Labuan Foundations (Part 2)

Recently, I had the opportunity to connect with Mr Mark Meah of Portcullis Trustnet (Labuan) Limited, on the topic of Labuan Foundations.

Here's a summary of our conversation.

Introduction

Labuan Foundations are creatures of the Labuan Foundations Act 2010. Historically, a foundation had its roots in civil law jurisdictions, so as a result of the aforesaid statutory enactment Labuan IBFC can now say that it is one of the few common law jurisdictions offering investors a choice between common law trusts and civil law foundations.

Foundations are regarded as separate legal entities that hold assets with the objective of managing the assets for the benefit of a class of persons on a contractual basis. These structures are used typically for private wealth management and charitable purposes.

Key Features

Some key features of a Labuan Foundation are as follows:

      It must be registered and have a registered office in Labuan;

     There are no capital requirements as a foundation does not have share capital; the minimum endowment of USD1.00 as an initial asset at the time of establishment is sufficient;

·        It must have a Charter. It is a document that sets out the parameters within which the Foundation is to be -managed and governed.

·         Key management of the Labuan Foundation is separated into the founder, council, the officers and a secretary;

·         Assets placed in the Labuan Foundation are owned by the Foundation and are to be applied only for the benefit of the identified purpose. However, these assets must be non-Malaysian properties UNLESS it is a charitable foundation, or as approved by Labuan Financial Services Authority.

Compliance Requirements

·       The Secretary to the Labuan Foundation will provide secretarial functions such as filing and lodging of documents to Labuan FSA; this a compulsory appointment and the secretary always must be the licensed Labuan Trust Company;

      Every Labuan Foundation shall ensure compliance with the Anti-Money Laundering and Anti-Terrorism Financing Act 2001;

·     The Founder, Council (members), and Officer(s) shall remain as fit and proper persons throughout their appointment as prescribed in the Fit And Proper Person Requirements issued by Labuan FSA.

Fees:

Labuan Foundations are required to pay Labuan FSA the following fees:

·         One-off payment of Registration Fee                     – RM750

·         Annual fee on or before anniversary date            – RM750

There are recurrent fees to pay to the Authority. In addition there are secretarial fees for a registered office and filing, audit, etc. some of which are also paid out annually.

Preparation of the Charter is also a cost you have to look into.

Tax considerations

-For me to explain the tax framework in Labuan, I shall need to touch upon the principal legislation the Labuan Business Activity Tax Act 1990 (LBATA).

-However, I shall begin by saying that the Malaysian Income Tax Act 1967 is territorial, what it means is that it covers the whole of Malaysia, including Labuan. Therefore any income accruing in or derived from Malaysia is taxable. But know that LBATA is regarded as a tax exemption under the ITA.

-S.3 of LBATA says that “a Labuan entity carrying on a Labuan business activity shall be charged to tax in accordance with this Act…”

-The definition of a “Labuan Business Activity” means: A Labuan Trading or a Labuan non-trading activity, carried on in, from or through Labuan in foreign currency, by a Labuan entity with non-residents or with another Labuan entity.

To delve deeper into its definition:

-A Labuan Trading is any activity that includes banking, insurance, trading, management, licensing, shipping operations or any other activity which is not a Labuan non-trading activity.

-A Labuan Non-Trading Activity is any activity relating to the holding of investments in securities, stock, shares, loans, deposits or any other properties by a Labuan entity on its own behalf.

-Reverting to S.4 of LBATA, it says that the tax rate for a Labuan trading activity is based on 3% of chargeable profits. Here chargeable profits = net profits in the accounts. In the alternative, the entity may elect to pay tax at a fixed rate of RM20,000 (S.7 LBATA).

-Know that for non-trading activities, they are not chargeable to tax.

Furthermore:

·         -Distributions by a Labuan foundation to its beneficiaries are tax-exempted in Labuan. However, the beneficiaries of the foundation will need to satisfy their own tax liabilities in their respective jurisdictions of tax residence.

·         -There are no withholding tax/capital gain tax.

·        - No stamp duty on all instruments relating to offshore business activities.

-Specific requirements for Labuan Charitable Foundations.

-For all Labuan charitable foundations, they are required to comply with the legal requirements of the jurisdiction they intend to operate in.

