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24 de November de 2021

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What is FDCA? Learn all about the Childhood and Adolescence Fund

The Fund for the Rights of Children and Adolescents (FDCA, Brazilian acronym) allows society to help projects aimed at children and adolescents.

The resources are collected based on Federal Law 8069, created in 1990. The norm provides that citizen participation is made through the allocation of part of the Income Tax.

Although it seems like a complicated subject, participating and exercising your social responsibility is easier than you think. That’s why we’ve prepared a question-answer on the subject.

What is the purpose of the FDCA?

The Fund for the Rights of Children and Adolescents aims to raise and apply financial resources in institutions aimed at children and adolescents in social vulnerability.

In general to meet some public policy in partnership with the third sector or programs and actions of non-profit institutions.

The tax waiver is from the Income Tax and donations are the main sources, and, in the case of IR, all donated amounts are on the federal government and not on the taxpayer..

These resources come from different organizations, which can be, for example:

  •         Public resources in general, such as transfers from the Executive Branch
  •         Donation by individuals or companies
  • Material and real estate
  • Financial resources deductible from income tax
  • Income from financial investment
  • Appeals for fines and damages for administrative infractions

According to the law, individuals and companies can donate via income tax. It can be up to 6% for individuals and up to 1% for legal entities.

The law that created the Fund is federal, but states and municipalities are free to create their own rules for the application of resources.

In general, proposals related to:

  • Family and community life;
  • Socio-educational measures;
  • Confronting child labor in the state;
  • Strengthening of Guardianship Councils and Municipal Law Councils;
  • Confronting the use and abuse of alcohol and other drugs by children and adolescents;
  • Comprehensive early childhood care in areas of socioeconomic deprivation and disaster situations.

These guidelines will also guide the proposals for the municipalities. Interested institutions send their projects to the Councils, as established by specific notices.

Once presented, these projects need to be evaluated and approved by the Municipal and State Councils for the Rights of Children and Adolescents. Only then can organizations begin to raise funds for the Fund..

The money collected is used primarily to carry out selected social projects, and may also cover the administrative expenses of the Councils themselves.

The entire process is overseen by the legislative powers, the Public Ministry and the Courts of Auditors, as the appeal is managed by the Councils

Likewise, institutions have the obligation to make public accountability, available to all citizens, of the resources transferred by the Councils.

What is the role of the Municipal Councils for the Rights of Children and Adolescents in the Fund?

The councils aim to formulate and monitor, in the Union, in the States, in the Federal District and in the municipalities, the execution of public service policies. The composition of the Board is necessarily equal, that is, 50% of the members are from civil society and 50% are appointed by the municipal, state or federal executive.

The Child and Adolescent Statute (ECA, Brazilian acronym) provides for the duties and obligations of Municipal Councils. These bodies are responsible for deliberating and deciding the priorities of each municipality to guarantee the rights of children and adolescents.

They should also detail the actions that must be taken to meet these priorities.

To put the plans into practice, the Councils manage the Childhood and Adolescence Fund.

In addition to choosing the projects, the Councils also render accounts in a transparent manner, linked to the municipal executive powers and controlled by the Public Prosecutors.

Why donate to the FDCA?

By making a donation, you not only contribute to helping children and adolescents in social vulnerability, but also have this amount deducted from your income tax. That is, there is an increase in your refund or a decrease in the amount payable and you or your company decides where to actually apply your tax rate.

In addition to being able to exercise social responsibility, an important factor especially for companies. But even so, there are still few individuals and companies that make the donation.

According to the Internal Revenue Service, if all companies and citizens made the donation via income tax, the total amount would be around R$5 billion per year.

However, the reality is quite different: on average, the total collected by individuals is around R$100 million, or 2% of the total collection potential. Among the companies, the total amount would be R$1 billion, but only R$300 million are transferred.

This means that, in total, only 8% of the potential is used by the Childhood and Adolescence Funds.

Where does my income tax go if I don’t donate?

If you do not make a donation, the tax goes to the Union’s single fund. From there, the resources are distributed to policies coordinated by the Federal Government, such as health and education. In addition, this amount will also cover Government expenditures.

In other words, by choosing to donate, you help to optimize resources. This is because the money will be invested more quickly in local projects to protect children and adolescents.

What are the differences between donations from individuals and companies?

Any company or individual can donate to the FDCA. The main way is through the allocation of part of the Income Tax. In other words, it is a percentage of the amount that would be destined for the Treasury. In these cases, those who have tax to pay receive tax benefits.

