There was a flood in the area I live in. A company here in town took donations to help people in the area, but they plan on using the money to pay employees' lost wages. My question is a for-profit company allowed to do that. They plan on putting it down as bonus pay.
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For profit companies can take donations just as anyone else, they just won't be tax-deductible. Whether or not they're allowed to use these donations for this purpose depends not on whether they're for profit or not, but on how they solicited them and what they said to the donors. A good example of why using donations not for the declared purposes is a bad idea would be this.
littleadv
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Going to jail
Fundraising is only legal when conducted by a registered charity or when used for a charitable purpose.
The company is not a registered charity,
If the company was legally obliged to pay these wages then this is not a charitable purpose.
If there is no obligation to pay (e.g. the employees were casual workers paid only when they worked), it might still not be a charitable purpose.
The common law definition of ‘charitable purposes’
Under the common law definition, there are four main categories of charitable purposes:
- relief of poverty, age or impotence
- advancement of education
- advancement of religion, and
- other purposes beneficial to the community that are within the spirit and intention of the Statute of Charitable Uses (a long list of ‘other purposes’ has developed over time through judge made law)
Most jurisdictions start with the common law definition and then specifically add or remove specific things by statute. Notwithstanding, unless the company is an exempt organisation (probably not), it would need approval for the fundraising.
Dale M
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