-If a Labuan charitable foundation were to solicit donations from the public, it shall comply with the following:

·        

     a) Appoint a council of at least three (3) fit and proper persons

     b) founder may be a council member. However, the majority of the council members shall be independent of the founder;

    c) Appointment of a supervisory person for the foundation who is fit and proper in accordance to the Guidelines on Fit and Proper Person issued by the Labuan Financial Services Authority (LFSA);

   d) Provide information memorandum or such other information document for the public which shall include but not limited to the following minimum information:

-     -Name of foundation;
       -Purpose and object of the foundation;
-      -List of its founders, council members, supervisory person, officer and secretary, where applicable;
-Statement of its establishment under Labuan Foundations Act 2010;
-Whether it has been accorded the status of an “approved institution or organization” under the Income Tax Act 1967 for donations made to the foundation to be tax deductible, where applicable;

·         
   e) Submit a proposed general operating plan, which include the management of the property in regard to the utilization and distribution of the property, the strategy of the foundation including its investments and other related information, and

    f) Submit annual audited accounts to LFSA within six (6) months after the close of each financial year of the foundation.

Please feel free to contact the following for more information on Labuan Foundations, trusts and other vehicles.

Mr Mark Izzeddeen Meah,

Business Development Director

PORTCULLIS TRUSTNET (LABUAN) LIMITED

Level 6D, Main Office Tower

Financial Park Labuan Complex

Jalan Merdeka, PO Box 80887

87018 Labuan, F.T. Labuan

Malaysia

Tel: +6087 451310 / +6087 439191

Fax: +6087 439193 / +6087 451311

email: mark.meah@portcullis-trustnet.my

website: www.portcullis-trustnet.my

Resources for Social Enterprises

Toying with the idea of starting up a Social Enterprise (SE)? 

Check out the comprehensive resources available at https://mymagic.my/en/.

Find out more about the  MaGIC Accelerator Programme and the Social Enterprise Nation Survey, as well as the Amplify Awards which offer actual funds to selected social enterprises. https://se.mymagic.my/en/amplify/

Also, download the MaGIC Social Enterprise 101 Guidebook, and the Malaysian Social Enterprise Blueprint, at https://se.mymagic.my/en/publications/

According to its website, MaGIC also runs a Social Enterprise Bootcamp, capability development workshops and dialogues. https://se.mymagic.my/en/academy/.

Also check out http://dosomething.gd/.
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Role of the Executive Committee (Ahli Jawatankuasa) of a Registered Society in Malaysia

Perhaps you have just been invited by a friend, colleague or family member, to sit on the Executive Committee (Exco) of a non-profit organisation. It is an honour to serve in such a capacity, and it is encouraging to see more and more community organisers stepping forward to start non-profit organisations and charities. Volunteer work not only serves the greater good but allows Malaysians from all walks of life to come together and work side-by-side on worthy causes for the benefit of all communities.

However, before you accept the invitation to be an Exco member or a main office bearer, it’s a good idea to familiarise yourself with the scope of duties beforehand so that you can honestly assess your existing commitments, and evaluate whether you can really take on the job. Time is a finite resource after all, and not everyone has the luxury of focusing on a non-profit role. More likely than not, you’ll be balancing your full time job and family obligations as well as the additional tasks that may fall to you in your role as an exco member.   

For the most part, non-profits are small organisations running on a shoestring budget and almost all those involved are volunteers. In such an organisation, you should be prepared to take a hands-on approach. There won’t be a host of administrative assistants to take care of the administrative work. If you accept the position of Secretary or Treasurer for example, and if the organisation does not employ any administrative assistants, you could quickly find your role taking up a lot of man-hours J.

Under the Societies Act 1966 (“the Act”), and in accordance with the registered society’s constitution (see http://www.ros.gov.my/index.php/my/perkhidmatan for sample Constitutions for societies with and without branches, provided by ROS), there will usually be a President, Secretary, Treasurer, and a number of Deputies or Assistants (such as Deputy President, Assistant Secretary, Assistant Treasurer etc). Once these main office bearer positions are filled, the rest of the members forming part of the “Ahli Jawatankuasa” are usually referred to as “Exco members” with no corresponding office bearer title. They do however still need to sign circular resolutions, attend Exco meetings, and are still deemed to be office bearers within the meaning of the Act.

