There may be opportunities to generate income from other activities to supplement the organisation’s donation income. However, in these circumstances, there are a number of considerations which must be carefully considered.
These include the following:
- Any such income-generating activity must remain secondary and not become a primary focus, to the detriment of the organisation’s public benefit purpose.
- Net profits derived from ‘unrelated’ income-generating activity are likely to be subject to tax, and must be separately accounted for and recorded.
- Board members and employees – and their relatives or friends – must be particularly careful to avoid conflicts of interest or draw personal profit in these situations.
- Such activities should never involve undue commercial risk, which may put the organisation’s financial sustainability in jeopardy.
RELATED
Click here to read or download The Independent Code of Governance for NPOs.
Cick here to read about The ABC’s of Tax in the NPO Sector.
SOURCE
The Independent Code of Governance For Non-Profit Organisations In South Africa
