Institutions of a Public Character (IPCs) are non-profit or not-for-profit organisations.   Only those organisations which are conferred the approved IPC status are authorised to receive tax-deductible donations (i.e. donors are given tax-deduction for donations made to these organisations).   APPLICATION OF IPC STATUS   MEETING THE CONDITIONS TO QUALIFY FOR IPC STATUS   REQUIREMENTS   PUBLIC FUND-RAISING APPEALS   TAX-DEDUCTIBLE DONATIONS INFORMATION   LEGISLATIONS GOVERNING IPCs

MEETING THE CONDITIONS TO QUALIFY FOR IPC STATUS

An approved IPC must either be a charity or an institution or fund which is: 1.    a hospital not operated or conducted for profit; 2.    a public or benevolent institution not operated or conducted for profit; 3.    a public authority or society not operated or conducted for profit and which is engaged in research or other work connected with the causes, prevention or cure of disease in human beings, where the gift is for such activities; 4.    a university or a public fund for the establishment, maintenance, enlargement or improvement of a university; 5.    an educational institution not operated or conducted for profit, or a public fund for the establishment, maintenance, enlargement or improvement of such an educational institution; 6.    a public or private fund for the provision, establishment or endowment of a scholarship, exhibition or prize in a university, or an educational institution not operated or conducted for profit; 7.    a public fund established and maintained for the relief of distress among members of the public; 8.    a charitable institution or a body of persons or a trust established for charitable purposes only; or 9.    an organisation not operated or conducted primarily for profit which is engaged in or connected with the promotion of culture or the arts or with the promotion of sports.   For an institution/fund to be an IPC, its activities must be beneficial to the community in Singapore as a whole, and not confined to sectional interests or group of persons based on race, creed, belief or religion, unless otherwise approved by the Minister. These activities must meet its objectives under its governing instrument and the objectives of the Sector Administrator.   The institution/fund must also be administered by a group of independent governing board members and at least half of whom are citizens of Singapore.   Go to top

REQUIREMENTS

Issue of Tax Deduction Receipts   Some IPCs have been authorised to issue tax deduction receipts. Upon receiving the tax deductible donations, the IPCs should issue tax deduction receipts to the donors.   A tax deduction receipt should contain or incorporate the following information with effect from 1 Jan 2011:    (a)           This receipt is for your retention. This donation is tax deductible and the deduction will be automatically included in your tax assessment as you have provided your Tax Reference number (e.g. NRIC/FIN/UEN). You do not need to claim the deduction in your tax form.   (b)           State the name of the Sector Administrator, where applicable;   (c)           Be serially numbered; and   (d)           Be signed by either the treasurer of the IPC or by any person to whom such function is delegated by its governing board members.   IPCs can also use the electronic medium provided by the Inland Revenue Authority of Singapore (IRAS) to issue the tax deduction receipts.   Donations Records   IPCs have to maintain a record showing the particulars of every tax deductible donation received. The record should include the following items:   (a)               the receipt number (in numerical sequence); (b)               the name of the donor; (c)               the identification number, or corporate or business registration number, of the donor; (d)               the date on which the donation was received; (e)               the type of donation received; (f)                 the amount or value of the donation received; and (g)               any terms and conditions under which the donation was made.   These records must be kept for at least 5 years from the end of the year of assessment relating to the year in which the donation was received.   Auditors   IPCs are required to change auditors at least once every 5 years, whether to another auditor from the same auditing firm or company or to another auditor from a different auditing firm or company.   IPCs should seek the approval from the respective Sector Administrator on the auditors.   Click here to download a copy of the auditor’s declaration.    Submission of Annual Report and Statement of Accounts   IPCs are required to submit the following documents within 6 months from the end of the financial year to the respective Sector Administrator via the Charity Portal using the <annual report><submit> and <ipc status><update> functions:   (a)           the audited financial statements; click here to view the Charities Accounting Standard (CAS). An accounting template and explanatory notes is also available to assist charities in the preparation of your accounts according to the CAS.   (b)           the auditor’s report on the financial statements;   (c)           the auditor’s report on the use of donation moneys and whether such use is in accordance with the objectives of the IPC;   (d)           the IPC’s fund-raising and expenditure plans for the following financial year; and   (e)           the annual report.   In addition the following documents are also required to be submitted to the relevant authorities.   (f)            an annual return of donations  no later than the last day of January of each year to the respective Sector Administrators; and   (g)           details of every tax deductible donation received, specified by the Comptroller of Income Tax, no later than the last day of January of each year to the Inland Revenue Authority of Singapore (IRAS).   Posting of IPC’s Information Online   All IPCs are required to post their financial and non-financial information online on the Charity Portal.     Addition Requirements as Large IPCs   Large IPCs will have to comply with additional rules relating to governing board members and auditors.     A large IPC means an IPC with gross annual receipts in each financial year of not less than $10 million in the 2 financial years immediately preceding the current financial year of the charity.   These additional rules include:   Financial statements must comply with the Financial Reporting Standards; Having at least 10 governing board members; and Posting of annual reports and audited financial statements online i.e. on its own Internet website or other website as approved by the respective Sector Administrator. Go to top

