When incorporating a non-profit entity (NPE) in Singapore, being aware and having the right information is critical. Apart from saving you precious time, you also get to avoid things that can bring your dream crashing down in no time.
Non-profit organisations in Singapore are not established for the purpose of conducting business. Therefore, even if they make profits in their pursuits, such is not transferable among members. Consequently, the entity is qualified for full or income tax-exempt, depending on the type of registration done.
If you’re considering setting up a non-profit entity in Singapore, you must take note of these five things.
Five Things To Keep In Mind While Setting Up A Non-Profit Entity
Types Of Registration
Three types of registrations are possible for non-profit organisations in Singapore. The first and most preferred is registration as a public company limited by guarantee. This registration type requires at least three members, one of which has to be a director and one a secretary. The third person can be a board member, but the secretary and one other member must be residents in Singapore. A non-profit entity (NPE) registered as a public company enjoys the same rights as any traditional independent legal company, and its members’ liability is significantly low. Notwithstanding this, the law requires members of an NPE to guarantee a specific amount for any liability should such arise. Approval for this type of registration can take up to two weeks.
The second option is to register as a society. This registration type requires at least 10 members, with the President, Secretary, and Treasurer mandated to be residents of Singapore. While this registration is less cumbersome than the public company limited by guarantee, its downside is that members are not considered separate from the society’s liabilities because it does not operate as an independent legal entity. However, this form of registration is taken care of by the Registrar of Societies, and it takes only minutes to complete once all the required documents are available.
Registration as a charitable trust is another option for non-profit entities in Singapore. It is appropriate when an NPE has one founder but many trustees. It is the trustees who manage the entity’s funds and administrative affairs. Each trustee’s role is specified in the deed establishing that particular charitable trust. However, the major downside of this registration option is that it can be costly.
Sources Of Funding
After registration, the next important thing is the funding of the non-profit entity to achieve its aim; securing funds for a non-profit cause is competitive and complex because it cannot be marketed like an ordinary business entity. NPEs can only source funds through fundraising, grants, or appeals to the public. Each of these methods requires that you maintain decent accounting information that shows your credibility. If you’re fundraising, you must link it to a program as many donors won’t release funds for administrative or running costs. Again, you need a detailed proposal for each fundraising event you hold.
Many corporations also award grants to non-profit entities as part of their corporate social responsibilities. However, it often happens only towards the end of each year and is usually targeted at charitable programmes that meet the company’s own interests. Singaporeans are, however, generous and usually respond positively to door-to-door or street appeals to help a charitable cause. That said, an NPE that wants to raise funds this way must obtain a permit for such from the police.
Creating Awareness and Publicity
Getting people to know the social cause your new non-profit organisation is pursuing requires a strategic plan. It’s one thing to tick all the boxes for registration and funding; it’s another thing to meet the appropriate targets. Without adequate public awareness of your NPE, securing funds from firms and individuals can be tedious. That aside, if your target audience cannot relate to what your NPE stands for, your aim is as good as defeated.
Common ways to create awareness for your entity include erecting large billboards, hosting events and showcasing your social cause, building a website, and sending direct emails to people. Of course, social media also provides an excellent platform for getting people to become aware of your cause.
Limits And Privileges
Only non-profit entities that have attained the “Charity” status are entitled to tax exemption in Singapore. And to achieve this status, your NPE has to be indeed a charitable organisation committed to meeting the needs of the vulnerable. It must also be transparent in its dealings by making its financial transactions open for public inspection. Again, members of a non-profit entity in Singapore are not entitled to any surplus realised through activities and events of the entity. And to ensure that non-profit organisations (NPOs) adhere to this, they are to keep their financial books open. Similarly, all NPOs have to register within three months of their establishment.
The ability to implement a sustainable project of interest to the public is perhaps the most significant benefit for NPOs in Singapore. There are little to no bottlenecks once you are state-accredited. If your entity gets the status of a charity, it can also apply for the Institutions of a Public Character (IPC). In that case, you need not be restricted to certain demographics like religious faith or gender but can cast a wider net. That then qualifies you to receive tax-deductible donations from Singapore’s Chairman of Charity. IPC registration and approval take up to three hours.
Recruiting And Managing Volunteers
Non-profits organisations often need volunteers to execute large scale social programmes. Singaporeans prefer to volunteer extemporaneously instead of full time. But ad hoc volunteers are even more productive sometimes because of the limited time to participate. Motivating people to volunteer requires a detailed framework that usually involves conception, planning, implementation, and review. If people see that your organisation has a good framework, you can expect the turn out to be massive.
Professional bodies in Singapore can help you register your non-profit entity for a fee. Although you can do without them, they may be the way to go if you face any challenges registering your NPO. Also, it’s better to engage them as they would always be up to date about the process and statutory requirements for requiring an NPE.
The information shared in the article reflects the current realities that no non-profit entity seeking to get register can fail to know. Now that you know what needs to be done before registering let’s understand how to register an NPE in Singapore.