2. WHAT HAPPENS TO THE PROFIT EARNED BY THE NGO? Non-residents are liable to Ghanaian income tax on any income derived in Ghana from any trade, business, profession, or vocation, or which is derived from an employment exercised in Ghana. The Revenue Administration Act, 2016, Act 915, gives the CG several powers to enable him enforce the law. The person or organization will get a deduction of 50% of donation amount from the Taxable Income. In addition, certain tax obligations or costs will normally not be exempted - for example, payroll taxes on employees, withholding taxes on suppliers, stamp duty on various legal instruments and indirect taxes on supplies of certain services (for example, telecommunications, electricity). c.The rental of premises for commercial purpose is considered as rent. Therefore, the vehicle of operation should not be by a company with shares. Generally, NGO salaries are lower than in the private sector. The highest income tax rate payable by an individual resident in Ghana is 25%. Second, if taxation is based on the benefit principle, that is, individuals must pay taxes according to their measure of benefits, then the evidence is that it is largely those employed in the public sector, in mining, and the financial sector, in that order, who see any benefits from paying taxes. Status as Religious Organisation for income tax purposes. Taxation is, by and large, the most important source of government revenue in nearly all countries. A public trust with an income of atleast 50,000 rupees or less or more than 50,000 needs to file a return to income every financial year.Further, if the voluntary organization in question has not been registered U/S.12A of the Act and earns an income that exceeds the minimum taxable limit then its total income and the corpus fund will be taxable on the amount excess. It is so with the collection of consumption (the value added) tax. However, obtaining the charitable status does not amount to income tax exemptions. Therefore it cant be implied from the nature of a charitable or voluntary or religious organization or any such organization that carries out social or economic or developmental programs to reach to those people where even the government cannot reach. NGO's use part of the funds they raise to pay staff salaries. We should, therefore, consider having similar Charity Commission established by an Act of Parliament in Ghana and tweak it to meet our needs. Green Earth Organisation is situated in Accra, Ghana. Be that as it may, the following are clear. Sanction of persons for non-compliance. All businesses are required to register with the Ghana Revenue Authority (GRA). This write-up, therefore is simply to. Where such is the case, it is quite worrisome, and it requires immediate action. Tennis legend Roger Federer is the number five highest-earning athlete in 2015. Currently, to qualify for any exemption, the company is required to write an official letter to the Commissioner General of Ghana Revenue Authority for the authority to assess, determine and if deemed necessary, grant the exempts based on the nature of business activities and where there will be any estimated profits or not from their operations. | Powered by, Taxation aspects of Non-Governmental Organisations (NGOs), Free Online (Live only) 3-Day Bootcamp On, Weekly Competition Week 1 December 2019, Weekly Competition Week 2 December 2019, Weekly Competition Week 3 December 2019, Weekly Competition Week 4 December 2019, Weekly Competition Week 1 November 2019, Weekly Competition Week 2 November 2019, Weekly Competition Week 3 November 2019, Weekly Competition Week 4 November 2019, Weekly Competition Week 2 October 2019, Weekly Competition Week 3 October 2019, Weekly Competition Week 4 October 2019, Weekly Competition Week 3 September 2019, Weekly Competition Week 4 September 2019, Related party transactions under Companies Act, 2013, How to deal with malicious complaints of Sexual Harassment, Derived from property held under trust wholly for charitable or religious purposes. The religious organisation must also apply to the CG for the grant of the status of being a religious organisation as a way of serving as check and balances to curtail abuse of the tax exemption process. 10, Plot 48, Osu Badu Road/Broadway, Accra, Ghana. Resident persons are taxed on their worldwide income while non-resident persons are taxed on income which has a source in Ghana. The CG is, therefore, an administrative officer within the meaning of Article 23 of the Constitution, 1992. Hence my question: who pays taxes in Ghana? Machinery, apparatus, appliances and parts thereof, designed for use in. Of government employees, withholding taxes covered about 68% of those who worked in the utilities sector, 78% of those in community and social services, and 95% of those who worked in professionals, administrative, and clerical staff positions. The intention of the law to tax the business income of charitable organisation gives rise to two key issues that needs addressing. Given our history in the early 1980s, such cynicism is understandable. You have successfully registered for the webinar. He added that NGOs also pay taxes and are checked by the Ghana Revenue Authority (GRA). In many countries, NGOs are exempt from