BAGUS Legal Bites: Fundraising

Back again with another bite-sized legal gem, Gabriel and Clifton (Co-Founders of The Legal Sauce#) speak with Ang Si Yi*, Assistant Professor at the National University of Singapore, and Belynda Ho^, Associate at Withers KhattarWong LLP, to find out more on how groundups can fundraise for their activities and what are some key things to note when going about their fundraising activities. Find out more on fundraising for groundups in this latest installment of Bagus Legal Bites.

1. Are groundups permitted to fund-raise? 

Funding is fundamental to a groundup. The rules that apply to fundraising are highly dependent on the type of fundraising that the groundup intends to conduct (e.g. whether funds are solicited locally, what is the source of the funds, whether the groundup intends to solicit funds on the street or online etc.). Fundraising is governed generally by the Charities Act (“Act”), and its relevant regulations, in particular, the Charities (Fund-Raising Appeals for Local and Foreign Charitable Purposes) Regulations 2012 (“Regulations”). All fundraising activities will have to be compliant with the Act and the Regulations.  

 2. Can groundups use online fundraising platforms to raise funds for their activities? 

Yes, online fundraising platforms may be used as platforms for fundraising by individuals, registered and non-registered groundup entities. For a list of qualifiable platforms, you may refer to Charity Portal’s here. The funds raised by these platforms are subject to the requirements under the Regulations, and fundraisers will be subject to the internal requirements and approvals under each of these platforms.

3. Can groundups sell merchandise to raise funds?  

Yes, groundups can sell merchandise but it must be compliant with the Regulations. Groundups will have to disclose clear and accurate information to contributors about the purpose of the contribution, and specify where the monies will be used. For example, if merchandise is being sold at a roadshow or public event, a notice should be prominently displayed at the point of sale, such as on prominent signage, booths, or merchandise tables, stating the fundraising purpose and intended use of proceeds. For online sales, the same information regarding the fundraising purpose and intended use of proceeds should be clearly presented on the product page or checkout screen. Where feasible, this information should also be included on the merchandise itself (e.g. on packaging, tags, or labels).

Proper records of contributions received and disbursed need to be kept. Groundups should note that amounts collected beyond a certain amount may be subject to tax under existing Inland Revenue Authority of Singapore regulations.

If the fundraising is done by commercial fundraisers or commercial participators, all solicitation and publicity material must be accompanied by a written statement containing the additional information: 

• Proportion of total proceeds that will go to charitable causes;
• Breakdown of proceeds to each charity (if funds are raised for more than one charity);
• Name of the commercial fundraiser or commercial participator, and its status as a commercial entity; and
• How the fundraiser or participator’s remuneration is calculated. 

4. What are the boundaries that groundups should work within given that they are non-registered?  

Groundups must ensure that any fundraising operates within the boundaries of the Regulations. A key point for groundups to note is that all fundraising activities must ensure that any information that it provides to contributors and the general public is accurate and not misleading. This includes circumstances of public fundraising where contributors may be family and friends.

Some of the information that needs to be made clear to every contributor are: 

• the name of the person or groundup that the contribution is made to;
• the purpose of the contribution; and
• whether there are any commercial fundraisers involved (including any fundraising or crowdfunding websites), and if so, how much of the contributions will be used to pay for the expenses of the commercial fundraiser.

In addition, all groundups must take adequate measures to ensure utmost accountability to contributors, for e.g., keeping proper accounts, ensuring the security and safety of the contribution amounts, and ensuring that they are able to provide timely responses to any queries regarding the usage of the funds.

They must also ensure that all contributors’ information is confidential, and will not be disclosed to any other person unless required under the law, or with the contributor’s consent.

5. Are there any limits applicable to a groundup in their fundraising efforts?

Certainly! The limits to a groundup’s fundraising activities are largely dependent on the manner in which they intend to solicit funds, and the source of these funds.

For instance, if the source of the funds are from overseas sources, a permit from the Commissioner of Charities may be required in order to ensure that the funds are from a reliable source. Likewise, if the groundup intends to obtain funding from door-to-door solicitation, they may be required to apply for a House to House and Street Collections (HHSC) license from the Singapore Police Force. Do note that the HHSC license application requires a UEN, and the groundup might need to work with a registered charity or other entities like schools when attempting registration.

Other requirements may apply depending on the groundup’s individual requirements and fundraising strategy.

6. If someone wishes to make a monetary contribution to a groundup, can the groundup simply accept it?

The usage of contributions should strictly adhere to the following requirements set out in the Regulations: 

• All contributions have to be used according to contributor’s intentions.
• If such intention is not specified, contributions must be used according to the purpose communicated to the contributors during solicitation;
• If such intention is not specified and no purpose is communicated to the contributors during solicitation, the contribution may be used to fund any activity carried out by the groundup that meets its purposes under dimensions defined under the project run by the groundup.
• If a contribution cannot be used, the groundup must refund it to the contributor.

7. Are there any policies or laws relating to anti-money laundering (AML) or countering the financing of terrorism (CFT) that groundups need to take note of?

There are no AML/CFT measures that apply specifically to only groundups. However, all fundraising activities are subject to the applicable AML/CFT laws and regulations.

The burden falls upon the groundup to ensure that fundraising is effectively managed, and all money laundering and terrorism-financing risks are mitigated. Should there be any suspicious transactions, groundups can make a report to the Singapore Police Force here.

Groundups should also note that the Commissioner of Charities has the discretion to stop any fundraising activities that are in aid of any purpose that is illegal, fictitious or objectionable. As mentioned above, there are specific requirements that apply to contributions that originate overseas (e.g. obtaining a permit from the Commissioner of Charities).

8. What about accepting gifts and/or in-kind contributions?

The same goes for gifts and in-kind donations. The above FAQs are equally applicable as they are considered monetary contributions.

#For more information on The Legal Sauce, click here. 

*Ang Si Yi, is currently an Assistant Professor and a Fellow of the Centre of Pro Bono and Clinical Legal Education at the National University of Singapore. 

^Belynda Ho, is currently an Associate practising in Withers KhattarWong LLP. Her experience lies in the real estate and property sector and with a particular interest in the hospitality and leisure sector.