Charitable organization
A charitable organization, or charity, is an organization whose primary objectives are philanthropy and spreading social well-being.
The legal definition of a charitable organization varies between countries and in some instances regions of the country. The regulation, the tax treatment, and the way in which charity law affects charitable organizations also vary. Charitable organizations may not use any of their funds to profit individual persons or entities. However, some charitable organizations have come under scrutiny for spending a disproportionate amount of their income to pay the salaries of their leadership.
File:UFF Jyväskylä.jpg|thumb|The second-hand shop of UFF, a non-profit and non-governmental humanitarian foundation, in Jyväskylä, Finland
Financial figures are indicators to assess the financial sustainability of a charity, especially to charity evaluators. This information can impact on a charity's reputation with donors and societies, and thus the charity's financial gains.
Charitable organizations often depend partly on donations from businesses. Such donations to charitable organizations represent a major form of corporate philanthropy.
To meet the exempt organizational test requirements, a charity has to be exclusively organized and operated, and to receive and pass the exemption test, a charitable organization must follow the public interest and all exempt income should be for the public interest. For example, in many countries of the Commonwealth, charitable organizations must demonstrate that they provide a public benefit.
History
Early systems
Until the mid-18th century, charity was mainly distributed through religious structures, almshouses, and bequests from the rich. Christianity, Judaism, and Islam incorporated significant charitable elements from their very beginnings, and dāna has a long tradition in Hinduism, Jainism, Buddhism, and Sikhism. Charities provided education, health, housing, and even prisons. Almshouses were established throughout Europe in the Early Middle Ages to provide a place of residence for the poor, old, and distressed people; King Athelstan of England founded the first recorded almshouse in York in the 10th century.Enlightenment charity
During the Enlightenment era, charitable and philanthropic activity among voluntary associations and affluent benefactors became a widespread cultural practice. Societies, gentlemen's clubs, and mutual associations began to flourish in England, with the upper classes increasingly adopting a philanthropic attitude toward the disadvantaged. In England, this new social activism led to the establishment of charitable organizations, which proliferated from the middle of the 18th century.This emerging upper-class trend for benevolence resulted in the incorporation of the first charitable organizations. Appalled by the number of abandoned children living on the streets of London, Captain Thomas Coram set up the Foundling Hospital in 1741 to care for these unwanted orphans in Lamb's Conduit Fields, Bloomsbury. This institution, the world's first of its kind, served as the precedent for incorporated associational charities in general.
Another notable philanthropist of the Enlightenment era, Jonas Hanway, established The Marine Society in 1756 as the first seafarers' charity, aiming to aid the recruitment of men into the navy. By 1763, the Society had enlisted over 10,000 men, and an Act of Parliament incorporated it in 1772. Hanway also played a key role in founding the Magdalen Hospital to rehabilitate prostitutes. These organizations were funded by subscriptions and operated as voluntary associations. They raised public awareness about their activities through the emerging popular press and generally enjoyed high social regard. Some charities received state recognition in the form of a royal charter.
Charities also began to take on campaigning roles, championing causes and lobbying the government for legislative changes. This included organized campaigns against the mistreatment of animals and children, as well as the successful campaign in the early 19th century to end the slave trade throughout the British Empire and its extensive sphere of influence.
The Enlightenment era also witnessed a growing philosophical debate between those advocating for state intervention and those believing that private charities should provide welfare. The political economist, Reverend Thomas Malthus, criticized poor relief for paupers on economic and moral grounds and proposed leaving charity entirely to the private sector. His views became highly influential and informed the Victorian laissez-faire attitude toward state intervention for the poor.