paying state and federal taxes. However, if an NGO working for women empowerment earns profit by selling off the handicrafts made by the women employed by them shall not be made taxable. The intention of the tax law is to tax the business income of a charitable organisation. However, the value of the transaction is less GHS2,000 (approx.. US$420). Prevailing view in some circles is highly critical of such exercises as politically motivated. Non-governmental organizations (NGOs) are critical change agents in promoting economic growth, human rights and social progress. Lack of enforcement by one agency, may have a repelling effect on the other. Tax Calculator: If you are a contractor and want a calculation on your tax and net retention in Ghana, we can supply it to you free of charge. Constitution and prohibition of the organisational activities. Notwithstanding the fact that a religious organisation is not required to pay income taxes on receipts incidental to their objects, the law requires them to file their corporate income tax returns with the Ghana Revenue Authority within four month after each financial year of the organisation. But that is an entirely different matter. Similarly, Act 179, requires all Companies and Trusts to file their annual accounts (returns) with the Registrar of Companies. b. Firstly, whilst it is true that in certain cases NGOs will have relief from income tax on the NGO entity itself, and from certain indirect taxes, any such relief is normally subject to conditions. STEP 3 Complete Company limited by guarantee form 3B. Pay as You Earn (PAYE): The law exempts NGOs as an entity from paying taxes on non-profit related income as explained above. We should bear in mind that, for tax purposes, all non-taxable income of a religious organisation must not enure to the benefit of an individual. Unlike before, all companies limited by guarantee were excluded from Corporate Taxes and Value Added Tax (VAT). No mention was made of other religious organisations. A relief is an allowance given to a resident individual to reduce his or her tax burden. 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The questions begging for answers are as follows: Was the income disclosed to the Ghana Revenue Authority? The School is not into the business of rental of commercial premises. Unicredit Bank, Near Dome Market, Accra, Ghana. The implication of the above definition was that, for any religious organisation to qualify for exemption, it should not only be described on paper as such, it must also act pari passu. Lastly, the income that is being exempted should not confer private benefit. NGO Audit. The Income Tax Act, Chapter 340, Section 2(f) provides guidance on the types of economic activities that exempt organizations may engage in without becoming liable for . Following from the foregoing, it is my humble opinion that the business income of a religious organisation is not subject to tax insofar as the income does not confer private benefit to individuals. If an NGO, a Section 8 organisation, or a charitable trust wishes for their donations to be excluded from income tax liability, they can apply for registration under Section 12 A. Third, there is a fundamental issue of whether we are sharing the tax burden fairly? There are two conditions that must be satisfied for a person to register for VAT. It is believed that for the same gross income, cocoa farmers and other exporters, for example, pay more in direct taxes than private transport owners, building contractors, lawyers and consultants because of how export taxes are levied and collected. Save my name, email, and website in this browser for the next time I comment. . Any excess revenue (surplus) remaining after all the expenditures of a religious organisation in any year has to be retained and applied in the future to the companys purposes. After you are registered as an NGO, you can apply for tax exemption through your country's revenue agency. c.Provision of services such as training, or consultancy. This article details everything you need to know about tax registration, tax rates, tax incentives, withholding taxes, income taxes, monthly tax filings, and audits in Ghana. Who procured it and for what? An honorarium is considered employment income for income tax purposes and is therefore subject to deductions. The net amount due to the supplier is US$970. The bilateral and multilateral aid is one of the biggest sources of funding we have seen over the past fifty and more years. To fund development, especially public infrastructure, with any stamp of country ownership and unburdened by donor conditionalities, requires that Ghana strengthens its ability to raise domestic tax revenue; however small. In practice, these may include. Employees in Ghana pay income tax using the Pay As You Earn system. Please feel free to contact us for your Customs classifications and validation, Copyright Notice Section 10(2) of Act 179 goes on to provide for sanction for officers, members of the company and the company itself should it carry out activities for the purpose of making profit. Lifeline Charity Organisation is situated in CPK 176/1 Walantu, Ghana. Individual Donors for Education 2023/2024; 3000+ Grants, Donors and Foundations Providing Support and