Payments to Overseas Entities
The most asked question by Clubs? “Can we send money overseas and still meet the requirements of our Charitable Trust?
Clause 4.2 of a Club’s Trust Deed reads: “The Trust’s objectives shall only be carried out in and for the benefit of charitable purposes in New Zealand’. This is the most queried Clause in the Trust Deed by Trustees concerned that paying money to Rotary Foundation breaches this section.
The Income Tax Act allows for an entity such as a charitable trust to make a deduction for a charitable gift that is made to a donee organization. A donee organization is defined in the Income Tax Act as an organization listed on Schedule 32 (recipients of charitable or other public benefit gifts).
Donations/distributions from Clubs and Trusts for the Rotary Foundation and other Rotary overseas projects can be made to NZ Rotary Clubs Charitable Trust or RNZWCS (Rotary New Zealand World Community Service) Limited (which are listed in Schedule 32 of the Income Tax Act).
In summary making donations/distributions offshore either to The Rotary Foundation or to overseas projects meets this restriction imposed by 4.2 because the funds are paid to NZRCCT or RNZWCS which are recognised in the Income Tax Act as a ‘donee organization’ and they in turn can pay them to the Foundation or to overseas projects without jeopardising the status of the Charitable Trust.