Setting Up a Foundation in Singapore

Singapore’s philanthropic and non-profit landscape offers multiple vehicles, which are commonly referred to as foundations.

These are structured under distinct legal frameworks.

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This comprehensive guide explores the important aspects of setting up a foundation in Singapore.

This will provide insight into the available structures, costs, benefits, and regulatory considerations.

Does Singapore Have Foundations?

Yes, Singapore has foundations, though they are typically established as specific legal entities rather than being called “foundations” in the legal sense.

The term generally refers to non-profit organizations set up for charitable, educational, religious, or other purposes beneficial to the community.

In Singapore, entities performing the role of foundations are typically registered as charitable trusts, companies limited by guarantee, or societies under respective Acts.

Each of these structures serves the purpose of a foundation while operating under specific regulatory frameworks that govern their establishment and operations.

A notable example is the Singapore International Foundation (SIF), established on August 1, 1991, as a non-profit organization. The primary goal of this entity is to support Singapore’s globalization efforts and encourage positive interactions between world communities.

The presence of foundations in Singapore reflects the nation’s commitment to fostering philanthropy and supporting social causes.

These organizations play a vital role in addressing societal needs, promoting educational initiatives, supporting cultural activities, and driving positive community impact across various sectors.

How to Create a Foundation in Singapore

Setting up a foundation in Singapore involves several key steps and considerations. The process requires careful planning and adherence to regulatory requirements:

1. Determine your mission and objectives: Clearly define the purpose, goals, and target beneficiaries of your foundation.

2. Choose the appropriate legal structure: Select from one of the three main legal structures available for non-profit organizations in Singapore (detailed in the following sections).

3. Prepare necessary documentation: Depending on your chosen structure, you’ll need to prepare a trust deed, constitution, or other governing documents outlining your foundation’s purpose, governance, and management framework.

4. Register with the appropriate authority: Register your organization with the relevant regulatory body based on your selected legal structure.

5. Apply for charity status: Once your legal entity is established, apply for charity status with the Commissioner of Charities to receive tax exemptions and eligibility to receive donations from charitable trusts.

6. Set up governance structures: Establish a board of directors or trustees, develop policies, and implement governance mechanisms.

7. Apply for grants (optional): With charity status secured, explore grant opportunities to support your foundation’s work.

The entire process can span 3–6 months, depending on complexity and professional support.

Trusts (or Charitable Trusts)

A charitable trust in Singapore is a legal arrangement where trustees hold and manage assets for charitable purposes rather than for specific beneficiaries.

Key features include:

• Must have a clearly defined charitable purpose (relief of poverty, advancement of education, advancement of religion, or other purposes beneficial to the community)
• Must promote public benefit through its actions
• Must be wholly and exclusively charitable
• No beneficiaries with vested interests in the trust property

Charitable trusts in Singapore operate under the Charities Act 1994 and the Trustees Act, administered by the Ministry of Law.

The regulatory framework ensures high standards of probity to prevent abuse.

All charitable purpose trusts must register as a charity within 3 months of establishment, to enjoy tax exemptions. This is done by submitting their governing instrument and other required documentation.

Unlike some other trusts, a charitable trust in Singapore requires no registration if it is a foreign trust.

According to local tax laws, foreign trusts need not disclose the identities of the settler or beneficiaries.

How Much Does It Cost to Set Up a Trust in Singapore?

Setting up a trust in Singapore involves various costs depending on the complexity and purpose of the trust. While specific figures vary, potential costs include:

• Professional Fees – Legal drafting of trust deeds: S$2,000–S$10,000+.
• Registration Fees – Charity registration: no fixed fee but administrative costs apply.
• Model Constitution – N/A for trusts; costs pertain to drafting.
• Ongoing Expenses – Annual audits, accounts, trustee administration.
• Family Office & Grant Incentives – For high-net-worth donors, see Singapore Family Office Tax Exemption for schemes encouraging local spending and grants.

For company limited by guarantee (CLGs) specifically, ACRA name reservation ($15) and registration ($300) are standard fees.

What Are the Benefits of a Trust in Singapore?