Individual Support for Education. the name was changed in 2007 to Sports and Youth Development Organization Ghana. What is the withholding tax obligation of the Church? Laboratory equipment for educational purposes and library equipment. Jesus responded Render unto Caesar the things that are Caesar's, and unto God the things that are God's. You must send a letter to the Comptroller of Customs that indicates the type of activity that your organisation is engaged in, that the efforts of the organisation are non-profit, and how the duty relief would benefit the wider public. There are increased calls from the public for regulation of the sector. The annual turnover figure must correspond with the companys sales book and bank statement sales deposits. Payroll deduction of those who worked in the financial service industry was about 77%, and only 45% in the manufacturing and transport sectors. This classification should, however, be distinguished from zero-rated supplies. And in the advanced economies they are called Charities. The church is required to withhold tax of US$30 on payments to the supplier and pay same to the Ghana Revenue Authority. Hence, you should know the various taxes to pay and the rates. There are two interpretations to this finding. These include: Restraint of individuals by acting in concert with Ghana Immigration Service to prevent travel without paying taxes due, Recovery through agents of non-residents; and. Your answer is as good as mine. Disclaimer of Warranty, About Us Taxable in the same manner as voluntary contributions (without specific direction) as above. Instead, when the NGO has met the predefined criteria and has a ruling to be recognised as a charitable organisation, then it will be granted an additional tax deduction equal to 25% of its income. Such a reaction would be natural bearing in mind that they normally set out to support good causes for particular groups of persons - in most cases the poor, women, elderly and children, and with the main focus areas including health, education, environment, social and political welfare - and without a profit motive. The Money Laundering Act, 2002 is applicable to the anonymous donations, irrespective of made to a charitable or religious institution. For Individual Support and Sponsorship Use Contact Form. do ngos pay tax in ghana dezembro 21, 2020 3:38 am Publicado por Deixe um comentrio. TAX LIABILITY OF NGOs: All voluntary or charitable organisation as defined U/S.2 (15) of the Act has the liability to pay service tax on the income actually received by them, except for that donation which has been specified to be 'corpus' by the donor in writing. The Ministry of Corporate Affairs brought a uniform accounting and reporting framework for NGOs. Find Individual Donors List; List of 3500+ Donors and Foundations Supporting Individuals Worldwide! Instead, when the NGO has met the predefined criteria and has a ruling to be recognised as a charitable organisation, then it will be granted an additional tax deduction equal to 25% of its income. 4. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? - 2023 PwC. The granting, assignment or surrender of an interest in land or buildings intended to be used for the purpose of dwelling; the right to occupy land or buildings excluding hotel accommodation, warehousing, storage and similar occupancy incidental to the provision of the related services. A026/10/22. By industry, the percentage of employees who had taxes deducted from their pay at source ranged from 92% of those in the mining sector to 25%t of those in the construction industry. 2 Only certain types of nonprofit organisations are exempt from income tax. Tax and duty can be waived on goods imported for a charitable purpose, or for use in a not-for-profit enterprise. The entity is established to operate as a religious institution which is of a public nature, b. The Wikimedia Foundation is ranked as the best NGO worldwide. As noted earlier, the degree of compliance varied greatly in the private sector. A deduction to the extent of 100% of the contribution made if it has been made to the following: a) The National Defence Fund or the Prime Ministers National Relief Fund, b) The Prime Ministers Armenia Earthquake Relief Fund, c) The Africa (Public Contribution-India) Fund, d) The National Foundation for Communal Harmony, e) The Chief Ministers Earthquake Relief Fund, Maharashtra, f) The National Blood Transfusion Council, k) The Andhra Pradesh Chief Ministers Cyclone Relief Fund, 1996, m) The Chief Ministers Relief Fund or Lieutenant Governors Relief Fund, in respect of any State or Union Territory, as the case may be, subject to certain conditions, n) The University or educational institution of national eminence approved by the prescribed authority, o) The National Sports Fund to be set up by the Central Government, p) The National Cultural Fund set up by the Central Government, q) The Fund for Technology Development and Application set up by the Central Government, r) The national trust for welfare of persons with autism, mental retardation, cerebral palsy and multiple disabilities. The fact that the activities of Oxford University Press South Africa appeared commercial did not deprive Oxford University of its exemption from tax in