Growth during the 19th century
During the 19th century, a profusion of charitable organizations emerged to alleviate the awful conditions of the working class in the slums. The Labourer's Friend Society, chaired by Lord Shaftesbury in the United Kingdom in 1830, aimed to improve working-class conditions. It promoted, for example, the allotment of land to laborers for "cottage husbandry", which later became the allotment movement. In 1844, it became the first Model Dwellings Company – one of a group of organizations that sought to improve the housing conditions of the working classes by building new homes for them, all the while receiving a competitive rate of return on any investment. This was one of the first housing associations, a philanthropic endeavor that flourished in the second half of the nineteenth century, brought about by the growth of the middle class. Later associations included the Peabody Trust and the Guinness Trust. The principle of philanthropic intention with capitalist return was given the label "five percent philanthropy".File:Carnegie-1903.jpg|thumb|Andrew Carnegie's philanthropy. Puck magazine cartoon by Louis Dalrymple, 1903.
There was strong growth in municipal charities. The Brougham Commission led to the Municipal Corporations Act 1835, which reorganized multiple local charities by incorporating them into single entities under supervision from the local government.
Charities at the time, including the Charity Organization Society, tended to discriminate between the "deserving poor", who would be provided with suitable relief, and the "underserving" or "improvident poor", who was regarded as the cause of their woes due to their idleness. Charities tended to oppose the provision of welfare by the state, due to the perceived demoralizing effect. Although minimal state involvement was the dominant philosophy of the period, there was still significant government involvement in the form of statutory regulation and even limited funding.
Philanthropy became a very fashionable activity among the expanding middle classes in Britain and America. Octavia Hill and John Ruskin were important forces behind the development of social housing, and Andrew Carnegie exemplified the large-scale philanthropy of the newly rich in industrialized America. In Gospel of Wealth, Carnegie wrote about the responsibilities of great wealth and the importance of social justice. He established public libraries throughout English-speaking countries and contributed large sums to schools and universities. A little over ten years after his retirement, Carnegie had given away over 90% of his fortune.
Towards the end of the 19th century, with the advent of the New Liberalism and the innovative work of Charles Booth in documenting working-class life in London, attitudes towards poverty began to change. This led to the first social liberal welfare reforms, including the provision of old age pensions and free school-meals.
20th century
During the 20th century, charitable organizations such as Oxfam, Care International, and Amnesty International expanded greatly, becoming large, multinational non-governmental organizations with very large budgets.21st century
With the advent of the Internet, charitable organizations established a presence on online social media platforms and began initiatives such as cyber-based humanitarian crowdfunding, exemplified by platforms like GoFundMe.By jurisdiction
Australia
The definition of charity in Australia is derived from English common law, originally from the Charitable Uses Act 1601, and then through several centuries of case law based upon it. In 2002, the federal government initiated an inquiry into the definition of a charity. The inquiry proposed a statutory definition of a charity, based on the principles developed through case law. This led to the Charities Bill 2003, which included limitations on the involvement of charities in political campaigning, an unwelcome departure from the case law as perceived by many charities. The government has appointed a Board of Taxation inquiry to consult with charities on the bill. However, due to widespread criticism from charities, the government abandoned the bill.Subsequently, the government introduced the Extension of Charitable Purpose Act 2004. This act did not attempt to codify the definition of a charitable purpose but rather aimed to clarify that certain purposes were charitable, resolving legal doubts surrounding their charitable status. Among these purposes were childcare, self-help groups, and closed/contemplative religious orders.
To publicly raise funds, a charity in Australia must register in each Australian jurisdiction in which it intends to raise funds. For example, in Queensland, charities must register with the Queensland Office of Fair Trading. Additionally, any charity fundraising online must obtain approval from every Australian jurisdiction that mandates such approval. Currently, these jurisdictions include New South Wales, Queensland, Victoria, Tasmania, Western Australia, and the Australian Capital Territory. Numerous Australian charities have appealed to federal, state, and territory governments to establish uniform legislation enabling charities registered in one state or territory to raise funds in all other Australian jurisdictions.
The Australian Charities and Not-For-Profits Commission commenced operations in December 2012. It regulates approximately 56,000 non-profit organizations with tax-exempt status, along with around 600,000 other NPOs in total, seeking to standardize state-based fund-raising laws.
A Public Benevolent Institution is a specific type of charity with its primary purpose being to alleviate suffering in the community, whether due to poverty, sickness, or disability. Examples of institutions that might qualify include hospices, providers of subsidized housing, and certain not-for-profit aged care services.