President

The President is the face of the organisation, and will need to set the direction for the organisation in terms of day-to-day activities as well as short, medium and long-term planning. The President will need to oversee aspects such as sourcing for funding, identifying and courting corporate and other sponsors, seeking out opportunities to raise funds and generate publicity, coming up with ideas for programmes to generate awareness and attract volunteers, as well take overall responsibility for the society’s general compliance with regulatory requirements. The President is also an authorised signatory with the registered society’s bank for the purposes of signing cheques on behalf of the society, and is one of the office bearers authorised to deal with the society’s bank account.

Secretary

Be warned…if you don’t like paperwork and regulatory compliance, don’t sign up for this job :-) The Secretary is responsible for a lot of the back-end functions, or rather, to manage the documentation that forms part of the regulatory aspect of running a registered society. The Secretary must maintain updated registers of members and of Exco members, prepare/circulate all documentation relating to Exco Meetings and Annual/Emergency General Meetings (these would include notices of agenda, minutes of meetings, reports such as the President’s report, the audited accounts, attendance lists, etc), and the preparation of the annual returns - a set of documents that needs to be lodged with the ROS once every financial year. In addition, the Secretary will need to draft circular resolutions when needed. The Secretary is also likely to be an authorised signatory with the registered society’s bank for the purposes of signing cheques on behalf of the society and dealing with the society’s bank account. The role of Secretary has been greatly assisted by the recent introduction of ROS’ online submission system, called eROSes. (Go to http://www.eroses.gov.my/).

Treasurer

This is a role for numerically-minded, so if you still rely on your fingers and toes to count, then perhaps, this is not quite the role for you :-). Prepare to be buried under a pile of receipts and claim forms as soon as you take up the job. Once you have extricated yourself from the pile, you might be confronted with another pile...of cheques this time J. OK, this is an exaggeration, it shouldn’t be as bad as all that. If your organisation is small and just starting out, there should not be so many transactions to start with. However, Standard Operating Procedures and templates should be created from day 1, to ensure that the accounts are managed properly. The Treasurer is responsible for the society’s funds. So, however few transactions there are, and however small your non-profit organisation is, records must be kept, data must be entered into an accounting system such as MYOB, receipts and documents must be filed and bank statements must be reconciled. Petty cash boxes, chequebooks, the registered society’s chop and other important items should be locked up at all times. Once a year, the Treasurer will need to liaise with an external auditor for the purposes of conducting an audit. Once again, the more organised and up-to-date the accounting and finance records, the easier the audit fieldwork process will be. The Treasurer will definitely be an authorised signatory with the registered society’s bank for the purposes of signing cheques on behalf of the society, and is one of the office bearers authorised to deal with the society’s bank account.

Other Exco members

If the main office-bearer positions sound like too much work, perhaps you might helpfully offer yourself for the position of “Exco member”...as you’re probably thinking, “Hey, sounds pretty good, I’m not being responsible for any actual work, but I get to attend meetings, hang out with the rest of the committee and enjoy the food and drinks….” :-) Ha ha! Well, to some extent you might be right, but usually, Exco members also do need to contribute time and expertise to the organisation, especially if the organisation is small, has just started out, and does not have much funding or resources at its disposal yet. But yes, your role is not statutorily defined, so the scope of your duties and contribution depends largely on the organisation itself. Perhaps you could help with co-ordinating volunteer activities, generating publicity, fundraising and awareness campaigns, contributing ideas for future expansion and helping the main office bearers.:-)

Conclusion

If the role of a main office-bearer or other exco member sounds like too much to take on given your current commitments, it’s best to politely decline up front so that the organisation can look for someone else who has more time to contribute. However, this does not mean that you cannot participate. If the cause is something you believe in passionately and want to support, think about other ways that you can help the organisation. Talk to your friend, colleague or family member about other ways that you can be involved and help support the organisation. As the saying goes, many hands make light work, and almost all organisations need volunteers with different skillsets and profiles.  

Overview of External Service Providers for Non-Profit Organisations

If you’ve registered your non-profit organisation with the Jabatan Pendaftaran Pertubuhan or Registry of Societies (ROS), here are some brief pointers on the kinds of external service providers you would need in order to comply with the relevant compliance requirements.

As costs are always a factor for new non-profit organisations, you might be able to use existing volunteers  or founding members to contribute their time and expertise – if any of them has a legal or financial background. 

In the event you are not able to enlist the help of a volunteer with the right expertise, you would probably need to get in touch with the following professionals.

