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Beginner’s Guide on Starting a Non-Profit Organization in Singapore
Non-profit Organizations exist to make a difference – they are the perfect vehicles to usher in positive changes. Whether these happen at a grassroots level or global scale, starting a Non-Profit Organization is exciting. Singapore is an ideal place to begin and already has many Organizations that support a diversity of causes.
A Non-profit Organization or NPO is also known as a Voluntary Welfare Organization in Singapore. Statistics from the Ministry of Culture, Community and Youth (MCCY) indicate a robust forecast for NPOs. As of 2019, there were 2281 registered charities and 626 Institutions of Public Character (IPC). With IPCs garnering SDG1,015 million in tax-deductible donations, the future for NPOs looks promising indeed.
If you’re keen to pursue your very own NPO dream, then this guide is the best place to start. We explain the nitty-gritty details of registration, approvals and offer some tips on growing your NPO. For more in-depth information, 3E Accounting is just a click away.
What is a Non-Profit Organization?
An interesting conundrum applies to non-profits – i.e., not all non-profit Organizations are charities, but all charities are non-profit Organizations. Mysteries aside, charities have a different legal structure and compliance requirement in comparison to NPOs. Further, NPOs existence is independent of the Government.
NPOs are legal entities that make profits or surplus from their activities but channel these towards the Organization’s cause. While they may operate in similar sectors or causes, NPOs are different from for-profit Organizations. The main distinction is that for-profits pay their members dividends or directly from the profits made. For-profits also have more stringent tax and compliance requirements.
NPOs can carry out private or public activities to raise funds for their cause. These activities can include public donation rallies, leasing properties, high profile fundraising events, charging membership fees, etc. The main characteristics of a Non-profit Organization include the following:
- All profits go towards the cause or back into the Organization.
- Members do not get any share of the profits or proceeds.
- Only employees of NPOs get a salary.
Why Start a Non-Profit Organization in Singapore?
Singapore is a global business hub and continues to position itself firmly as such. Its stable economic and political governance promotes investor confidence, making it an ideal place to start any business. World-class infrastructure and connectivity and a diverse talent pool further cement its international reputation for excellence. To top it all off, Singapore is also the ideal gateway to Southeast Asian markets.
Further, supportive policies and a competitive tax regime make Singapore ideal for NPOs. NPOs can get full tax exemption and apply to become IPCs. An IPC status is advantageous as IPC activities benefit society as a whole. This earns and entitles NPOs access to government grants, sponsorship, etc.
Legalities of a Non-Profit Organization in Singapore
A non-profit Organization is like any other business in Singapore and acquires its legitimacy from registration or incorporation. Choosing your business entity requires due diligence – start by checking out 3E Accounting’s guide to company registration in Singapore. It offers an excellent read on the incorporation process.
For NPOs, there are a couple of factors to bear in mind, especially regarding incorporation. Generally, an NPO in Singapore can operate without a legal structure. Most NPOs tend to do so until they get too large or successful to be sustainable as they are. A legal structure becomes mandatory when membership is of 10 or more persons.
Getting a legal structure has its benefits as it conveys a professional image to stakeholders. It enables your NPO to remain compliant, organise activities, benefit from tax exemptions, grants, etc. Overall, legally structuring your NPO imparts a degree of authenticity that will resonate well with potential donors.
Key Steps in Starting a Non-Profit Organization in Singapore
Starting a non-profit Organization does require a fair bit of work, and it’s easy to overlook essential requirements. Engaging professional help, especially to handle Singapore company incorporation and compliance, is a sensible move. This gives you peace of mind to focus on getting the NPO off the ground. 3E Accounting has a range of comprehensive solutions that are just the ticket.
In Singapore, NPOs can register as a society or charitable trust or incorporate as a company limited by guarantee. An NPO becomes a society by registering and filing its constitutional documents with the Registry of Societies (ROS). Societies can promote any cause to benefit anyone, e.g., saving a local chicken rice shop, etc. The Singapore Societies Act is the governing statute, and the following facts pertain to societies:
- Can be a club, association, partnership, or company.
