A non-profit organization is an entity focused on participating in social welfare activities and not driven primarily by profit-making. The most common type in Singapore is the Volunteer Welfare Organization (VWO) which must register with the Accounting and Corporate Regulatory Authority (ACRA) to operate. Although there is no official definition of a VWO in Singapore, non-profit organizations are typically registered as a society under the Societies Act, a non-profit company under the Singapore Companies Act, or as a trust under a trust deed or the Trustees Act.
Qualities of Volunteer Welfare Organisations
Non-profit organizations are characterized not only by their religious, charitable, or welfare activities, but also by proper representation through a governing committee or board and a commitment to providing voluntary social welfare services for the benefit of society. These organizations can encompass a range of areas such as religion, financial education, animal welfare, support for female migrant workers and children, education, public healthcare, and other community service programs.
To be registered as a non-profit organization, a voluntary welfare organization must have the following qualities:
- Represented by a Board of Trustees, Managing Committee, or Governing Council made up of individuals with relevant expertise who serve as stewards;
- Providing benefits to specific sections of society, and prohibited from distributing any surplus or profits to their own members such as executives or investors;
- Eligible for tax exemptions if granted Philanthropy or Charity status. Organizations established solely for descent purposes and carrying out activities to achieve these goals may apply to be registered as foundations.
Enlistment of a non-profit association eg. VWOs
The primary benefits of registering a VWO include the ease of participating in social welfare activities as a recognized entity, and the ability to enter legally binding agreements (e.g. leases, purchases) that directly benefit the organization. Registered VWOs can benefit from such arrangements. Without registration, individual members may have to accept legal obligations and liabilities in their personal capacity.
Additionally, fundraising abilities are limited for unregistered VWOs as it would be nearly impossible to secure funding from non-individuals and members of the public. Unregistered VWOs also do not have access to tax or charge exemptions.
Registering your VWO as a Public Company Limited by Guarantee
A Singapore organization established as a non-profit company operates under non-profit activities related to national or public interests, such as promoting art and charitable causes, among others. It has no share capital and members instead of shareholders who pledge to contribute a fixed amount towards the organization’s liabilities in the event of winding up. The amount set aside as security can be as low as S$1.
The name of a non-profit company in Singapore must include the word “Limited”. If you wish to remove the “Limited” label from the organization’s name after incorporation, one requirement is that the organization does not distribute profits.
Registering your non-profit association as a Society
A “Society” is defined as a club, association, organization, or group of at least 10 individuals, regardless of its nature or purpose, not registered under any other law. Societies are suitable for participatory or volunteer-based groups, especially smaller groups that are not heavily reliant on donations and external funding.
Enlistment of a Charitable Trust
A trust is an arrangement documented in a trust deed, where a property owner transfers assets to a board of trustees to manage and distribute them to designated individuals (beneficiaries) for a specific purpose. Charitable trusts are a type of direct trust that support a cause rather than benefiting specific individuals.
To establish a charitable trust in Singapore, an individual or group sets aside assets for a philanthropic purpose in a structured and long-term manner. The trustees’ primary role is to manage and invest the funds and distribute the income to the beneficiaries for their well-being.
Applying for the “Philanthropy” status
After your VWO (whether a society, company limited by guarantee or trust) is registered and acquires legal status in Singapore, it may be eligible for “charitable” status from the Commissioner of Charities if it meets the criteria. All charities in Singapore fall under the purview of the Singapore Charities Act and must be registered with the Commissioner of Charities within 3 months of establishment, free of charge. The processing time usually takes around 3 months.
An IPC is a non-profit organization recognized as a “charity” by the Commissioner of Charities. Its activities serve the general community in Singapore and are not limited to specific groups based on ethnicity, beliefs, or religion/faith.
IPCs are eligible for tax-deductible donations and most are charities, although some may be sports organizations. It takes about 2 months to apply for IPC status.
Institutions of a Public Character (IPC) status
An IPC is a non-profit organization recognized as a “charity” by the Commissioner of Charities. Its activities serve the general community in Singapore and are not limited to specific groups based on ethnicity, beliefs, or religion/faith.
IPCs are eligible for tax-deductible donations and most are charities, although some may be sports organizations. It takes about 2 months to apply for IPC status.
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