Company Secretary

Company secretaries could either be practising lawyers or licensed company secretaries in public practice. Meaning, such professionals would be attached to a legal firm or a company secretarial firm. Basically, you would contact one of these firms to act for your non-profit organisation and take care of company secretarial matters such as preparation of documentation for Executive Committee meetings, as well as Annual General Meetings (AGMs) or Emergency General Meetings (EGMs).  These documents could include notices of agenda, minutes and circular resolutions. Such a professional could also assist with compilation and lodgement of the registered society’s annual returns with ROS every year  (though with the advent of the new eROSES system, it is possible for any of the founding members/volunteers to do this, with some guidance on how to fill the online forms).  

To locate a company secretarial firm near you, here’s a list of chartered company secretaries in public practice  provided by the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) http://www.maicsa.org.my/pc_holders_dir.aspx.

External Auditor

In order to come up with a set of audited accounts which need to be tabled before the members of the registered society during its AGM, you will also need an external auditor. The ROS guidelines provide for an internal auditor to be appointed by the registered society (juruaudit dalaman) as well. But an external auditor would  still be required to conduct the full year audit of the registered society’s accounts, which would need to be tabled before the members in general meeting (that is, during the AGM) within 6 months of the close of the society’s financial year. The external auditor would also need to comment/advise on tax issues.

To locate an audit firm,  there’s a member firm directory search provided by the Malaysian Institute of Accountants at http://www.mia.org.my/new/members_memberfirms_directory.asp.Be sure to refine the search based on the state in which your non-profit organisation is located, and also, select “audit firms” instead of “non-audit firms”.

As always, the cost of appointing an external service provider varies. On the whole, large established firms charge more than smaller firms. In order to save costs, perhaps you could try to interest your preferred service provider in the possibility of “adopting” your non-profit organisation as a corporate CSR project . In return for a programme run by your non-profit organisation in collaboration with the service provider, such as volunteer sessions for the staff, perhaps the firm could subsidise the cost of services, or better still, provide them to your non-profit organisation FOC. An added selling point might be some positive publicity for the firm, in your social media postings, newsletter or email blasts to your members.

Standards and Best Practices govering Charities and Non-Profit Organisations

 The Australian Charities and Non-Profits Commission, the independent Australian regulator of charities, has published a set of standards governing Australian charities and non-profit organisations. 

Such standards chould be equally applicable to charities and non-profit organisations in any jurisdiction, and could prove a valuable resource for best practices to be adopted by Malaysian charities and non-profit organisations too - with some tweaking and customisation.

Standard 1: Purposes and not-for-profit nature

Standard 2 : Accountability to members

Standard 3 : Compliance with Laws

Standard 4 : Suitability of Responsible Persons

Standard 5 : Duties of Responsible Persons

More information available at ::http://www.acnc.gov.au/ACNC/Manage/Governance/ACNC/Edu/GovStds_overview.aspx

How to set up a Labuan Charitable Foundation

In the non-profit world, one often hears of “setting up a foundation”.

But what does that actually mean and how does one do it?

Well, there is more than one type of foundation, and each has its own set of rules and requirements.

Let’s look at one you may not have heard of before, called a Labuan foundation. The Labuan Foundations Act 2010 (Act 706) (“the Act”)  is the governing statute in question.

According to an article in the popular magazine Smart Investor [Issue 01.2015], foundations set up in Labuan can also include charitable foundations.

A Labuan foundation is a corporate body and a separate legal entity. In addition to non-charitable purposes, a Labuan foundation can also be established for a charitable purpose (provided such purpose is lawful).  A Labuan foundation can also be an Islamic foundation, if its aims and objectives comply with Shariah principles.

What are the benefits of setting up a Labuan charitable foundation?

It’s relatively cost-effective to set up (approximately RM 750), and the annual renewal fees are not that prohibitive either (a recurrent fee of RM 750). The founder of the Labuan charitable foundation can also exercise a degree of control over the management and direction of the foundation’s activities, use of assets etc, if he is appointed to the council.

Next, we look at what constitutes a charitable purpose.

The Labuan International Business and Financial Sector Malaysia’s website at http://labuanibfc.com/areas-of-business/89-150/financial-services/labuan-foundations.html offers a concise overview of the detailed provisions of the Act as well as how to apply for registration, eligibility criteria, set up and management of the foundation, fees, etc.

