Funding topic 1 of 12
Classify the support before accepting it
The agreement and actual transaction determine the treatment; the bank narration does not.
Six different receipts
A voluntary contribution normally has no reciprocal supply. A grant supports a defined purpose and may carry milestones or repayment conditions. CSR describes the corporate donor’s statutory spending framework, not a tax exemption for the recipient. Share capital purchases lawful ownership rights. A loan creates repayment obligations. A service payment purchases a supply, including one delivered to farmers and paid for by a third party.
Use a written decision
Ask who pays, who benefits, what must be delivered, whether money is repayable, whether shares or profit rights arise, and who owns any assets. A project can contain several components: separate training-service consideration, a restricted equipment grant and member contribution in the agreement, budget and ledgers. The classification sheet records unresolved questions before acceptance.
Stop misleading descriptions
Do not call a repayable deposit a donation, share subscription a grant, or advertising consideration a gift. A restriction on using funds for training does not by itself prove a taxable service; examine the enforceable deliverables and relationship. Conversely, no direct benefit to the funder does not rule out third-party consideration for a supply.
Practical questions
Is every restricted grant payment for a service?
No. Restriction to an approved charitable or development purpose is not by itself reciprocal consideration. Examine deliverables, beneficiaries, enforceable obligations and supplies. Document why the amount is a contribution, grant, advance or service consideration.
Read the topic and sourcesWhat if the donor wants the money back later?
A fixed repayment promise suggests financing rather than a gift. A conditional refund for misuse can instead be part of a grant. Review borrowing, deposit and company-law rules before accepting repayable funds; a grant agreement cannot bypass them.
Read the topic and sources