JAS to become charitable body, but maintain its for-profit business
The board of the Jamaica Agricultural Society, JAS, is in discussions with the Ministry of Agriculture on the possibility of reconstituting itself as a charitable organisation after its divestment by the state.
JAS currently operates as an agency of the ministry from which it gets an annual stipend of $80 million to provide service to its 6,000 farming and agri-linked members.
Under the divestment plan, which is behind schedule, the ministry would be freed of the yearly obligation. And central to the discussions in June was a plan for the JAS to transition to charitable status while retaining its money-making business.
JAS was one of the government’s public bodies identified for rationalisation by the Transformation Implementation Unit in 2018.
The meeting on June 22, a report of which was seen by the Financial Gleaner, included the JAS, representatives from key members of the JAS management team, the Ministry of Agriculture, Fisheries and Mining, the Transformation Unit and consultants PricewaterhouseCoopers.
It’s purpose was to gain consensus on the recommendations put forward in the 2018 report on the JAS divestment.
The JAS board agreed with the recommendations, the principal component of which would be its reconstitution as a non-governmental organisation with charitable, not-for-profit status.
JAS currently owns 26 properties nationwide and earns rental income from them as well as events such as the Denbigh Agricultural Show. However, the society was assured that its charitable status would not preclude its continuing ownership of a for-profit business.
“The for-profit entity may itself be a contributor to the charitable entity with those contributions being tax deductions for the determination of taxable profits for the subsidiary,” the report noted.
“The for-profit entity may also declare dividends to be paid to its shareholder(s), being the newly formed JAS.”
However: “Tax may be payable on the dividend payments to the new charitable entity,” it added.
The society’s charitable NGO status would also not disallow the membership of commodity boards.
“To the extent that JAS is established as a company limited by guarantee, it will have control over its own assets and be able to transact business with the assets in the normal course of its activities. This would be set out in the constitutive documents of the newly established JAS, with parallel legislative provisions allowing for the transfer of assets and obligations of the existing JAS to the newly established JAS,” the reported noted.
On Monday, JAS President Lenworth Fulton said the plan of action agreed to in June is currently under way.
“The transition is in progress, but the society is also at a crossroads,” he said.
“The board met with the minister and his team, and it was agreed that an independent team will be assembled to study the way forward with emphasis on elections, staff issues, modernisation of the constitution, by-laws, business development and more,” Fulton said.
The reformed JAS would be subject to regulation by the Department of Co-operatives and Friendly Societies.
The numbers of charities registered, and assets reported have been fluctuating over the last three years. As at the end of 2021 there were 91 new charities registered, adding to the 1,228 declared in 2020.
The Charities Act implemented by the Charities Authority and the Registrar of Charities, came into force on December 24, 2013. It defines 13 charitable purposes, namely: the prevention or relief of poverty; the advancement of education, religion, health or saving of lives, good citizenship or community development, the arts, culture, heritage, or science, amateur sport, and human rights, conflict resolution or reconciliation; and the relief of those in need because of youth, advanced age, ill-health, disability, and financial hardship or other disadvantages.
The JAS, which was founded in 1895 and registered as voluntary organisation in 1941, is currently at an impasse internally, over its leadership transition. A new president and executive members are to be elected but legal claims in court and accusations about interference with the list of eligible voters have effectively put the society’s 126th annual general meeting on hold.