How to Establish a Non-Profit Organization in Singapore

A non-profit organization (NPO) in Singapore is a legally formed group that focuses on activities for public or private interest without making commercial profit. If NPOs make a profit, known as a surplus, they keep it for future activities instead of distributing it to members like profit making companies do. In Singapore, NPOs are often called Voluntary Welfare Organizations (VWOs) and can be registered as a public company limited by guarantee, a society, or a charitable trust. Let's learn further on how to establish a non-profit organization in Singapore.

Key Features of Non-Profit Organizations in Singapore:

Benefits of Registering Your Non-Profit Organization

While it's not required to register your NPO in Singapore, doing so makes it much easier to conduct meaningful and sustainable activities. Here’s why:

Types of Non-Profit Entities in Singapore

When registering your non-profit organization in Singapore, you can choose from three types of entities:

  1. Public Company Limited by Guarantee
  2. Society
  3. Charitable Trust

The best type for your non-profit depends on factors like size, complexity, potential legal liabilities, and fundraising plans. To decide which one is right for you, review the details of each type below and choose the one that fits your needs the best.

Registering as a Public Company Limited by Guarantee

Forming a non-profit as a company limited by guarantee has several advantages. It creates a separate legal entity and limits the liability of its members. This type of structure is advanced and highly desirable for non-profits. These companies usually focus on charitable, religious, scientific, or artistic activities and do not engage in trading.

What is a Company Limited by Guarantee?

Pros and Cons of Public Company Limited by Guarantee:

Tax exemptions

Associations registered as company limited by guarantee in Singapore are exempt from income tax if surplus funds are from members’ contributions; or if over 50% of gross revenue receipts are from members and are not tax-deductible for members. For full tax exemption, the company must apply for Charity status after its registration.

Key Facts Simplified:

Registering as a Society

A society is like a club, group, or association with at least 10 members. It's a good choice for smaller groups with strong community ties and not heavily reliant on donations or external funding.

Advantages and disadvantages:

Statutory Requirements:

Registering as a Charitable Trust:

A trust is a written agreement, known as the trust deed, where the owner or founder transfers property or funds to a group of people called trustees. These trustees manage the assets for the benefit of others, known as beneficiaries, to achieve a specific goal. A charitable trust is a type of trust that serves a purpose and aims to benefit the community rather than specific individuals.

Who Should Register a Charitable Trust?

Pros and Cons

Statutory Requirements

Trusts are licensed by the Monetary Authority of Singapore (MAS) and follow the Singapore Trust Companies Act. Consider seeking professional advice for registering a Charitable Trust in Singapore.

Obtaining Charity Status

Once your non-profit entity (society, company limited by guarantee, trust) is registered and legally recognized in Singapore, you can apply for charitable status. The Commissioner of Charities will assess whether your organization's objectives align with charitable purposes when reviewing the application.

Being recognized as a charity is about your status, not just your organizational setup. Charity status offers several advantages:

Charitable purposes fall into four main categories:

Every charity in Singapore follows the rules of the Singapore Charities Act and needs to register with the Commissioner of Charities within three months of starting. It usually takes around three months to complete the registration process, and there is no fee for registering under this Act.

Statutory compliance

Once a charity obtains charity status, it must follow these rules:

Statutory compliance

Once a charity obtains charity status, it must follow these rules:

Tax exemptions

All registered charities in Singapore now automatically qualify for tax exemption, aiming to develop Singapore as a hub for philanthropy.

Applying for Institutions of a Public Character (IPC) status

An approved IPC is a non-profit organization (NPO) with charity status that benefits the entire community in Singapore. It's not limited to specific groups based on race, religion, or other beliefs. IPCs are authorized by the Commissioner of Charities to receive donations that qualify for tax deductions. Most IPCs are charities, while others are sports associations. The application process for IPC status typically takes around two months

Who can apply for IPC status?

Meeting Statutory Requirements

After obtaining IPC status, all IPCs must follow these rules:

Tax Deductible Donations

Only donations to charities approved as Institutions of a Public Character (IPC) are tax deductible. This means donors can claim a tax deduction for their donations to these organizations. Not all registered charities have IPC status, so donations to charities without IPC status are not tax deductible.

The following types of donations usually qualify for a tax deduction:

Donations for "foreign charitable purposes" are not tax deductible, even if made to an approved IPC.

Professional Help

Seeking professional assistance is advisable if you're interested in starting a non-profit organization in Singapore. A professional services firm can help you with the registration process and ongoing compliance requirements.

Clooud Consulting specializes in setting up non-profit organizations and foundations with various philanthropic objectives. Whether it's humanitarian work, conservation efforts, supporting underprivileged families, or addressing environmental issues, we have the expertise to assist you. Contact us for a quote.