PUBLIC FUND-RAISING APPEALS

All IPCs should comply with the following requirements when conducting public fund-raising appeals.   Duty to Donors : Any information provided to donors or to the general public is accurate and not misleading. Disclose the name of their organisation, intended use of funds raised (includes the cause and/or beneficiaries) and whether any commercial fund-raiser has been engaged in soliciting the donation. Information relating to donors is kept confidential. No information relating to a donor should be given to any other person without the consent of the donor. Arrangement to solicit donations must have adequate control measures and safeguards to ensure proper accountability and to prevent any loss or theft of donations. Use of Donations : All donations have to be used according to donors' intentions. If such intention is not specified, donation must be used according to the purpose communicated to the donor during solicitation. If such intention is not specified and no purpose is communicated to the donor during solicitation, the donation should be used in the following manners: tax deductible donations: donations may be used to fund any activity carried out by the IPC that is exclusively beneficial to the community in Singapore as a whole and is not confined to sectional interest; and that meets its objectives under its governing instruments and the objectives of the Sector Administrator. non-tax deductible donations: donations may be used to fund any activity carried out by the IPC that meets its objectives under its governing instruments and the objectives of the Sector Administrator. If a donation cannot be used, the IPC must refund the donation or use the donation as may be approved by the Commissioner of Charities or Sector Administrators. Maintenance of accounting records : They must maintain every accounting record for a minimum period of 5 years from the end of the financial year. 30/70 fund-raising rule : Total expenses incurred on public fund-raising appeals in a financial year must not exceed 30% of total donations collected through the public appeals in that year. (See section on “ The 30/70 Fund-Raising Efficiency Ratio ” below) Disclosure of information after fund-raising : For each public fund-raising exercise which raises $1 million or more, IPCs must disclose the total funds raised, fund-raising expenses incurred and planned use of funds raised. The disclosure is to be done online (on the IPC's website, the Sector Administrator's website or the Charity Portal) at the end of the financial year. IPCs must disclose in their financial statements the consolidated amount of donations received from the public fund-raising appeals in the financial year. For financial year ending on or after 1st April 2008 and subsequent financial years, the IPC has to disclose in its financial statements the total amount of sponsorships if, and only if, receipts or other documentary evidence are available. Use of commercial fund-raisers: Where commercial fund-raisers are engaged in any public fund-raising appeals, all donations received must be made directly to the IPCs who engaged the commercial fund-raisers. Any payment to commercial fund-raisers must be made by the IPCs separately. The 30/70 Fund-Raising Efficiency Ratio The fund-raising efficiency ratio is the total fund-raising expenses of an IPC to the total gross receipts from fund-raising and sponsorships of the IPC for that financial year. All IPCs are expected to keep their fund-raising efficiency ratio below 30%, which is commonly known as the 30/70 rule . The rule for computing the 30/70 fund-raising efficiency ratio has been revised and will apply to fund-raising events for IPCs whose financial year is ending on or after 1 April 2008 .   For the purpose of computing the 30/70 efficiency ratio, “fund-raising” refers to the receipt of money or other property from any member of the public, which is given in whole or in part for any charitable purposes, solicited or unsolicited. However, trading conducting by an IPC has been specifically excluded from the meaning of fund-raising for this purpose. Trading, for the purpose of computing the 30/70 efficiency ratio, refers to the provision of goods and services (donated or otherwise) in return for a payment, carried out on a regular basis with a view of making profits to fund the charitable causes. •  With the revision, “Sponsorship” in the fund-raising efficiency ratio will be re-defined to refer only to cash sponsorships that are conditioned upon the provision of direct or indirect commercial benefit to the sponsors and in-kind sponsorships where tax deduction receipts are issued . •  For fund-raising done via sale of merchandise, only the net proceeds i.e. the gross amount received from sale of merchandise less cost of relevant goods, will be treated as receipts . The cost of merchandise need not be included as part of fund-raising expenses . The Formula: (E + S) (R + S) x 100% < 30% "E” refers to the total expenses relating to fund-raising for the financial year, including — •  direct and material indirect expenses of any kind; and •  payments made to commercial fund-raisers engaged by the IPC, but excluding, in a case of the sale of goods by or on behalf of the IPC for fund-raising (and not trading), the cost of the goods sold; “R” refers to •  in a case of the sale of goods by or on behalf of the IPC for fund-raising (and not trading), the total receipts from such sale (after excluding only the cost of the goods sold); and •  the total gross receipts from any other fund-raising for that financial year. “S” refers to a) total amount of sponsorships in cash received by the IPC relating to fund-raising for that financial year that is conditioned upon the provision of direct or indirect commercial benefit to the sponsors; and b) the total cost or value of sponsored property, goods and services for which tax deduction receipts are issued relating to fund-raising for that financial year. Please refer to the FAQs section for examples of computing the 30/70 fund-raising efficiency ratio under the revised rule. Go to top