerely,
Friedhelm Ehrenbreit
Dear Mr. Ehrenbreit,
Thank you for your inquiry regarding the legally secure acceptance of donations for your charitable association that cares for needy children. It is commendable that you are considering the proper handling of donations and ensuring that they are used for their intended purpose in a legally compliant manner.
First and foremost, it is important to know that charitable associations are allowed to accept donations from individuals, businesses, and other foundations. However, there are certain regulations and formalities to be observed in order to avoid potential legal consequences.
To accept donations in a legally secure manner, I recommend following these steps:
1. Bylaws: Review your bylaws to determine if and to what extent donations may be accepted. Clarify if there are specific regulations regarding the use of donations and whether they must be earmarked for a specific purpose.
2. Transparency: Ensure that your association members and potential donors are informed transparently about the use of donations. Maintain clear donation management and document the donation processing.
3. Donation receipts: Issue donation receipts to enable donors to deduct their donations for tax purposes. Ensure that the receipts comply with legal requirements and accurately reflect the donations.
4. Control: Conduct regular checks to ensure that donations are used for their intended purpose. Avoid diverting donations for other purposes to avoid legal consequences.
Regarding tax aspects, please note that donations to charitable associations are tax-deductible. Donors can claim their donations in their tax returns and receive a corresponding certificate from your association. As an association, you are obligated to record donations accurately and report them to the tax authorities.
In summary, the legally secure acceptance of donations for your association is possible if you follow the mentioned steps and comply with legal regulations. If you have any uncertainties or further questions, I am happy to assist you.
Sincerely,
Thomas Tressel
Attorney specializing in association law
