Nonprofits NGOs Asia

NGO Expansion to Asia: Comparison and Analysis by Country

September 23, 2024

For global nonprofits, having at least a regional presence in Asia is key for fundraising, staffing, and strategic purposes. Determining where to establish the entity is a crucial decision that can lead to or avoid compliance headaches, long setup times, or restrictions. 

The content below evaluates some of the factor's organizations should consider when deciding which country will host their NGO Asian regional hub. This report, originally drafted in 2020, focuses specifically on setting up a nonprofit presence in Singapore, South Korea, and Australia, so it is by no means exhaustive. 

Country Comparison Table 

 

Factor 

Singapore 

South Korea 

Australia 

Nonprofit entity types 

  • Public Company Limited by Guarantee (“PCLG”)  
  • Society  
  • Charitable Trust  
  • Representative Office (“Rep Office”) 
  • Incorporated under Korea Civil Code:    
  • Foundation   
  • Associations   
  • Unincorporated:   
  • Beyoungri Im-ui Danche (nonprofit legal person); or  
  • Other non-incorporated organizations   
  • Incorporated    
  • Incorporated Associations, e.g., ‘XYZ Inc.’  
  • Company Limited by Guarantee (“CLG”)  
  • Non-trading Co-operatives  
  • Indigenous Corporation  
  • Unincorporated   
  • Trust   
  • Association   

Setup timeline 

  • Rep Office: 1-2 weeks  
  • Charitable Trust: 1-2 months  
  • PCLG | Society: 2-3 months  
  • Complexity (in increasing order): Rep Office, Society, PCLG, Charitable Trust   
  • Establishment of NPO requires ministerial approval  
  • Establishing an NPO involves the central government, local governments and various government ministries, based on a complicated legal framework  
  • 2 to 3 months to incorporate  
  • Incorporating with Australian Charities and Not-for-profits Commission (“ACNC”) usually takes between 3-4 weeks.   
  • Process is straight forward   

Compliance requirements 

  • Register with Commissioner of Charities  
  • Accountability and disclosure of funds raised, used and purpose  
  • Compliance requirement is dependent on the law applicable, which in turn is based on the purpose and nature of the NPO’s activities.   
  • Accountability and disclosure of funds raised, used and purpose  
  • Register with the ACNC  
  • Accountability and disclosure of funds raised, used and purpose  
  • Disclosures fall into 2 categories:   
  • Financial   
  • Operational   

Availability of tax exemptions 

  • Need Charity Status for tax exemption for the organization; donors do not get tax deduction  
  • Need Institution of Public Charity (“IPC”) status for Donors to get tax deduction for their donations  
  • Unincorporated NPO: “Beyoungri Im-ui Danche” derives its “nonprofit legal person” status for tax exemptions, based on the Enforcement Rule of the VAT Act  
  • Incorporated NPO: “Beyoungri Bubin” derives its “nonprofit legal person” status for tax exemptions based on nonprofit laws. There are different tax laws for each type / nature of NPO (e.g., schools, medical services etc. These laws set out the criteria to be granted tax exempt NPO status.   
  • All ACNC-registered charities can apply for income tax exemption  
  • Tax-exempt charities may also receive refunds on dividends franking credits, i.e., dividends from shares owned, at gross.   
  • Tax exempt charities may be eligible for GST concessions  
  • ACNC-registered charities can apply for and obtain employee fringe benefits tax rebate or full exemption  
  • Qualify to be Deductible Gift Recipient (“DGR”), whereby the respective donor’s contributions will be tax deductible for the donor’s personal tax    

International fundraising limitations 

  • 80/20 Rule – 80% of funds raised locally must be used for local objectives   
  • The Korea “Act on Collection and Use of Donation” comprise specific legislations that guide the fundraising activities of NPOs.   
  • The philanthropy culture gravitates towards funds raised to be used for local initiatives  
  • Assistance for Nonprofit and Nongovernmental Organizations (ANNO) Act of 2000 provides legal framework for government grants and support or NPOs. To receive financial support from the central and local governments, the NPO must be registered as “Beyoungri Min- Gan Danche” (nonprofit private organizations)   
  • The ACNC does not regulate fundraising. However, the Charity still needs to observe the relevant state and territory laws, as well as corporations and consumer laws.  

