Date Published: 26 July 2022
Why talk about Charity?
Due to the increase in economic influence and the growing wealth in Singapore, corporate and personal philanthropy has expanded, gained prominence and increasing traction in recent years. For example, in 2021, the digital giving platform Giving.sg received a record S$95.5 million in donations – the largest sum collected since it was started in 2010. The S$95.5 million represents a 2% increase from 2020 and amounts to more than double the $35.8 million collected in pre-pandemic 2019.
With such a growing prominence of and increasing interest in philanthropy in Singapore, we believe that there are many persons who may be interested in how a charity may be set up in Singapore. In this article, we will be looking into the following topics with regard to charities in Singapore:-
(1) legal definition of a charity;
(2) the advancement of citizenship or community development;
(3) the advancement of arts, heritage or science;
(4) the advancement of environmental protection or improvement;
(5) the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantages;
(6) the advancement of animal welfare; and
(7) the advancement of sports, where the sport advances health through physical skill and exertion.
In addition, it should be noted that the purposes of the intended charity must be beneficial wholly or substantially to the community in Singapore.
Setting up of a Charity
An institution which intends to register as a charity should clearly set out in its governing instrument any one or more of the charitable purposes mentioned above as the institution’s purpose. The process of setting up a charity may be divided into two (2) major phases, namely:-
(1) the setting up of the vehicle or institution through which the charity will be established; and
(2) the registration of such vehicle or institution as a charity,
each of which will be briefly discussed in this article.
Setting up of an appropriate vehicle
A charity in Singapore may be established as a society registered under the Societies Act 1966 (the “Societies Act”); a public company limited by guarantee under the Companies Act 1967 (the “Companies Act”); or a trust under a trust deed in compliance with the Trustees Act 1967 (the “Trustees Act”).
(1) Society registered under the Societies Act
A society may be formed by a group of ten or more persons (usually like-minded people) coming together to pursue common interests in accordance with the objectives and rules of their constitution. An application to register a society is made to the Registrar of Societies under the Societies Act. A society is essentially self-governing as its members will typically form a management committee and elect from among themselves the members of the committee to look after its day-to-day affairs.
The Societies Act and regulations issued thereunder prescribe the requirements for the registration of a society. Registration of a society with the Registrar of Societies is mandatory, and it takes approximately 2 months to process an application. The main disadvantage of a society is that it is not a body corporate and does not have a separate legal identity. The members of the society may be legally liable for the actions of the society and bound by contracts entered into by the society and third parties.
(2) Company limited by guarantee under the Companies Act
A company limited by guarantee (“guarantee company”) may be formed by at least one person at the time of incorporation. It does not have a share capital or shareholders. Instead, each member provides a guarantee that he/she will contribute a specific, nominal sum of money if the company is wound up. It is not possible to establish a guarantee company as a private company and it is subject to compliance requirements applicable to public companies under the Companies Act.
Guarantee companies are generally set up to carry out non-profit making activities that have some basis of national or public interest. This, however does not preclude such companies from engaging in profit-making activities. Some charities choose to incorporate as a company limited by guarantee due to the benefits that such a legal entity provides. These benefits include perpetual succession, and the ability to be considered a separate legal entity distinct from its members, which provides further advantages such as being able to hold property under its own name and allowing members to enjoy limited liability.
Guarantee companies are registered with the Accounting and Regulatory Authority of Singapore.
(3) Trust under a trust deed, in compliance with the Trustees Act
In general, a trust is not in itself a legal entity, but a legal concept in which one person holds legal title to property, subject to an obligation to keep or use the property for the benefit of another or, in the case of a charitable trust, for a specific charitable purpose. A charitable trust can be created by a trust deed and establishing a fund under the care of trustee(s) to hold the fund in trust for the charitable purposes as specified in the trust deed. It is worthy to note that while charitable trusts will have trustee(s) to administer the trust, it does not have direct individual beneficiaries.
To meet the requirements for registration under the Charities Act, the governing instrument of a charity (i.e., the constitution if it is a company or a society or trust deed if it is established as a trust) should also include provisions pertaining to the objectives of establishing the charity (which must be exclusively for charitable purposes), powers of the management, quorum and other requirements for meetings of trustees/members, amendments to the governing instrument and dissolution of the charity.
In particular, the conditions for registration under the Charities (Registration of Charities) Regulations are that the:-
(1) purposes or objects of the organisation must be exclusively charitable;
(2) organisation must have at least 3 governing board members, of whom at least 2 must be Singapore citizens or permanent residents; and
(3) purposes or objects of the organisation must be beneficial wholly or substantially to the community in Singapore.
Registering as Charity
The general rule is that any institution set up for charitable purposes must apply to be registered as a charity with the Commissioner of Charities within three months of being established. However, the following charitable institutions are exempt from such registration requirement:-
(1) any university or educational institution, hospital or religious body established by an Act of Parliament; and
(2) any other institution which the Minister by order declares to be an exempt charity.
The founders are responsible for applying for registration as a charity of their respective charitable institutions, and for supplying the documents and information required therefor. An application for registration must be made within three months after the establishment of the charitable institution or such longer period as the Commissioner may allow, and submitted to the Commissioner in the prescribed form. The application and all documentation must be submitted online via the Charity Portal (www.charities.gov.sg), which requires a valid SingPass Account.
The following documents are required to be submitted together with the application:-
(1) a certified true copy of the relevant governing instrument;
(2) certified statements of accounts for the last three financial years (if available). The details of proposed charitable activities, proposed fund-raising activities and all fund disbursement plans for the two-year period following registration are also required; and
(3) particulars of all charity trustees (name, passport or National Registration Identity Card (NRIC) number, address, date of appointment and the position of the office held in the committee).
Each trustee (if a trust is utilised), member of the management committee (if a society is utilised) and director (if a guarantee company is utilised) must provide his/her name, NRIC number, address, date of appointment and position on the trust’s governing body, management committee or board, as the case may be.
When the application has been received by the Commissioner, the governing instrument will be examined for the purpose of determining whether the institution’s objects and activities are exclusively charitable and that it meets the minimum requirements for registration as a charity. If the Commissioner is satisfied in this regard, a letter will be sent to the applicant informing it of its registration as a charity and its corresponding registration number. The estimated processing time for applications for charity status is 90 days.
There is more than meets the eye with the setting up and running of a charity. Other important topics pertaining to charities include the registration process of an institution of a public character (“IPC”) , the roles of charity trustees, governance structures and the accounting and reporting obligations as well as the tax aspects of charities and IPCs. Moving forward, we at CNPLaw LLP stand ready to provide assistance on issues relating to charities in Singapore.
Disclaimer: This update is provided to you for general information and should not be relied upon as legal advice. The editor and the contributing authors do not guarantee the accuracy of the contents and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents.
Our private clients practice works closely with our corporate, immigration, real estate and tax practices to provide a comprehensive service to our individual clients whose personal legal needs range from will making to estate planning, wealth preservation and philanthropy. As confidentiality is of utmost importance to many of our private clients, we have stringent internal processes in place to ensure that a high level of confidentiality is maintained at all times.
Our clients recognise that wealth does not have to be the be all and end all of life and that there is value in giving.
Our private clients practice supports them in realising their philanthropic aspirations by advising on the suitable legal form of the charity (e.g. a charitable trust, a society or a company limited by guarantee), assisting with the establishment and registration of the charity (including as an institution of public character, where applicable) and preparing the relevant documentation to record our clients’ intentions.