Definition & Explanation: This is What “Non-Commercial Purpose” Means
Whether in the context of association and tax law, NGOs as well as foundations: The non-commercial purpose, or charitable purpose, is omnipresent in philanthropy. We may also encounter the adjective “ideational”. However, it is not to be confused with “ideal”. While the latter can also refer to objects and persons, the adjective “ideational” always refers to ideas, thoughts, i.e. immaterial things.
In the nonprofit field, the non-commercial purpose is characterized by its contrast to the economic purpose . The goal of an organization with a non-commercial purpose must therefore not be material profit. Rather, the non-commercial purpose pursues charitable, religious or political goals.
For a more detailed explanation of the non-commercial purpose, here are some examples as well as the definition for “legal entities with non-commercial purposes” from Swiss tax law.
Swiss Law & Taxes: Legal Entities with Non-Caterial Purposes
Nonprofits, associations and foundations receive tax benefits if they demonstrably pursue idealistic purposes and thus distinguish themselves from commercial enterprises. The definition of the non-commercial purpose is also deliberately left open in the legal texts. Legal entities that wish to claim a non-commercial purpose before the law must prove some characteristics:
- Charitable tasks: focus on social, political, religious, scientific, artistic activities.
- Nonprofit tasks: not aimed at obtaining a monetary benefit for members or dependents (cash, in-kind & service) or gaining an economic advantage.
Foundations and associations must include and define the non-commercial purpose in their statutes, otherwise they will not be recognized as such. A non-commercial purpose is not present, for example, if dividends are paid out, as in the case of cooperatives, or if the purpose benefits the participants themselves, as in the case of interest and professional associations. Legal entities with a non-commercial purpose engage in fundraising or accept donations in Switzerland. However, the funds must be exclusively and irrevocably tied to the pursuit of the purpose.
Examples of non-commercial purposes
For better understanding, an incomplete list of possible non-commercial purposes follows. At StiftungSchweiz, the largest digital philanthropy platform in Switzerland, you will find a wide range of projects, non-profit organizations and grant giving organizations with charitable purposes on every conceivable topic.
- Art & Culture: grants and support for artists, museums, galleries and exhibitions, concerts and festivals, music, dance and art schools, workshops, theater, film production and distribution, literature promotion, monument protection, architectural awards.
- Ethics, Religion, Church: church choir, church charities, preservation, maintenance and enhancement of churches and other religious sites, interfaith understanding.
- Social (charitable purposes, support for the needy): food banks and soup kitchens, housing groups, self-help groups, assistance for the homeless, financial assistance for the socially disadvantaged, debt counseling, promotion of mental and physical health, rebuilding measures for people with disabilities.
- Environmental Protection and Animal Welfare: animal shelters, nature reserves, waste prevention and recycling, CO2 compensation, solidarity agriculture, bee protection, marine protection.
- Education & Research, Science, Development: schools, universities and educational institutions, homework help, tutoring, career guidance, research institutes, scholarships for students and doctoral candidates.
- Leisure & Sports: sports clubs, playgrounds, recreation areas, vacation homes, sports camps, competitions, youth centers.
- Politics & Society: party work, integration, anti-discrimination campaigns, human rights organizations, consumer protection, promotion of independent media, intercultural exchange, startup promotion.
- Health: prevention, counseling and & accompaniment of affected persons as well as their relatives, outpatient and inpatient care and support.
- Development Cooperation & Humanitarian Aid: promote local self-help in the fields of environment, health, education, etc., disaster relief and humanitarian aid.