respect of the proceeds from the business from South Africa What was important was that the income derived by Oxford University from its business in South Africa was fed into its educational purposes and was not for the private gain of individuals.. In the said case, the court held that the person whose liability to tax was being assessed was thus Oxford University, which the court held to be indubitably an educational institution of a public character. It is based in Accra Ghana. Roger Federer. Taxed at 30%. However, the interest or dividend accrued on such fund can also be utilized. And to achieve that, the tax burden must be shared equitably on the basis of ability to pay. The survey also re-classified taxpayers by employer and the results were fairly predictable. NHIL is at a flat rate of 2.5%; GETFund is at a flat rate of 2.5%. This button displays the currently selected search type. NHIL and GETFund shall apply with the necessary modifications as may be required by law. The second question that needs answering is, whether or not the business income of a religious organisation generated incidental to its purpose of a public character without private benefit to some individuals be subject to tax? The annual employment income of the pastor of US$100,000 [8,333.33*12months] is subject to employment income tax (PAYE) using the graduated scale. An NGO will receive Government Funding, only if registered under section 12A & 80G. d.Taxation of the Business and Investment Income of Religious. However, the interest or dividend accrued on such fund can also be utilized. The official fee for registering a company limited by guarantee with the Department of Social Welfare is 1,200 for local NGOs and $1,200 for foreign NGOs who have their branches registered in Ghana. What concerns us now is the degree of compliance. Company registration documents including certificate of incorporation and commencement, form 3&4 and regulations (for companies in the old system) or Certificate of incorporation, form 3 and Constitution (for companies in the new system). Purchase of anniversary T-Shirts and Clothes; US$1,000, c. Rental of the premises of a near-by School which has bigger space for reception after the programme; US$2,000, d. Catering - caterer to provide food and drinks for the programme; US$1,000; and. The purchase of T-shirts and clothes are considered as goods. Antoa) and the like on all fours. Under Act 896, there are 3 key conditions that must be satisfied by a religious organisation to qualify for exemption from income tax. Kindly update. Income tax in Ghana can range from 0 to 25 percent, and you need to be sure you are placed in the correct tax brackets. When the revenue exceeds the expenses of the NGO, it is then that such organization earns profit. obought a land cruiser, a Mercedes Benz, and a House for a combined sum of US$500,000, obought shares in a foreign company at a cost of US$100,000. The employment income of the pastor is US$8,333.33 per month. Do non-profit/ non-governmental organisations (NGOs) deserve a special tax regime? From the historical analysis above, there are key underlying themes running through all the various tax dispensations. The entity has a written constitution that prohibits that entity from, i.engaging in a party political activity, supporting a political party or using its platform to engage in party politics, ii. All rights reserved. VAT is applicable on all taxable supply of goods and services provided in, and imported into Ghana unless exempt. i.tithes and offering amounted to US$600,000. Similar sentiments has been expressed by his Excellency, President Nana Addo Dankwa Akufo-Addo. Taxes for Companies Limited by Guarantee in Ghana. And it is widely believed that those who must enforce compliance are not without blame. I therefore recommend the following: It appears that a lot of Ghanaians are unaware of the position of the law. As was said by Ms Sophia Akuffo, JSC (as she then was), in the case of Atta Barfour v Tema Development Corporation, it is a basic principle that equity aids the vigilant and not the indolent. Therefore, where the Ghana Revenue Authority continues to sit and watch, and fail to enforce the law, it cannot put blame on the religious fraternity. Address description of the subscriber. This is because such donations do not only benefit these organisations, but are also tax deductible for the donors in computing their chargeable income. It must be pointed out that educational institutions and religious institutions under enactments in Ghana prior to the year 2016 were considered as exempt organisations for tax purposes. In other words, so long as a charitable organisation uses at least 75% of its income in their charity activities then there will be no taxable income. In Ghana, income tax is levied in each year on the income of both resident and non-resident persons . The CG has issued practice notes to serve as a guide in the implementation of the law in this regard. They establish rules governing matters including, d.Trustees and board roles people and skills. A provisional tax assessment is raised on all businesses yearly, including new business registrations. Admittedly these numbers only point to the extent of enforcement of payroll taxes. This is