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Charitable status: Sport and recreation
Updated February 2012
SPARC, the Department of Internal Affairs, Inland Revenue, the Companies Office and Charities Services have jointly produced this information sheet to help sport and recreation organisations who are considering applying to register as a charity.
This information sheet explains when sport and recreation organisations are considered to be charitable.
It provides guidance on the benefits and obligations for charities registered with Charities Services, and explains how to apply for registration.
When are sport and recreation organisations charitable?
Sport and recreation can be considered a charitable activity. As such, some organisations with purposes that promote sport and recreation may register with Charities Services.
For example, sport and recreation organisations are likely to have charitable purposes if they provide recreational opportunities for people with disabilities, teach skills to young people, or provide opportunities for the public to improve their fitness.
Benefits must be provided for the public. For example, if a sports club has exclusive membership or high fees, if the sport is excessively dangerous, or if the club focuses on social activities rather than physical activities, this is unlikely to be charitable.
Sport and recreation organisations will only have charitable purposes if they:
- relieve poverty
- advance education
- advance religion, or
- provide a benefit to the community that the law regards as charitable.
Sport and recreation organisations are not obliged to apply for registration as a charity. Registration is voluntary.
In deciding whether to apply, an organisation should assess the benefits and obligations associated with being a registered charity.
More information about charitable purposes and public benefit can be found here:
Benefits for sport and recreations organisations registered as charities
Organisations that promote an amateur game or sport for the recreation or entertainment of the public may already be exempt from income tax. They also qualify for donee status in certain circumstances. These organisations don’t need to register as a charity to receive these tax benefits.
Sport and recreation organisations may also be registered as charities by the Charities Services and receive similar tax benefits.
You can contact Inland Revenue to discuss how your organisation is being treated for tax purposes.
Eligibility for funding
Registered charities may find it easier to get funding from some gaming societies, community trusts or other funders, but this will depend on each funder’s criteria.
Many funders can and do fund sport and recreation organisations, whether or not they are registered as charities.
Some funders, however, are required to give their money to registered charities, and others may have a preference for funding registered charities. Some may only fund charitable activities.
Most gaming machine societies make grants to “authorised purposes” which includes grants for sport and recreation.
It is important to understand that funders that will only fund charitable activities:
- can fund a non-charitable organisation to carry out a charitable activity (for example, providing services for young people or the elderly)
- will not fund a charitable organisation to carry out a non-charitable activity (for example, upgrading a sports club’s bar).
If your sport and recreation organisation is applying for funding, you should always check the funder’s requirements, to be certain your particular project is eligible under their criteria.
More information about benefits for registered charities can be found here:
- The Charities Register: Benefits for charities
- The Charities Register: Benefits for the public
- Charitable purpose: Sport and recreation
- Tax and donee status and the Charities Act
Department of Internal Affairs:
How to apply for registration as a charity
An unincorporated sports group may choose to become a body corporate by incorporating as a charitable trust board under the Charitable Trusts Act 1957, or as an incorporated society under the Incorporated Societies Act 1908.
Registration under these Acts with the Companies Office does not confer charitable status and doesn’t mean the organisation can rely on having the tax exemptions of a charity.
Registration with the Companies Office confers “body corporate status”, but not “charitable status”.
To apply for registration as a charity, you must provide Charities Services with a completed application form for your organisation (Form 1), officer certification forms for each officer (Form 2), and a copy of your organisation’s rules document (constitution or trust deed).
All forms are available on Charities Services’s website. You may apply on paper or online.
Charities Services assesses each applicant’s purposes and activities to determine whether it has exclusively charitable purposes. It also decides whether the applicant’s name and officers meet the requirements in the Charities Act.
If Charities Services considers that there are any reasons why your application may be declined, it will notify you of this and allow you time to respond.
More information about applying for registration as a charity can be found here:
- Timing it right: When to apply for registration under the Charities Act
- Form 1 – application for registration as a charitable entity
- Form 2 – Officer certification form
- Rules and the Charities Act
- How the Charities Act affects charitable trusts, incorporated societies and companies
- Formal letters explained
Obligations for registered charities
Registered charities must inform Charities Services of any changes to their officers, rules, name, or address.
They must file an Annual Return and their financial statements each year with Charities Services.
This information is published on the Charities Register.
If a charity’s gross income is over $10,000, it is required to pay an Annual Return fee.
Charities can be investigated at any time by Charities Services and they must comply with all of their obligations under the Charities Act and any other relevant legislation.
More information about the obligations of registered charities can be found here:
Who has produced this information sheet?
Charities Services – registers and monitors charities. Maintains the Charities Register
SPARC – promotes and facilitates information for sport and recreation organisations
Department of Internal Affairs – administers gambling legislation, and grant-making and funding by gaming trusts
Inland Revenue – administers tax exemptions and donee status for sport and recreation organisations and charities
Companies Office – registers companies, charitable trusts and incorporated societies