Singapore offers several advantages for establishing trusts, particularly for philanthropic purposes:

1. Favorable economic environment: Singapore’s competitive economy, lower tax rates, high rate of foreign investment, and strong regulatory framework make it attractive for establishing trusts.
2. Robust legal framework: The comprehensive Trustees Act provides clear guidelines and protections for trust arrangements.
3. Tax advantages: Charitable trusts can obtain tax exemptions, making them efficient vehicles for philanthropic activities.
4. Privacy protection: For foreign trusts, there’s no requirement to disclose the identities of the settler or beneficiaries.
5. Asset protection: Trusts provide a mechanism to protect assets from potential creditors and ensure they’re used for intended purposes.
6. Legacy planning: Charitable trusts enable individuals to create lasting social impact aligned with their values.
7. Global reputation: Singapore’s reputation for stability, transparency, and good governance adds credibility to trusts established there.

These benefits have made Singapore an increasingly popular jurisdiction for establishing charitable and philanthropic trusts both for local and international philanthropists.

What Is Company Limited by Guarantee in Singapore?

A company limited by guarantee (CLG) is a popular structure for non-profit organizations in Singapore. This structure:

• Functions similarly to a company but with a social purpose instead of shareholders
• Requires registration with the Accounting and Corporate Regulatory Authority (ACRA)
• Has no share capital but is owned by guarantors who agree to contribute a predetermined amount (typically S$1.00) toward company debts if the organization is wound up
• Reinvests profits rather than distributing them to maintain charitable status

CLGs enjoy distinct legal entity status separate from their owners and are responsible for their debts.

They have the same rights as private limited companies under the Companies Act, providing professional credibility that can help achieve objectives more effectively.

CLGs must meet specific requirements, including having at least one director ordinarily resident in Singapore, at least one member, a qualified company secretary, and a constitution setting out the organization’s objects and by-laws.

What are 5 examples of companies limited by guarantee?

Companies limited by guarantee in Singapore typically include:

1. Professional associations: Organizations representing specific professions that provide member services, advocacy, and professional development.
2. Sports clubs and recreational organizations: Entities managing sporting facilities, organizing competitions, and promoting participation in sports and recreational activities.
3. Arts and cultural institutions: Organizations promoting artistic and cultural development through exhibitions, performances, and educational programs.
4. Educational foundations: Organizations supporting educational initiatives, scholarships, and research activities.
5. Social service organizations: Entities providing community services, support for vulnerable populations, and addressing social needs.

These organizations leverage the CLG structure to achieve their non-profit objectives while benefiting from limited liability protection and distinct legal status.

Do Companies Limited by Guarantee Need to be Audited in Singapore?

Yes, companies limited by guarantee in Singapore generally need to be audited.

According to regulations:

• Submission of audited financial statements annually is mandatory unless they qualify as a “small company” under the Companies Act and meets revenue, asset, and director-count thresholds.
• CLGs must hold Annual General Meetings (AGMs) as per statutory requirements.
• They must comply with corporate governance standards and financial reporting obligations.

The audit requirements ensure transparency, accountability, and proper financial management.

Societies or Associations

Societies or associations represent another common structure for non-profit organizations in Singapore.

Key aspects of societies and associations include:

1. Registration process: Organizations must apply to the Registry of Societies with their constitution, proposed leadership, and organizational objectives.
2. Governance structure: Societies typically have a committee or executive board elected by members, with specific roles like president, secretary, and treasurer.
3. Membership requirements: Societies must maintain a minimum number of members and hold regular meetings, including annual general meetings.
4. Financial obligations: Annual submission of financial statements and maintenance of proper accounting records.
5. Legal status: While societies have legal recognition, they do not have the same corporate personality as companies limited by guarantee.

Societies are particularly suitable for smaller community groups, interest-based organizations, and grassroots initiatives where the formality and costs of a company structure might be excessive.

Bottom Line

Singapore’s philanthropic foundations in practice are structured as charitable trusts, companies limited by guarantee (CLGs), or societies.

Each is subject to stringent regulation to ensure public benefit.

All three vehicles ensure transparency, robust governance, and alignment with Singapore’s charitable objectives.

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Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.