In addition to incorporating companies for non-profit purposes, the option of registering non-profit entity in Singapore is available for those who want to set up an organization for charitable activities.
The most common type of non-profit organization in Singapore is a Volunteer Welfare Organisation (VWO), a VWO is a type of organisation whose main purpose is to engage in social interest activities and one where commercial profit is not its main priority. While there is no specific legal definition of a VWO in Singapore, non-profit organisations can be typically registered as a society under the Societies Act, a company limited by guarantee under the Companies Act, or as a Trust (under a trust deed or under the Trustees Act).
When a VWO or non-profit organisation generates a profit in excess of its expenses (called a “surplus”), this money is retained by the entity for its future activities, unlike profit making companies which distributes its profits amongst its members.
In this article, we are discussing definitions, characteristics, advantages, and options in the context of registering non-profit entity in Singapore.
Characteristics of Volunteer Welfare Organisations in Singapore
There are certain characteristics that define the structure of VWO in Singapore.
In Singapore, VWOs:
- Are governed by the Board of Trustees, the Managing Committee or Governing Council, generally comprising of individuals who have specific experience of serving the organisation in a fiduciary capacity;
- Generate benefits for certain sectors of the society, outside the membership of the organisation
- Are prohibited from distributing any monetary surpluses or profit to their own members such as the directors and shareholders;
- May receive tax exemptions if successfully accorded a “Charity” status.
Benefits of registering non-profit entity in Singapore
Registering non-profit entities known as VWO in Singapore offers several benefits and advantages. Following are some of them:
- Ease of engagement in public interest activities
One of the main benefits of registering a VWO is that it is generally easier to engage in activities of public interest as a registered entity, which is otherwise difficult for individuals or groups.
- Receive benefits of various contractual agreements
Benefits can be enjoyed by a VWO in Singapore that is registered whoever if an organisation is not a registered entity, the individual persons concerned may have to accept contractual obligations/liabilities in their personal capacity.
- Fundraising becomes easy
Raising funds as a VWO in Singapore is so much easier since it would be almost impossible for you to raise funds from non-members and members of the public If your organization is not a registered entity.
- Ability to receive tax exemption
Tax exemptions are available for non-profit organizations in Singapore, as a non-registered entity cannot claim tax exemptions.
Options when registering non-profit entity in Singapore
In accordance with Singapore laws, there are 3 options on how a VWO in Singapore can be registered.
Here are the VWO registration options in Singapore:
- Register as a Society
Registration can be done at the Registry of Societies (ROS) website.
- Incorporate as a Company Limited by Guarantee
You are required to first apply for a new Company Name with ACRA, to be incorporated as Company Limited by Guarantee.
- Form a Trust (a Charitable Trust)
Under the Trustees Act, you may set up a trust for the purposes of the VWO’s activities. This needs a set of paper submission and completion of formalities that can be done with the assistance of a legal firm and a professional business advisory firm like Precursor can refer you to the appropriate legal party for help.