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Before embarking on any new income raising activity, Departments should consider whether the activity could be considered as falling within the University's core charitable activity. In deciding whether this is the case, it is important to remember that the test is applied to the activity itself and not its intended result.

For example, a Department may decide to raise funds for its educational activity by selling t-shirts. Although the result of the activity is that of education is improved by the profit made, the activity itself - selling t-shirts - is not itself a charitable activity.

Except to a very limited degree, the University may only engage in charitable activity. Broadly speaking, charitable activity in the University context equates to the provision of education (and supporting services) and the pursuit of research where the results of that research will be fed into the public domain.

If the University engages in significant trading activity which is not charitable, that activity may be liable to tax (at 30% of profits) and ultimately extensive non-charitable activity may threaten the charitable status of the Institution. For this reason, Departments must consult with the Taxation Section prior to commencement of new income-generating activity.

If a Department wishes to embark upon a trading activity which is not charitable, it is still possible to do this using one of the University's subsidiary companies which are not subject to the same constraints as the University itself. The main company for this purpose is Cambridge Enterprise Limited.

Further guidance and advice is available from either the Finance Division or Cambridge Enterprise.

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