02.06 – Not for profit Financial Institutions

The majority of not for profit organisations are expected to qualify as NFFEs as very few will be carrying on a business as Financial Institutions.

If a not for profit organisation does qualify as a financial institution, then it will need to subject any financial accounts that it maintains to due diligence.
In the case of not for profit organisations set up for the conditional benefit of an un-named class of beneficiaries (e.g. payments to war widows, school scholarships, pecuniary grants, etc) if the conditional right to payment has been granted but is yet to be satisfied (e.g. grant due over a year-end, ongoing scholarship, etc) then the fulfilment of such an obligation shall not be treated as a financial account maintained by the financial institution.

Example

The Greendale Quaker Society sets up a scholarship fund for the benefit of children of Greendale, who exceed 90% in the entrance exam for Greendale College. The GQS Scholarship Fund is an Investment Entity.

In 2004, Thomas Green scored 93% in his exam and the Society agrees to fund the Greendale College fees.

Thomas is a beneficiary of the GQS Scholarship Fund and will be for the duration of his time at Greendale College, but as this benefit was due to his becoming a member of the beneficiary class and conditional upon his exam score, this will not qualify as a financial account.