Who will define this percentage is the legislation. Since the federal law provides for the following rules:

  • For legal entities, which are taxed according to the company’s actual profit, they can allocate up to 1% of the tax owed to the Internal Revenue Service.
  • Individuals can donate up to 6% of their income tax. However, this amount must be divided into two steps: As this amount is not yet known, an alternative is to take into account the previous year’s statement to facilitate the calculation.
    • 6% within the calendar year Direct allocations to funds made in a calendar year are only reported in the following year’s DIRPF. Thus, a deposit in the FDCA account made in the year 2021 must only be informed in the DIRPF for fiscal year 2022, base year 2021.
    • If in the previous year you have donated, at the time of declaration you will not be able to donate anymore, only if you have a balance that reaches a maximum of 3%.
    • Another possibility is to allocate 3% with the IRPF Declaration. The calculation of this amount is done automatically by the delivery system of the Federal Revenue’s declaration in this rendering of accounts to the tax authorities.

How do I choose the institution that will receive my donation?

Now that you know how to calculate your donation, it’s time to set up an institution or fund to receive your contribution..

The donation is made to the social organization that will receive this resource. In other words, you choose the organization and it cannot have another destination.

Therefore, before donating, you need to do a survey about the institution, to check the registration data and whether it is in good standing..

In addition to discovering the donation data, it is important to research the institution to find out about the work and choose the causes with which you most identify.

You will be able to find awarded institutions that have consolidated work for several years. It can also privilege CSOs that have partnerships with renowned companies and organizations inside and outside the country, which are concerned with management, governance and transparency to make good use of resources.

This is the case of Ramacrisna, which since 2008 has been in partnership with FDC, one of the largest business schools in Latin America, has since achieved significantly better results in obtaining resources, credibility with partners, awards, improvement in the quality of service and number of people benefited.

Why choose Ramacrisna?

The Institute has been working for more than six decades in the education and professionalization of children and young people in social vulnerability. Our institution is composed of deliberative and fiscal councils and directed by an executive board.

We develop learning, vocational, cultural, job and income generation, technology, sport and leisure projects. Discover some of our projects:

  • Expanding Borders
  • Producer antennas
  • Professor Arlindo Corrêa da Silva Library
  • Ramacrisna Educational Support Center (CAER)
  • Building the Future
  • Liverpool Hope University
  • Young Ramacrisna Orchestra
  • Professionalization of Young People in Social Vulnerability (MSE)
  • Technology and Innovation

Our estimate is that more than 1.8 million people in vulnerable situations have already benefited from at least one of the Institute’s projects. Located in Betim, Ramacrisna operates in 13 cities in the Metropolitan Region of Belo Horizonte, including the capital, Esmeraldas and Igarapé.

The Institute has already received several awards, such as the Selo Doar, A+ for management and transparency, (2021 and 2019) and the 100 Best NGOs (2020, 2019, 2018 and 2017).

In 2021, some projects are being developed with FIA resources collected in 2020. They are:

  • Transforming Lives – in partnership with Instituto da Criança
  • Orchestrating the Future – in partnership with Instituto da Criança

By making your donation, you help maintain these projects and promote new initiatives for children and teenagers in our community.

Step-by-step instructions for legal entities

In the case of companies taxed by the Taxable Income, the calculation of the amount subject to allocation is defined in the calculation of the IRPJ due, which can be quarterly or annually, which corresponds to 15% of the taxable income. For example, a company that earned $100,000 in one year owes 15 thousand reais in income tax. Of this amount, 150 reais can be transferred to the FDCA.

It is worth noting that this process must be carried out by an accountant, in the Internal Revenue Service’s own systems. That is, it can only be done by a professional..

You can either donate the company that makes the quarterly calculation or the one that makes the monthly estimate with the determination of the actual profit on December 31.

In the case of quarterly calculation, the 1% of the income tax due in each calculation period is the maximum deduction limit allowed for the FDCA. Additional amounts are excluded..

In addition, the tax corresponding to profits and capital income abroad is also excluded..

The amount allocated to the FDCA cannot be added as an operating expense. Therefore, it must be added to the actual profit in its calculation. The allocation can be made in each quarter of the year. But, if it is done only at the end of the year, it will only take into account the tax amount for the last quarter.

In any case, the destination leaves the company’s cash at the time of donation, but the amount is deducted from the amount paid for the tax.

In the case of calculation based on an annual estimate, donations can be made monthly, deducting from the monthly tax payment. As the actual profit is only determined on December 31st, the portion that exceeds in one month can be used in others. You just need to be careful to respect the 1% limit in total.

To help you figure it out, take into account the previous year’s statement. That is, the one made in 2020, taking into account the year 2019.