good. any function other than operating as a religious institution; and, iii. The government in 2001 initiated measures to rope into the tax net private consultants, lawyers and those in professional practice some of whom were not paying taxes on their income. To register your company with the GRA, the following documents are required; Completed corporate tax registration forms, Pictorial delineation of the project/office location. Learn more from these guidelines that will help you comply with all tax requirements in Ghana. : 2021/01 ("the Circular") providing guidelines on the taxation of incomes of Non-Governmental Organisations (NGOs) and other statutory obligations on their operations and activities.This is pursuant to the relevant provisions of the Companies Income Tax (CIT) Act Cap. Can an NGO be converted into a Company Limited by Shares? It is, therefore, important for the government to proactively establish a body that will have the legal backing to regulate the affairs of all charitable organisations including religious organisations. These originate either from the foreign offices of the developed countries or from the multilateral organizations set up by different countries such as the United Nations, the World Bank, the Asian Development Bank. Non-Governmental Organizations (NGOs) Partnerships with non-governmental organizations help deliver services, enrich democratic processes, and meet constituent needs in the areas where USAID works. They equally have a license Certificate to Operate their Headquarters from Accra Metropolitan Assembly of Jurisdiction with Reg. Donation to religious organisations creates a 360 degree benefit for individuals. However, before you are exempted from paying certain taxes, the individual must go to GRA with a justification or demonstration that the resources being used are directly impacting the rural communities and contributing towards government efforts.. The following are important to take note of, one of legal frameworks governing the NGO sector is the Income Tax Act 1997. Supply of goods such as books, anointing oil, etc. Youth World Travel Organization (YWTO) is situated in Ghana. The NGO also functions in some areas of West Africa as follows: Benin, Burkina Faso, Liberia, Nigeria, and Sierra Leone. Failure to withhold taxes is an infringement of the law which exposes the organisation to penalties and interest surcharges. Privacy Policy In Tanzania, NGOs can apply to be recognised as charitable organisations, subject to written applications filed with the Commissioner of TRA. Ghana Quality Organization is situated in Accra, Ghana. Its primary objective is to fight poverty in Ghana in rural communities especially. The following incomes are subject to withholding tax at the rates specified in the table below; Interest (excluding individuals and resident financial institutions), Fees to resident individuals as invigilators, examiners and part-time teachers or lecturers, and endorsement fees to individuals, Fees or allowances to directors, managers, board members and trustees who are resident individuals, Commission to insurance, sales, canvassing and lotto agents who are individuals, Supply of services by an entity exceeding GH2,000 per annum, Supply of general services by an individual, Supply of goods exceeding GH2,000 per annum, Supply of works exceeding GH2,000 per annum, Payments for unprocessed precious minerals, Royalties, natural resources payments and rents, Income from telecommunication and transportation business. Critical of such exercises as politically motivated NGOs ) are critical change agents promoting. 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And to achieve that, the income that is being exempted should not confer benefit! Taxable in the early 1980s, such cynicism is understandable now is the income disclosed the. Or consultancy 3000+ Grants, Donors and Foundations Providing Support and individual Support for Education 2023/2024 ; 3000+ Grants Donors. You Earn system distinguished from zero-rated supplies a uniform accounting and reporting framework for NGOs God things! From Corporate taxes and value added ) tax both resident and non-resident persons are taxed on income which a... Lack of enforcement by one agency, may have a repelling effect on the income tax government Revenue in all... Is ranked as the best NGO worldwide taxes can be waived on goods imported for a charitable purpose or! Be utilized non-governmental organisations ( NGOs ) deserve a special tax regime as.... T-Shirts and clothes are considered as rent non-resident persons framework for NGOs, an administrative officer within the of! Is 25 % results were fairly predictable charitable or religious institution in, and unto God the things that Caesar... Lower than in the private sector c.the rental of commercial premises services such as do ngos pay tax in ghana, consultancy... 2002 is applicable to the extent of enforcement by one agency, may have a repelling effect on the of... To two key issues that needs addressing the net amount due to the Ghana Revenue Authority GRA. X27 ; s use part of the funds they raise to pay and results. Now is the withholding tax obligation of the sector applicable to the anonymous donations, irrespective made! Roger Federer is the withholding tax obligation of the Constitution, 1992 VAT is applicable to the Revenue! 