What requirements must a club meet in order to be recognized as a charitable organization?
August 21, 2023 | 50,00 EUR | answered by Siegfried Eckstein
Dear Tax Advisor,
I am Andrea Hohenberg and I am managing a small non-profit organization that is dedicated to promoting education and culture in our region. Lately, I have been thinking more about whether our organization meets all the requirements to be recognized as a non-profit.
Our organization was founded several years ago and since then we have conducted various projects and events to enrich the cultural offerings in our community. We mostly finance ourselves through donations and membership fees, and therefore rely on being recognized as non-profit in order to take advantage of tax benefits and to gain the trust of supporters and sponsors.
My concern is that we may not meet all the necessary criteria to be recognized as non-profit. I would therefore like to know from you what specific requirements an organization like ours must meet to be recognized as non-profit. Are there certain statutes or areas of activity that we must consider? What kind of reporting or documentation is expected from us?
I would greatly appreciate your help and support in clarifying this issue, as it is of great importance for the future of our organization.
Thank you in advance for your time and expertise.
Kind regards,
Andrea Hohenberg
Dear Mrs. Hohenberg,
Thank you for your inquiry and your dedication to education and culture in your region. It is commendable that you are interested in obtaining recognition for your association as a non-profit organization, in order to take advantage of tax benefits and gain the trust of sponsors and supporters.
In order for an association to be recognized as non-profit, it must meet certain requirements. Firstly, the association must expressly pursue non-profit purposes in its statutes. This includes the promotion of education and culture. It is important that the statutory purposes are clearly defined and not focused on personal or economic interests.
Furthermore, the association must demonstrate its non-profit status through its actual management. This means that the activities of the association must serve exclusively and directly non-profit purposes. No profits may be made, and all income must be used for non-profit purposes.
To obtain recognition as a non-profit organization, associations must regularly document their activities and income transparently. This includes, for example, preparing annual financial statements and submitting tax returns. It is important that all income and expenses are properly recorded and documented.
Additionally, ensure that your association does not operate any taxable economic activities, as this could jeopardize its non-profit status. Compliance with tax requirements, such as issuing donation receipts and properly conducting member meetings, is also important.
It is advisable to consult with a tax advisor early on to ensure that all requirements are met and no mistakes are made. I am available in my online office hours to answer any further questions and support you on your path to recognition as a non-profit organization.
Best regards,
Siegfried Eckstein
