Responsibility of the associations, liability and proper handling of donations
Responsibility of the associations
The association and the issuer of the donation receipt bear a considerable responsibility. They must ensure that all requirements for the donation deduction are met and that the donations are used properly. The most important obligations include:
1. Verification of non-profit status: Ensure that the association is recognised as a non-profit organisation and meets the requirements.
2. Verification of donations: Careful examination to ensure that the donations are actually donations and that no services are provided in return.
3. Documentation: Proper documentation of all donations and retention of the required documents and receipts.
4. Issuance of donation receipts: Only issue receipts if all legal requirements are met and the confirmations correspond to the official sample texts.
5. Separation of donations and sponsoring: Clear demarcation to avoid jeopardising the donation deduction.
6. Internal controls: Setting up control mechanisms to ensure that all steps related to donations are carried out correctly.
Liability risks
It is essential that donation receipts are issued properly, as errors or improper use of donations can result in significant liability risks:
1. flat-rate donation liability: incorrect issuance or improper use of the donation funds can lead to a flat-rate tax liability of 30% of the donation amount.
2. instigator liability: in the event of gross negligence or intent in the use of the donation funds, board members can be held liable with their personal assets.
Loss of non-profit status
The loss of non-profit status is a serious risk for associations and other non-profit organisations. This can be caused by:
1. misappropriation of donations: use of donations for non-charitable purposes.
2. violation of record-keeping requirements: inadequate documentation of income and expenses.
3. economic business operation: engaging in economic activities that do not serve the non-profit purpose.
4. Articles of association: Articles of association do not comply with the requirements of the law on non-profit organisations.
If a non-profit organisation loses its non-profit status, it no longer qualifies for tax breaks, which can jeopardise the organisation's financial survival.
How to handle donations properly
To maintain their non-profit status and minimise liability risks, associations and non-profit organisations should take the following measures:
1. Regular review: Ensure that all legal requirements are continuously met.
2. Training and advice: Regularly inform board members about current legal requirements and seek legal advice if you are unsure.
3. Transparency: Disclose how donated funds are used to donors and the tax authorities.
4. Procedures: Introduce clear processes and guidelines for handling donations and issuing donation receipts.
These measures help to ensure that associations and non-profit organisations can take advantage of their tax-exempt status while also meeting their responsibilities to donors and society.
