Charities: Regulation

House of Lords written question – answered on 19th December 2011.

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Photo of Lord Alton of Liverpool Lord Alton of Liverpool Crossbench

To ask Her Majesty's Government, further to the Written Answer by Lord Taylor of Holbeach on 4 May (WA 155-6), how donation is distinguished from trade according to the Charities Act 2006 and the Charities Act 1993; and under what circumstances receipt of a flat sum upon provision of material goods is classified as either a donation or as trade for the purposes of charities regulation.

Photo of Lord Wallace of Saltaire Lord Wallace of Saltaire Lords Spokesperson (Cabinet Office), Lord in Waiting (HM Household) (Whip)

The Charities Acts 1993 and 2006 do not contain any distinction between charitable donations and trade. A donation of money or material goods is deemed to be charitable and becomes subject to charity legislation if it is made to advance charitable purposes. A charitable donation may only be used for the purposes for which it was given.

Charities can trade to fund their activities where such trading activities contribute directly to the furtherance of their charitable objects or are ancillary to those objects. If a trading activity is not for either of these purposes it may need to be carried out through a subsidiary trading company.

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