How to Donate your Assets to Charity

Last updated on January 4, 2019

From Facebook founder Mark Zuckerberg joining the Giving Pledge in 2010, to billionaire Warren Buffett’s pledge to give away more than 99% of his wealth, the world’s richest men have in recent years pledged to give away their wealth to philanthropic causes.

Though we may not have billions to give away, you may still have a desire to do your part for the community and give away your assets to charitable causes upon your demise.

The question on your mind would then be: How can I go about donating my assets to charity upon death?

There are several ways to do so, depending on your needs and preferences.

Setting Up of a Non-Profit Entity

The three most common legal structures in Singapore for non-profit entities are:

Generally, societies refer to any club, company, partnership or association of ten or more persons, regardless of its nature or object (see section 2 of the Societies Act). Societies are required to be registered under Singapore law, though it is not considered to be a separate legal entity. This means that members of the society are personally liable should the society be sued.

Unlike societies, public companies limited by guarantee is a separate legal entity with limited liability. A public company limited by guarantee is usually used by a non-profit organisation that requires corporate status.

Lastly for charitable trusts, the arrangement is set out in a deed of trust where trustees would be responsible for administering your assets in accordance to the charitable intentions as set out in the trust deed. A charitable trust is also not considered a separate legal entity.

Each of the above legal structures has its own requirements and characteristics, and a helpful comparison can be found at the Pro Bono Services Office (PBSO) website.

The procedures for setting up each of the above legal structures differ, though the general steps you should take note of are as follows:

  • If registration is required, have the requisite information and supporting documents on hand
  • Register your non-profit entity with the relevant authorities
  • Apply for charity status
  • Apply for Institute of Public Character (IPC) status (not applicable for charitable trusts)

For more detailed information, please refer to PBSO’s website here.

The following is a non-exhaustive list of factors you can contemplate in deciding whether setting up a non-profit entity is a viable option.

Benefits Disadvantages
  • Greater flexibility in determining how funds can be managed.
  • Eg. Setting out the specific charitable intention in the deed of trust.
  • There might be additional statutory or administrative requirements that the entity must adhere to.
  • Eg. Annual General Meetings (AGMs), specified place of business, documentation.
  • Limited liability – public companies limited by guarantee are separate legal entities.
  • Liability of members – societies and charitable trusts are not separate legal entities.
  • Not cost efficient – expensive to set up and maintain.
  • Eg. Might need to hire professionals to manage the funds.

Bequeath It to a Foundation for Disbursement

Since it might not be cost effective to set up your own charitable organisation, another alternative would be to bequest it to a foundation that can disburse your funds in accordance to the community’s needs. This means that your funds may be disbursed across a variety of charitable organisations.

For instance, the Community Foundation of Singapore (CFS) pools donated funds and works together with donors to match their interests with the community’s underfunded needs.

Thus, in order to maximise the effect of your donations, you may wish to have a discussion with the foundation to identify if there are any specific societal needs that are currently underfunded or unmet that your donations can contribute to. This is to allow your donated funds to be utilised more effectively and efficiently upon your demise.

There are however, pros and cons of bequeathing your funds to a foundation. Some of these pros and cons are:

Benefits Disadvantages
  • More efficient utilisation of funds – in accordance to any societal needs
  • Less flexibility in disbursement of funds
  • Usually managed by professionals for greater accountability
  • Difficulties in matching donor’s interests in charitable causes with societal needs
  • Eg. donor’s interests lie in education, but education grants in the foundation are already overfunded
  • Tax deductions for donations

Leaving the Money to Charity in Your Will

Last but not least, you can choose to draft a clause in your will that leaves a specific amount to charity.

Certain non-profit organisations offer a template clause that can be inserted into your will, should you choose to donate some of your funds to that charity upon your demise. It is important to clearly define and identify the charitable organisation that you wish to give to in your will, as there may be more than one charitable organisation that shares the same name.

For instance, the Singapore Red Cross website states the following example of a clause that can be inserted into a donor’s will:

“Subject to the payment of my funeral and testamentary expenses, just debts and estate duty if any payable on my death, I give the sum of [$______] to the charity Singapore Red Cross Society, a charity registered in Singapore (registered charity number S86CC0370E) of registered office address [15 Penang Lane, Red Cross House, Singapore 238486] and I declare that the receipt of the treasurer or other officer of the charity shall be a full discharge to my executors and trustees.”

The advantage to this option is that you have greater control as to where the donation is going to. However, the disadvantage to this option is that there is a slight chance that the charitable organisation may no longer be in existence when the will is executed.

If you wish to draft a will or codicil to leave your money to charity, you may wish to consult a wills lawyer to draft these documents.

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