Cost Ranking / Social Security / Payroll tax* 

  • 1 / 17% / 0%  
  • 3 / 9.96% / 0%  
  • 2 / 9.5% / 0%  

Other advantages 

  • Political stability  
  • English is an official language  
  • Government offers a nurturing environment to become a ‘charitable’ hub in the region   
  • Registration is generally straight forward  
  • Centralized oversight under the Commissioner of Charities  
  • Proliferation of NPOs, local and foreign based, in country; generally a familiar situation and accepted  
  • Awareness of NPOs and International Organizations such as UN further increased in the last decade due to local politician and diplomat Ban Ki-moon’s role as the former Secretary-General of the United Nations.   
  • The centralization of all charities under the ACNC and tie-back to the Australia Tax Office (“ATO”) makes the process transparent and straight forward   
  • There is a fairly strong environment for charities to thrive in Australia. ACNC currently manages over 58,000 charities  

Other disadvantages 

  • Bank account set up is tedious as banks follow a stringent KYC process  
  • Registration is decentralized and complex  
  • No central government legislation on NPOs, resulting in complexity (depending on nature and type of NPO). In 2020, over 20 ministries are involved in the nonprofit incorporation process  
  • Many official regulations are in Korean language; adds translation challenge  
  • Australia’s is geographically distant from the core South-East Asia region. Thus, coordinating foreign objectives and projects cross-border may be challenging  

*This metric shows the relative cost of living / salary level among the countries in the table, ranked 1-3 (1 being the most expensive). Social Security indicates the employer’s burden as a percentage of gross salary (this is sometimes variable or a fixed number, so some of these are approximations). Payroll tax shows the employer’s share of payroll tax as a percentage of gross salary.  

Analysis & Recommendations 

Singapore and Australia both present compelling factors for establishing a regional fundraising hub for an international nonprofit as part of a broader global business expansion strategy. Particularly for foreign-based organizations, having a well-defined framework and a central oversight body helps remove uncertainty and reduce overall efforts required to set up in either country. Both countries offer a very stable and relatively neutral political environment and a strong ranking for ease of doing business according to the World Bank [source and credit: “2020 Doing Business Report”] - Singapore (#2) and Australia (#14). Although the World Bank report is focused on for-profit companies’ perspective, it provides assurance with regards to the efficiency and ease of the respective governments’ processes and systems.  

In terms of economic strength, Singapore and Australia are among the top 10 countries in the world based on per capita GDP in 2019 (#7 and #9, respectively) [source and credit: IMF GDP data for 2019]. The presence of wealthy donors, coupled with both countries’ stellar reputation for low corruption, transparency and accountability (#3 and #11, respectively) [source and credit: Transparency International - Index 2020”] is particularly relevant and important for fund raising purpose.   

Australia’s ATO has several tax incentives that are attractive and beneficial for NPOs. Australia’s ACNC is the central government body for registration, monitoring and support for all NPOs and Charities. This creates efficiency and ease in setting up and maintaining the NPO.   

Singapore has slight advantages over Australia in the following areas:   

  • Geographically central location, and proximity to the rest of Asia   
  • Has a mature and strong financial system and market   
  • Stable currency   
  • Good governance  
  • Well-educated resource pool  
  • Strong global political standing  

However, note that Singapore’s restrictions on use of locally sourced funds/donations on overseas use are restricted (80% or more of funds must be used domestically), unless granted an exemption. For any organization selecting Singapore for its regional fundraising office in Asia, applying for this exemption would be crucial to its goals.   

South Korea also has a strong ranking for ease of doing business (#5) according to World Bank’s “2020 Doing Business Report”. However, for establishment of an NPO, the lack of a central oversight government body, the complexity of various legislations, tedium of working with the multiple government ministries involved, and language barrier, are all key negative aspects that may be difficult or require significant efforts to overcome.   

We hope this guide is helpful in your evaluation of potential countries in Asia in which to pursue NGO entity registration. Please reach out to our General Manager of NGO Services, Aidan O’Neill, at aidan.o’neill@topsourceworldwide.com with any questions, or for a complementary consultation. You can also visit at - TopSource-NGO Expansions. 

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Aidan O'Neill
Aidan O'Neill is the General Manager of NGO Services at TopSource Worldwide, the go-to Global Expansion services provider for international nonprofits and universities. He oversees the business' specialization and focus on this sector, providing consultative guidance and advisory services to NGOs and higher education institutions, developing thought leadership, and supporting TopSource's virtual NGO community.

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