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A public consultation exercise on the implementation
details for the Budget 2007 changes to promote philanthropy
was held from 18 July 2007 to 17 August 2007. Members
of the public were invited to give their views on the
following:
- the proposed guidelines to distinguish between
private donations and donations raised from the
public, so as to facilitate the waiver of the 80:20
fund-raising rule for private donations; and
- the proposed conditions to be applied to qualifying
grantmaking philanthropic organizations that are
allowed to issue double tax deduction (DTD) receipts
to donors for donations that are subsequently channeled
to local IPCs.
2 The consultation paper on implementation details
for the Budget 2007 changes to promote philanthropy
may be downloaded here.
3 A total of 23 responses were received. 6 were from
individuals while 17 were from organizations. We would
like to thank all who have given us their feedback.
4 A summary of the key comments received, together
with our responses, is shown in this table. The comments
pertained to the following key areas:
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Waiver
of 80: 20 fund-raising rule for private donations
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Remove 80:20 fund-raising rule for foreign
charitable causes for public donations; |
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High administrative cost of obtaining the
permit for fund-raising for foreign charitable
causes; |
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c. |
Clarifications on the definition of private
and public donations; |
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d. |
Avoid over-prescriptive guidelines for public
and private donations; |
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Grant
DTD for donations to grantmakers which are subsequently
channelled to local IPCs |
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e. |
Requirement for grantmakers that allow DTD
at the point of donation to disburse the monies
to IPCs within 2 years; |
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f. |
Requirement for grantmakers that allow DTD
at the point of disbursement to distribute a minimum
percentage of its funds annually; |
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g. |
Tracking of donations until they are disbursed
to an IPC; |
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h. |
Safeguards against abuse by grantmakers; and |
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i. |
Allowing DTD for in-kind donations made to
IPCs through grantmakers. |
a. Remove 80:20 fund-raising
rule for foreign charitable causes for public
donations |
While most respondents supported
the relaxation of the 80:20 fund-raising rule
for foreign charitable causes for private donations,
many also felt that this should be further extended
to public donations. The reasons cited were:
- It is unnecessarily restrictive as the
public interest can be safeguarded via the
requirement for a permit;
- Raising awareness will be more effective
in preventing fraud; and
- Reputable local and international charities
which raise donations for meaningful causes
like relief and development work in low-income
developing countries should not be subject
to the 80:20 fund-raising rule as this will
show Singapore’s “heart”.
COC’s Response:
- The 80:20 rule is retained for public donations
because of the fundamental policy premise
that charity should begin at home and monies
raised from the general public should be applied
more to local charitable causes than foreign
charitable causes.
- Public vigilance is a good way to detect
and prevent fraud. We encourage members of
the public to alert the authorities if there
are suspect fund-raising practices.
- The COC’s office has waived the 80:20
rule for fund-raising appeals to assist in
overseas disaster-relief work. However, charity
should begin at home and any fund-raising
appeal targeted at the general public, unless
for major disaster relief work, would be subject
to the 80:20 rule. The 80:20 rule should not
prevent Singaporeans who wish to donate to
worthy foreign charitable causes from doing
so. In fact, many Singaporeans today are already
contributing their time, talent and resources
to overseas charitable causes.
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b. High administrative
cost of obtaining the permit for fund-raising
for foreign charitable causes |
A number of respondents noted
that the extent of the burden imposed by the requirement
for the permit depended on how onerous the application
process was. They suggested that a once-off COC
permit could be granted such that applicants would
have to apply for it only once over a specified
period.
COC’s Response:
Noted. COC’s office would work with relevant
agencies to explore the suggestion for a renewable
annual permit.
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c. Clarifications on the
definition of private and public donations |
A number of respondents sought
clarifications on the following:
- Whether privately-owned money would be
subject to the 80:20 fund-raising rule;
- What the definition of “direct”
relationship is. For example, if a fund-raiser
knows a person within a particular category
and that person introduces the fund-raiser
to other persons within that category, is
the relationship with the “other persons”
then considered to be a “direct relationship”;
- Whether bequeathed assets were categorized
as fund-raising; and
- Whether appeals via text messages were
considered public fund-raising.
COC’s Response:
- Privately-owned money will not be subject
to the 80:20 fund-raising rule unless the
money is solicited under a fund-raising appeal
for foreign charitable causes targeted at
the general public. If the funds (public or
private) are donated without having been solicited,
then a permit is not required.
- COC has amended the word “direct”
to “defined” in the guidelines.
Defined relationships can include acquaintances
made through first-degree (or higher) introductions.
- Bequeathed assets are private assets that
can be donated to a charitable or philanthropic
cause. This would not constitute fund-raising
as long as the assets are bequeathed according
to the individual’s will. Hence, any
bequests to an organization for foreign charitable
purposes do not require a fund-raising permit
unless the organization intends to solicit
such bequests as part of their fund-raising
appeal.
- Mass fund-raising appeal via sms-es would
also constitute public fund-raising.
