Are you thinking of doing something meaningful with your resources? Do you have a cause that you are passionate to champion for? If you would like to raise funds for a charitable cause or to create an entity that can grow to serve a forgotten part of society.
The legal challenges your Charity in Singapore may face not only until you get to work. Before your Charity starts its work, some major legal decisions need to be made. One of the most critical choices it will ever have to make is how your Charity in Singapore chooses to set up or organize itself.
You might be thinking of how to start a Charity in Singapore and what are the requirements to built it. We have highlighted some of the various matters to take note of before you commence on your noble cause.
Conditions for Registration
Charities are governed by the Charities (Registration of Charities) Regulations, organizations will have to meet the below conditions for registration:
- Purposes or objects of the organization must be exclusively charitable;
- Organization must have at least 3 governing board members, of whom at least two must be Singapore citizens or permanent residents; and
- Purposes or objects of the organization must be beneficial wholly or substantially to the community in Singapore.
What is IPC Status and how to qualify for it
In order for the donors to be able to claim tax deduction for their contributions to the Charity, the Charity in Singapore that you are about to built will need to be registered as a Institute of Public Character (IPC). Being an IPC will definitely help the Charity in its effort to raise funds but the criteria will be stricter than just being registered as a Charity.
Before the organization can apply for IPC status, the organization has to first register as a Charity or be an exempt charity. The additional criteria to qualify for IPC status are that
- The activities of an IPC must be beneficial to the community as a whole and not confined to sectional interests or group of persons based on race, creed, belief of religion
- The activities must meet the IPC’s objectives under its governing instruments and the objectives of its Sector Administrator.
- The IPC must also have a governing board of which at least half of the members are independent and citizens of Singapore.
Types of Structure that Charities often use in Singapore
In the text given below, you are going to know the essential tips to follow while you are starting a charity in Singapore. An organization must first decide on its legal structure before applying for registration as a Charity.
The 3 main types of legal structures for charities are:
- A society under the Registry of Societies (ROS): or
- A company limited by guarantee (CLG) or
- A charitable trust
The various structures have their own required reporting frameworks and regulatory requirements. Hence, it is important to understand what are the obligations under each of the options before deciding on the legal structure for charities.
Governing Board Members
Once you have decided on the type of structure, you will need to decide on who will be the persons appointed as members of the board of the Charity. The governing board members form the body which manages the charity. Together, they are responsible for the governance of the charity and to prudently manage in achieving the charitable objects for which it has been set up.
Governing boards of charities are to ensure that persons appointed to be their members must :
- Be at least 18 years old;
- Not be disqualified as a company director;
- Not have been convicted of an offence involving dishonesty or terrorism, terrorism financing or money laundering;
- Not be an undischarged bankrupt; and
- Not have been removed by the Commissioner from any capacity following an inquiry.
Selecting the Name
After deciding on the people to be appointed as members of the board, you will also need to come up with a name for the Charity. The name has to be in English and cannot be in a foreign language. There are also some restrictions on use of specific words:
- Use of the word “Foundation” is only allowed if the organization is self-funded by an individual, family or for-profit company to aid the organisation’s intended charitable purposes; or financed by an endowment
- Use of the word “International” is only allowed if the organisation has objects and activities serving beyond local geographical boundaries.
- The word “Singapore” cannot be in front of the name of the organisation, for example, Singapore XYZ Charity will not qualify. Instead, the word “Singapore” or its abbreviation can only be used within brackets at the end of the charity’s name, e.g. XYZ Charity (Singapore) to indicate the charity’s place of registration.
Drafting the Governing Instrument
The governing instrument is a piece of document which states what are the objectives for the Charity and how the Charity will be managed. Depending on the legal structure that was chosen, the governing instruments will be different:
- Constitutions (for charities set up as Societies)
- Memorandum and Articles of Association (for charities set as Companies Limited by Guarantee)
- Trust instrument (for charities set up as Trusts)
However, despite the different form of the different instruments, there are essential provisions that should be included for a Charity. We will highlight three major ones.
- Objectives of Establishing the Charity
The objects must be only charitable, there cannot be profit making elements and must also be clearly and concisely stated. Any power to carry out activities in support of the main objectives should be provided under an incidental clause.
There should be minimum 3 governing board members. These include Board Members, Management Committee Members, Directors and Trustees. The duties and terms of office of the governing board members should be specified.
The Commissioner of Charities (COC) or the respective Sector Administrators (SAs) should be notified of any changes in the governing board members.
The minimum number of governing board members present to attend any meetings should be clearly stated. Otherwise the meeting will not be valid. In cases where the charity is incorporated as a company or set up by trust deeds, the minimum number to form a quorum should be three.
For charities set up as societies, the quorum at the Annual General Meeting should be 25% of the total voting membership or 30 voting members, whichever is the lesser. The quorum at the Committee Meeting should be at least 50% of the governing board members.
The governing instrument should also include the following:
- Conflict of Interest Policy
- Trustee of Immovable Property (for charities incorporated in any form other than as Companies Limited by Guarantee)
- Amendments to Governing Instrument
Once, the above matters have been settled, it is time for you to proceed with appointing a professional to set up your desired legal structure for you. The Charity will still be pending approval from the Commission of Charities (COC) after submission.
If you have any enquiries, please feel free to drop us a note.