It is possible to donate larger amounts, but without any tax incentive.

Now is the time for the actual donation. To make the deposit, you will need the bank account details and the linked CNPJ.

To choose the Ramacrisna Institute to receive the donation, simply make a cash deposit or transfer via DOC to the Betim Municipal Fund for the Rights of Children and Adolescents (FIA) account. Data are Banco do Brasil – Ag.: 750-1 | Cc.: 102.185-0 | CNPJ: 21101865/0001-14.

Then, just send the deposit slip by email to the Children and Adolescent Council of Betim (cmdcafiabetim@gmail.com), with a copy to Ramacrisna (ramacrisna@ramacrisna.org.br), and a letter informing you your desire to allocate the donation to Instituto Ramacrisna.

Along with the bank receipt, it is also necessary to inform the data of the legal entity: company name, full address, CNPJ and deposit amount.

These data must appear on a receipt released by the Council. It will be the proof that goes to the income tax return..

You have until December 31 of each year to do the banking. In other words, you can make a donation at any time of year. Just do the correspondence at the time of the Declaration.

When filling out the Annual Adjustment Declaration, legal entities must register the donated amounts in their bookkeeping, keeping the proof of donation to record the necessary information in the Annual Adjustment Declaration act.

Another important information is that there is the possibility of allocating resources to more than one fund, as long as the total amount does not exceed the limit of 1% of the IR owed.

Remembering that, in order to donate, it is not necessary to have a registered address or company in Minas Gerais or in Betim.

Step-by-step instructions for Individuals

 On the other hand, the calculation for individuals is different. To start with, the IR calculation takes into account the person’s income minus deductible expenses, such as school and health. The result of this difference is the amount that will be taxed and will be the basis for calculating the 6% for the FDCA.

The donation can be made at any time during the fiscal year and must be entered in the Annual Adjustment Statement – DAA in the financial revenue system by the taxpayer or an accountant, within the period defined by the government.

To reach the 6% threshold, experts recommend that you use the amount of tax due from your previous year’s tax return as the basis for calculating it. For example, if the tax amount was R$1,100.00 on your return, you would multiply it by 6%, reaching R$66.00. This amount is what must be deposited in the Child Rights Fund account.

Now, to obtain proof of donation from the Board that manages the Fund, just send it to the e-mail, which will respond with the receipt itself. So, in the following year, you will inform your DAA and guarantee the reduction of the tax payable or refund. Also remember to inform the Institution that you wish to benefit from this feature.

Help Ramacrisna

In cases of donations outside the Declaration date, the first step is to make a cash deposit or transfer by DOC to the account of the Municipal Fund for the Rights of Children and Adolescents of Betim (FIA). Data are Banco do Brasil – Agency: 750-1 | Cc.: 102.185-0 | CNPJ: 21101865/0001-14.

Afterwards, you will send the deposit slip by email to the Children and Adolescent Council of Betim (cmdcafiabetim@gmail.com), with a copy to Ramacrisna (ramacrisna@ramacrisna.org.br), informing that the donation must be transferred to the Institute.

In addition to the bank document, you will need to provide your full name and address, your CPF and the deposit amount.

These data must appear on a receipt released by the Council. It will be the proof that goes into your income tax return.

In the act of the Annual Adjustment Declaration – DAA in the revenue system, the taxpayer or an accountant enters this amount, within the period defined by the government.

These donations can be made until December 31 of each year, but will only be deducted in the following year, during the income tax declaration act..

At this time, you must enter the information in the topic “Payments and Donations Made”, under code 40 (Donations – Child and Adolescent Statute). Then enter the name of the fund, the CNPJ and the amount paid.

It is recommended that you keep the document for a while for eventual presentation to the Internal Revenue Service.

The program will indicate the limit that can be allocated for the tax and, if there is margin to donate, at the time of the DAA, it will indicate the amount of the donation with just one click. Remember that the limit is a maximum of 6% for donations outside the declaration period.

Finally, there is also the possibility of donating through the annual adjustment declaration program – DAA, only in the period defined by the Revenue. However, in this case the limit is 3%. But, both in the case of donation by the system and in the complementary contribution made in the fiscal year in the declaration, they can only be made between March and April, which is when the Revenue releases access to the software.

The allocation in the current year is easier and less labor-intensive, as it is directly in the child’s rights fund bank account, which also makes life easier for the donor when making the Declaration in the following year, in addition to the higher percentage of 6%.

Other ways to donate

The allocation of income tax is not the only way to donate to Ramacrisna. Currently, individuals and companies can choose one or more of the following ways to contribute:

Either way, you can help us improve and transform lives and the entire community.

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