Qualifying Grantmaking Philanthropic Organisations

The double tax deduction (DTD) scheme for Qualifying Grantmaking Philanthropic Organisations ("Grantmakers") was introduced in Budget 2007. This scheme is to allow DTD to the donors who donate to the Grantmakers, where the donations are eventually channeled to an approved Institution of a Public Character (IPC). This is applicable even where the Grantmaker itself is not an IPC.

To be a grantmaker, your organization has to be of the following set up:
1) registered charities (registered under the Charities Act); or
2) not-for-profit organizations (approved under the NPO tax incentive scheme administered by EDB or MAS).

If you wish to register for this scheme, you have to submit a letter of undertaking to IRAS to be registered as a Grantmaker under the DTD scheme and adhere to a set of conditions. Grantmakers will be allowed to grant DTD at the point of donation by the donor from the date of successful registration.

The DTD scheme takes effect for donations of money on or after 15 Feb 2007 (i.e. Budget 2007).

Conditions to be met by qualifying grantmaking philanthropic organisations

a. The grantmaking organisation must be either a registered charity under the Charities Act or a grantmaker approved under the NPO tax incentive scheme administered by MAS or EDB;

b. The grantmaking organization must channel the donation that is intended for the IPC to a segregated account/fund (hereafter “designated IPC fund”) that is designated for donations to IPCs only;

c. The grantmaking organisation will be responsible for issuing the tax-deductible receipt to the donor, and it must distribute the donations to IPCs within 5 years of receipt of the donations from the donors;

d. The grantmaking organization will be liable to pay to the IRAS a financial penalty of the amount ascertained by the formula 0.4x the total value of the donations for:
i. Any amount of DTD that has been incorrectly granted or that is not properly due to a donor; and
ii. Any amount of DTD granted on donations that are not disbursed within the 5-year timeframe.

e. Upon dissolution of the designated IPC fund, the grantmaking organization must distribute any residual funds/assets (if any) to IPCs;

f. The grantmaking organization must institute proper procedures to ensure that the donations are in fact channeled to IPCs;

g. The grantmaking organization must keep proper records such as the identity of each donor, date of donation, amount of donation received from each donor and the amount of DTD receipts that was issued to each donor. These records must be kept for at least 7 years;

h. The grantmaking organization must submit details of cash donation received and disbursed in the format prescribed by IRAS on an annual basis; and

i. The grantmaking organization must subject the designated IPC fund to an annual external audit, and submit the annual audited accounts to IRAS.