- Must have ten or more members.
- The positions of President, Secretary and Treasurer are mandatory.
- Constitutional documents must clearly state its NPO status.
- Full tax exemption by applying for charity status.
- Highly suitable for volunteers and community-linked causes.
- Fast and inexpensive to register, but members remain open to liability.
- Lacks any formal structure.
NPOs can also register as charitable trusts by executing a trust deed and appointing a board of trustees. The Monetary Authority of Singapore (MAS) and the Singapore Trust Companies Act license and govern all trusts. Do take note of the following:
- Charitable trusts have formal structures and objectives.
- They are expensive and complex to set up.
- Charitable trusts tend to champion a purpose (e.g., save the rainforests) rather than focus on individuals. The trust deed limits accountability.
- Trustees have significant liabilities.
The third option for an NPO is to incorporate as a company limited by guarantee. Incorporation gives it a separate legal identity and limits its members’ liability. Members also undertake to contribute or ‘guarantee’ a fixed sum towards the company’s liabilities. It falls under the purview of the Singapore Companies Act, and considerations to be aware of include:
- Must incorporate with the Accounting and Corporate Regulatory Authority (ACRA).
- Must hold AGMs, file annual returns, etc.
- Has stringent financial reporting and public disclosure obligations.
- Can apply for charity status to enjoy full tax exemptions.
- Has no share capital or shareholders.
Having a corporate service provider by your side is going to be immensely helpful while starting a non-profit organization in Singapore.
The Approvals You Need
NPOs don’t need licencing and permits, but their activities to raise funds will need approvals. NPOs can raise funds via public collection, private events, auctions, street parties, raffles, bake sales, etc. However, to raise funds legitimately, NPOs need the relevant approvals for these activities, and these include, amongst others:
- Police Force – House to House and Street Collection Permit, Public Entertainment Ad-Hoc Licence for street fairs or parties, etc.
- Infocomm Media Development Authority (IMDA) – Radio or Television Service Licence, Film Exhibition Licence, etc.
- Food Agency (SFA) – Temporary Fair Permit License to serve or sell food and beverages.
- Building and Construction Authority (BCA) – Advertising or Signboard Licence.
If you want to get your NPO a charity or IPC status, you must register with the Charities Commission. It is important to note that this is a ‘status’, not a restructuring of your NPO. Your NPO will remain as a society, charitable trust or company limited by guarantee. IPC or charity status confers benefits, tax exemption, higher credibility and eligibility for donations and grants.
Any NPO with IPC or charity status must follow stringent compliance requirements, which includes amongst others:
- Holding AGMs, submitting annual reports and financial statements.
- Maintain proper financial and donation records.
- Independent control of the administration.
- Post relevant financial information online.
How to Fund and Grow Your Non-Profit Organization
NPOs need funding to realise their mission objectives, and growth is a part of this dynamic activity. Investing in the proper tools, technology and outsource partners is as essential as having an enthusiastic cadre of volunteers. Reliable and scalable CRMs, excellent web design, and budget-friendly online funding platforms are worth investing in.
Of course, social media and brand advertising play a very integral role in creating awareness. Actively promote your NPOs achievements, highlight donors, sponsors, and partners, as well as venues – testimonials are great as well. Consider partnering with social media management agencies to promote your NPO – society can only support something they know about.
As you engage actively in events and fund-raisers, it is important to adopt sensible strategies. You want to attract new donors and supporters but also keep the ones you already have. The best way to do this is to be transparent and inclusive, especially in how to fund disbursements occur. Always be genuine and forthcoming with those who support you – they are the lifeblood of your organization after all.
Doing your bit for charity or championing your favourite cause can inspire and bring communities together. Starting a Non-profit Organization in Singapore is one way to achieve your mission and make a difference. Nor do you have to go it alone as 3E Accounting is ready to assist with all start-up needs.
As an award-winning corporate service provider, 3E Accounting provides some of the most comprehensive incorporation packages available. All our solutions are customisable, innovative, and budget-friendly. You’ll also be working with global professionals who bring years of expertise to the table. Contact 3E Accounting today and start making a difference.