Chapter IEIM404725

Published date25 April 2016
Record NumberIEIM404725
IEIM404725: Charities: Financial Institution: Examples Example 1

A UK charitable trust is funded by grants from government, charitable foundations and public donations (including legacies). The charity has a small number of investments but income derived from these amounts to 2% of the charity’s overall income.

The Charity is not a Financial Institution and has no CRS reporting obligations because less than half of its income is derived from investing in financial assets.

If asked to self-certify their status (e.g. by a bank, funder or the charity’s investment manager) the charity will indicate that it is an Active Non-Financial Entity.

Example 1a

A UK charitable company is funded by a mix of public donations (including legacies) and investing in financial assets, which are managed by a Financial Institution. Income derived from the investments amounts to 25% of the charity’s gross income.

The Charity is not a Financial Institution and has no CRS reporting obligations because less than half of its income is derived from investing in financial assets even though the assets it holds are managed by a financial institution.

If asked to self-certify their status (e.g. by a bank, funder or the charity’s investment manager) the charity will indicate that it is an Active Non-Financial Entity.

Example 2

A UK charitable company is funded by a mix of public donations (including legacies) and investing in financial assets, which are managed by a Financial Institution. Income derived from the investments amounts to 51% of the charity’s gross income.

If asked to self-certify its CRS status (e.g. by a bank, funder or the charity’s investment manager) the charity will indicate that it is a Financial Institution.

Example 3

A UK charity has more than 50% of its gross income from investing in financial assets, it has given full discretion on the investment strategy for part of the financial assets to a fund manager, which is a Financial Institution. The investment strategy for the other part of the financial assets is managed by the trustees of the charity.

The charity will still be a Financial Institution, as more than 50% of its gross income is from investing in financial assets (however managed), and those assets are managed by a Financial Institution, in whole or in part.

Example 4

A UK charitable trust has more than 50% gross income from investing in financial assets, the assets are invested externally by a Financial Institution according to an investment...

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