A charitable purpose means and includes any of the following description of purposes:

• The prevention and relief of poverty;
• The advancement of religion, profession or education;
• The advancement of health including the prevention and relief of sickness, disease or of human suffering;
• Social and community advancement including the care, support and protection of the aged, people with a disability, children and young people;
• The advancement of culture, arts and heritage;
• The advancement of amateur sports, which promote health by involving physical or mental exertion;
• The promotion of human rights, conflict resolution and reconciliation;
• The advancement of environmental protection and improvement;
• The advancement of animal welfare; or
• The advancement of facilities for recreation or other leisure-time occupation in the interest of social welfare.

A Labuan charitable foundation is allowed to own Malaysian assets and properties (while there are some restrictions on this governing foundations set up for non-charitable purposes).

 As always, you are advised to contact a company secretary or lawyer for advice before opting to use this vehicle for your non-profit organisation.

Other useful links:

http://www.labuanibfc.com/legislation-main/212/details.html

http://labuanbusiness.com/guide-to-start-labuan-charitable-foundation/

The role of a non-profit board member

This article discusses the role of a non-profit board member from an Australian perspective.

http://www.emilford.com.au/page.asp?id=188&pv=%C2%A5%C2%AC%C2%A8.

Many of the points set out in the article, would be equally applicable to the Malaysian context.

Inter alia, board members are encouraged to act in the best interests of the organisation, to guard against conflicts of interest and use of information for an improper purpose and to ensure that finances are managed responsibly.

Board members should always bear their stewardship role in mind, and constantly strive to meet the highest standards of ethical conduct in managing the affairs of the organisation.

Summary of the Guidelines for Application for Tax-Exempt Status pursuant to Sub-Section 44(6) of the Income Tax Act 1967

Note: The full text of the Guidelines is available here in English : http://www.hasil.gov.my/pdf/pdfam/Guidelines_Section446.pdf

The summary below is only applicable to ordinary societies registered with ROS. For different types and categories of charitable organisations, refer to the actual guideline for the relevant provisions.

2.Organisations that are eligible to apply for tax-exempt status

3.1, 3.2

Objective, Meaning of charitable purposes:

The organisation is formed purely for social welfare objectives (amal/khairat umum)

3.3 (i) and (ii)

Benefits

The organisation must give services or benefits to the Malaysian people regardlesss of race, religion and descent. Benefits cannot accrue to one group only, including the board of directors, their families and the staff of the organisation.

3.4

50% Use of Funds Raised

The organisation must spend in the following year, at least 50% of its income and donations to carry out activities that meet its objectives.

3.5

Board of Trustees

At least 50% of the board members must be outsiders with no connection to the founder or the organisation.

3.6

Restriction

The organisation must not be involved in political or trade union activities and does allow its funds, premises or staff to be used for such purposes.

3.7

Financial Statements

The financial statements need to have been audited by a certified extermnal auditor and a copy needs to be submitted every year to the DG of Inland Revenue. [Consolidated financial statements need to be submitted for organisations which have registered branches].

3.8

Business

The organisation is allowed to carry out business on condition that only 25% of its funds on the 1^st day of the financial year is utilised for this purpose. All proceeds need to be reinvested and used to achieve the objective of the organisation or for specific community-targetted  works authorised by the DG of Inland Revenue.

3.9

Amendments to the Constitution

Any amendments to the Constitution requires the approval of the DG prior to it coming into force.

3.10

Dissolution

Once an organisation is dissolved, all debts and obligations need to be settled and the DG needs to be informed, etc .

3.11

Overseas activities

The organisation is allowed to undertake charitable activities overseas with the permission of the Finance Minister.

4 Amendments to the Constitution

The organisation may be asked to amend its constitution before its application for tax exempt status can be considered, the amendment first needs to be approved.

5. Persons who may apply :

Only the Presdient or the Secretary may apply for approval.

6. Procedure to apply :

For most organisations, all that is required is a letter containing the relevant information.

6.1.2.Requirements:

• A copy of the ROS registration certificate
• A copy of the Constitution
• A list of members of the Exco containing names, addresses, IC numbers, employment details and positions held on Exco
• 2 years’ worth of financial statements if applicable
• A list of activities conducted to date if applicable,  and
• A letter of support from the relevant department/Ministry

7. Application to be addressed to:

Pengarah,

Jabatan Dasar Percukaian,

Lembaga Hasil Dalam Negeri,

Tingkat 17, Wisma Hasil,

Persatuan Rimba Permai,

Cyber 8.

