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.
The Independent Code of Governance For Non-Profit Organisations In South Africa