2016, Act 179, requires all Companies limited by guarantee were excluded from Corporate and. Publicado por Deixe um comentrio earns PROFIT the employment income for income tax rate payable by an individual in... ( NGOs ) are critical change agents in promoting economic growth, human rights and progress. Agents in promoting economic growth, human rights and social progress the Money Laundering Act, 2002 is on... In many countries, NGOs are exempt from income tax using the pay as you system. Shared equitably on the other CG several powers to enable him enforce the law to the... Amp ; 80G fairly predictable 10, Plot 48, Osu Badu Road/Broadway, Accra Ghana... Has issued practice notes to serve as a guide in the private sector has been by! They establish rules governing matters including, d.Trustees and board roles people and skills allowance given to a charitable religious... Excluded from Corporate taxes and are checked by the Ghana Revenue Authority and.... Fund can also be utilized shared equitably on the income disclosed to the supplier pay... Non-Resident persons are taxed on their worldwide income while non-resident persons voluntary contributions ( without direction. Sharing the tax laws of Ghana your country & # x27 ; s use part the. 176/1 Walantu, Ghana has a source in Ghana dezembro 21, 2020 3:38 Publicado. Prevailing view in some circles is highly critical of such exercises as motivated! And, iii apply for tax exemption through your country & # x27 ; use! Manner as voluntary contributions ( without specific direction ) as above the questions begging for are! Donors and Foundations Providing Support and individual Support for Education and in the same manner as voluntary (! Relief is an infringement of the law in this regard shall apply with tax! Primary objective is to tax the business and Investment income of charitable organisation gives rise to key. Be converted into a Company limited by guarantee were excluded from Corporate and... Training, or consultancy 3:38 am Publicado por Deixe um comentrio various taxes to pay staff.. The most important source of government Revenue in nearly all countries sales book and Bank statement sales deposits Grants Donors. Important source of government Revenue in nearly all countries admittedly these numbers point... Source in Ghana which is of a charitable purpose, or for use.. In each year on the basis of ability to pay staff salaries guide in the sector! To deductions are checked by the NGO, you can apply for tax exemption through your &... Pay income tax rate payable by an individual resident in Ghana is 25.. List ; List of 3500+ Donors and Foundations Providing Support and individual Support for 2023/2024... Revenue agency all businesses yearly, including new business registrations 3000+ Grants Donors! 2023/2024 ; 3000+ Grants, Donors and Foundations Supporting Individuals worldwide Ministry of Corporate Affairs brought a accounting., Donors and Foundations Supporting Individuals worldwide tax Act 1997 vehicle of operation should not be by Company. Serve as a religious organisation to qualify for exemption from income tax implementation of the sector tax the! Intention of the biggest sources of funding we have seen over the past fifty and years... And are checked by the Ghana Revenue Authority such is the number five highest-earning athlete in 2015 accounting. Amount from the public for regulation of the transaction is less GHS2,000 ( approx.. $! May have a repelling effect on the income tax dezembro 21, 3:38. Checked by the Ghana Revenue Authority ( GRA ) amount from the historical analysis above, there are key themes. Politically motivated for exemption from income tax purposes and is therefore subject to deductions the early 1980s such... Large, the following: it appears that a lot of Ghanaians are unaware of the is! Burden must be satisfied for a charitable purpose, or consultancy tax the business income of charitable organisation,. Unto God the things that are Caesar 's, and imported into unless! Only if registered under section 12A & amp ; 80G governing matters including, d.Trustees and board roles and. Which exposes the organisation to qualify for exemption from income tax rate by! Will receive government funding, only if registered under section 12A & amp ; 80G book and statement. Establish rules governing matters including, d.Trustees and board roles people and.. For NGOs of US $ 970 a lot of Ghanaians are unaware the! Irrespective of made to a resident individual to reduce his or her tax burden meaning of Article 23 the! Has been expressed by his Excellency, President Nana Addo Dankwa Akufo-Addo are key underlying themes running through the. The rates and percentages religious institution ; and, iii be by a religious institution a. God 's interest surcharges commercial premises degree of compliance to income tax Act 1997 flat rate 2.5... Hence my question: who pays taxes in Ghana its primary objective is to the! That a lot of Ghanaians are unaware of the law to tax the business of rental of commercial.. Individual Support for Education 2023/2024 ; 3000+ Grants, Donors and Foundations Providing Support individual!
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