Ever heard of a Non-profit Organisation? According to the MSG Management study Guide (2021), by definition, non-profit organisations do not have a definite structure and they are usually run by volunteers and most of the time, hierarchies are not involved. However, non-profits still require formal boards, management structures and financial control.
As of today, there is an estimated number of 140 Non-profit Organisations in Singapore. While this number does not seem like much, these organisations are important in creating a healthy ecosystem in their communities.
Want to start a Non-profit Organisation but do not know which type your organisation falls under? There are many different types of Non-profit Organisations in Singapore and they have different legal requirements and they all operate differently. Some Non-profit Organisations you might have heard of are Public Company Limited by Guarantee (CLGs), Societies and Charitable Trusts. We will explain them in-depth so that you can have a deeper understanding.
CLGs
Public Company Limited by Guarantee, better known as CLGs, are usually registered with ACRA and are governed by the Singapore Companies Act.
A CLG is an organisation that carries out non-profit activities that have some basis of national or public interest, such as the promotion of art or charities etc. It does not have a share capital and it is an organisation that usually consists of members rather than shareholders. These members contribute a predetermined sum to the liabilities of the company. This sum can be as low as S$1. A CLG needs to include the word, “Limited,” as a suffix to its name at time of incorporation. All in all, a CLG is a legal entity existing in its own right and is distinct from the individuals involved in it. According to the Singapore company Incorporation, Singapore is an ideal place for non-profit organisations to headquarter itself due to its global connectivity, pro-business environment and multi-racial community. Some examples of CLGs that can be found in Singapore include The Art House and the National University of Singapore.
Now, what is required for you to start a CLG? Firstly, a CLG needs to have at least 1 director, 1 member and a qualified company secretary. You must draft a Memorandum as well as the Articles of Association to set out the objectives of the organisation. Once the organisation is formed, your CLG needs to audit accounts, hold General Meetings and file its Annual Returns with ACRA yearly.
Societies
Now onto Societies. Societies are registered with the Registrar of Societies (ROS) and are governed by the Singapore Societies Act. It usually takes around two months for the ROS to process an application.
Societies are different from CLGs and Charitable Trusts. Societies are defined as a club, company, partnership or association of 10 or more people. It is also not already registered under any other law. Societies are suitable for membership or volunteer based groups, especially smaller groups with strong community links and are not heavily dependent on donations and external funding. When the society gets sued, the members involved will all be liable. The Singapore Children’s Society and the Singapore International Foundation are well known societies here in Singapore.
You will need a minimum of 10 people to start a society. It is mandatory to have 3 key office bearers such as the President, Secretary and Treasurer. Accounts need to be audited annually and you must also file Annual Returns with the Registrar of Societies. A Constitution that governs the society also needs to be drafted. According to Law society Pro Bono services (2021), the constitution sets out:
- The goals and objectives of the society in which their funds may be applied
- The qualifications for membership and the holdings of an office
- The method of appointment or election to an office
- The rules that will be used to govern the society
- Forming of the committees to conduct the final approval of programmes and projects
- The preparation of by-laws that will not go against the Constitution for conducting the regular administration of the society
- The method any of the above matters can be modified
Charitable Trusts
Last but not least, Charitable Trusts. Charitable Trusts are regulated under the Trustees Act (Cap. 337) under the supervision of the Ministry of Law. Animal Concerns Research & Educational Society (ACRES) and the Salvation Army are examples of Charitable Trusts.
A Charitable Trust can be set up by anyone who wants to set aside assets or income for charitable purposes, through a structured and ongoing approach to giving; for example a scholarship or bursary. It is usually administered by a group of people known as Trustees. This is for the benefit of other people known as beneficiaries for a stated objective. Charitable Trusts are a type of purpose trust in that it promotes a purpose and does not primarily benefit specific individuals.According to Law Society Pro Bono Services (2021), a Charitable Trust is useful when the party would like to set aside assets for charitable causes and wants these assets to be used in a structured manner. It is most useful when the charity’s main purpose and goal is to disburse, invest and hold funds.
In order to start a Charitable Trust, you will need to have a board of trustees as well as have a trust deed. A trust deed is the Constitution of the Charitable Trust, which sets out the framework within which the trustees must operate.
Different Non-profit Organisations have different purposes and with this article we hope that you got a better understanding of the different types of Non-profit Organisations in Singapore and that it will be easier for you to identify the organisation that will be the most ideal for you.
| Public Company Limited by Guarantee (CLG) | Society | Charitable Trust |
Legal RequirementsAt least 1 director, 1 member and a qualified Company SecretaryMust draft a Memorandum & Articles of Association setting out the objectives of organisationMust audit accounts annuallyMust hold Annual General MeetingsMust file its Annual Returns with ACRA | Legal RequirementsA minimum of 10 persons are required to form a societyMandatory 3 key office bearers, i.e. President, Secretary and TreasurerMust have a Constitution that governs the societyMust audit accounts annuallyMust file Annual Returns with Registrar of Societies. Must draft a Constitution that governs the society | Legal Requirements Must have a board of trusteesMust have a trust deed – the Constitution of the charitable trust, which sets out the framework within which the trustees must operate |
| CLG are registered with ACRA and governed by the Singapore Companies Act. | Societies are registered with the Registrar of Societies (ROS) and are governed by the Singapore Societies Act. | Charitable Trusts are regulated under the Trustees Act (Cap. 337) under the supervision of the Ministry of Law. |
| A CLG is –One which carries out non-profit making activities that have some basis of national or public interest, such as for promoting art, charity, etcOne with no share capitalOne with members, rather than shareholders, undertaking to contribute a predetermined sum to the liabilities of the company, which could be as low as S$1One that must include “Limited” as suffix to its name at the time of incorporationOne that is a legal entity existing in its own right and distinct from the individuals involved in it | A Society is – Defined as a club, company, partnership or association of 10 or more personsNot already registered under any other lawSuitable for membership or volunteer based groups, especially smaller groups with strong community links and not heavily dependent on donations and external funding | A Charitable Trust is – One that can be set up by anyone who wants to set aside assets or income for charitable purposes, through a structured and ongoing approach to giving; for example a scholarship or bursaryAdministered by a group of people known as Trustees for the benefit of other people known as beneficiaries for a stated objectiveA type of purpose trust in that it promotes a purpose and does not primarily benefit specific individuals |