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d. Avoid over-prescriptive
guidelines for public and private donations |
Some respondents
felt that the definitions of public and private
donations were too broad, and would create uncertainty
over how to classify fund-raising activities in
the future. However, other respondents asked that
the definitions not be too narrow, so to minimize
administrative red-tape and control. There was
no clear consensus on how defined the definitions
should be.
COC’s Response:
The guidelines have been kept broad so as not
to be overly prescriptive and to ensure regulatory
flexibility in dealing with more innovative forms
of fund-raising. Any attempt to narrowly define
such terms would be subjective at best, and hence
guidelines should be kept as they are and refined
along the way where necessary.
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e. Requirement
for grantmakers that allow DTD at the point of
donation to disburse the monies to IPCs within
2 years |
A majority of
respondents felt that donors would prefer DTD
to be granted at the point of donation, but that
the requirement for the monies to be disbursed
within 2 years was too restrictive. The reasons
given were that:
- The limit of 2 years did not encourage
long-term sustainable giving;
- There may be insufficient worthy projects
during the 2 year period; and
- If the donations were large, it may not
be advisable to require that all of it be
disbursed within 2 years.
MOF’s Response:
The intention of requiring the monies to be disbursed
within a specified timeframe was to ensure that
the donations are properly channeled to the intended
beneficiaries, and that there is no hoarding of
funds. Nevertheless, MOF acknowledges the feedback
that the 2 year timeframe may be insufficient
to ensure effective and sustainable use of the
donations, particularly if the amount of donations
is large. MOF has decided to increase the timeframe
to 5 years. Grantmakers would be required to keep
proper records of their donations for up to 7
years, so as to facilitate checks and audits by
the administrator of the DTD scheme.
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f. Requirement
for grantmakers that allow DTD at the point of
disbursement to distribute a minimum percentage
of its funds annually |
A number of respondents
felt that the requirement for a minimum percentage
of funds to be distributed annually was impractical,
for the following reasons:
- Grantmakers may wish to time the disbursement
based on the milestones of specific projects
or the performance of the IPCs, which will
vary from year to year;
- There may not be any worthy projects in
a particular year; and
- It discourages sustainable giving.
MOF’s Response:
The original intention of allowing grantmakers
the option to allow DTD at the point of disbursement
to IPCs was to give them more flexibility to ensure
that donations are used effectively and in a sustainable
manner. With the timeframe for disbursement of
donations to IPCs for those who chose to allow
DTD upfront at the point of donation being increased
from 2 years to 5 years, there is much less of
a need for this option. As such, all grantmakers
will now be required to disburse their donations
within 5 years, and they will benefit from the
upfront granting of DTD.
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g. Tracking
of donations until they are disbursed to an IPC |
Some respondents
suggested that DTD be allowed at the point of
donation, and that there be no requirement to
track whether the donations are ultimately used
by an IPC, as long as the donations are kept in
a fund meant for IPCs only. This would minimise
administrative cost.
MOF’s Response:
Grantmakers who grant DTD at the point of donation
now have up to 5 years to disburse the donations
to an IPC. In granting a DTD, the Government foregoes
tax revenue that could have otherwise been used
for the benefit of the community. As such, there
is a need for the donations to be tracked to the
point of disbursement to the IPC, so as to ensure
that they are indeed properly used for the benefit
of the Singapore community and donors’ intent
of supporting IPC causes are met.
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h. Safeguards
against abuse by grantmakers |
Some respondents
asked for clarification on whether the DTD will
be recovered from the donor or grantmaker, in
the event that the grantmaker fails to meet the
stipulated conditions, e.g. failure to disburse
donations within 5 years. They also asked about
the recourse of action that donors may have if
the grantmakers use the funds improperly.
MOF’s Response:
If the grantmaker does not channel the donations
to IPCs within the 5 year timeframe, the DTD that
has been given to donors for the un-disbursed
donations will be recovered from the grantmaker.
The donor will not be affected by the tax recovery.
Any misuse of the donations given to grantmakers
will be treated seriously. IRAS, which is the
administrator for the DTD scheme, reserves the
right to revoke the privilege of the grantmaker
to make use of the DTD scheme. The grantmakers
may also have their charity status or approved
status under the NPO tax incentive scheme revoked.
Donors who feel that the grantmaking organisation
they have donated their monies to is acting improperly
should inform IRAS.
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i. Allowing
DTD for in-kind donations made to IPCs through
grantmakers |
One respondent
asked whether the DTD scheme could also be applied
to in-kind donations such as art pieces. Currently,
donors of art pieces to IPCs can receive a DTD
on the value of the art pieces.
MOF’s Response:
Today, DTD is granted for a specified list of
in-kind donations to IPCs. We have noted the feedback
to extend the DTD for in-kind donations to grantmaking
organizations and will consider allowing this
when we next review the DTD initiative.
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5 The finalized guidelines for private vs public donations
can be downloaded here,
and the finalized conditions for the DTD initiative
can be downloaded here.
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