Peti Surat 11833, 63000, CYBERJAYA, Selangor Darul Ehsan

9. Deductions & Exemptions

An organisation with tax-exempt status will enjoy the following:

(i)                 Donors may deduct their donations from their taxable income as long as there is a receipt. Donations can only be in cash and not in the form of goods.

(ii)               The organisation will be exempt from tax on income (except for dividend income)

Financial Sections of the Annual Returns for Malaysian Non Profit Organisations

This post deals specifically at the financial sections of the annual returns to be lodged with the Registry of Societies (ROS) via the online portal e-ROSes.

A prior understanding of how the financial sections are grouped and categorised for the purposes of reporting and submission to ROS at the end of the financial year, could assist the non-profit organisation in classifying and recording its day-to-day accounting transactions more efficiently.

While most of the required data can be derived from the non-profit organisation’s audited financial statements, the categories are usually not exactly the same so some data needs to be moved around, added up or broken down, to ensure consistency between the audited financial statements and the data submitted to ROS.

First you’ll need to log in to the e-ROSes portal. Once in, go to “Penyata Tahunan” (Annual Returns) on the menu and select it. You’ll then be guided through the different submission headings until you reach “Kewangan” (Financial). Under that section, you’ll see the following categories and will need to key in the relevant corresponding figures into the boxes provided.

For those not proficient in Bahasa Malaysia, I’ve added in a translation, in brackets. (There is noofficial translation provided on the eROSes portal, so I've just put in a rough translation below).

1.PENDAPATAN (RM) (INCOME)

A.Pendapatan operasi (Operational Income)

Yuran kemasukan (Entrance Fees)

Yuran Ahli (Membership Fees)

Kutipan dana (Fundraising)

Derma (Donations)

Lain lain (Others)

B. Hasil Aktiviti Menjana Dana (Proceeds from Fundraising Activities)

Majlis makan malam (Fundraiser dinners)

Jualan amal (Sales)

Perkhidmatan (Services)

Lain lain (Others)

C. Pendapatan Pelaburan (Investment Income)

Sewa (Rental)

Dividen (Dividends)

Faedah dari simpanan tetap (Interest from fixed deposits)

Keuntungan hartanah (Real property gains)

Lain lain (Others)

D. Penerimaan geran (Receipt of Grants)

Agensi kerajaan (Government agencies)

Agensi swasta (Private agencies)

Individu (Individuals)

Lain lain (Others)

E. Lain lain pendapatan (Other Income)

F. JUMLAH PENDAPATAN (TOTAL INCOME)

2. PERBELANJAAN (EXPENSES)

A.Perbelanjaan Operasi/Kebajikan (Operational/Welfare expenses)

Perbelanjaan aktiviti kutipan derma (Donation-related activities)

Cukai (Tax)

Lain lain (Others)

Perbelanjaan kebajikan (Welfare expenses)

Khairat umum (General expenses)

Khairat kematian (Burial expenses)

Cenderahati/hadiah (Souveneirs)

Biasiswa (Scholarships)

Zakat (Religious tax)

Derma (Donations)

B. Perbelanjaan Aktiviti Menjana dana (Expenses related to fund raising activities)

Perbelanjaan penganjuran aktiviti (Activity-related expenses)

Promosi aktiviti pertubuhan (Promotional activities)

Jamuan (Parties/Events)

Lawatan/rombongan/hari keluarga (Visits/Excursions/Family Day)

Perbelanjaan Pelaburan (Investment expenses)

Yuran Penyertaan (Participation fees)

Lain lain (Others)

C. Kos Pentadbiran (Administrative Costs)

Elaun, gaji atau upah (Allowances, salaries or wages)

Sewaan (Rental)

Utiliti (Utilities)

Bekalan pejabat (Office supplies)

Kad ahli (Membership cards)

Bonus (Bonuses)

KWSP/PERKESO (Employee benefits)

Insuran (Insurance)

Uniform/baju (Uniforms/clothing)

Penyelenggaraan (Facilitation/Management)

Pengubahsuaian (Renovations)

Pengangkutan (Transport)

Fotostat (Photostating )

Caj bank (Bank charges)

Lain lain (Others)

D. Lain Lain Perbelanjaan (Other Expenses)

E. JUMLAH PERBELANJAAN (TOTAL EXPENSES)

B2 ASET & LIABILITI (ASSETS & LIABILITIES)

A. ASSET TETAP (FIXED ASSETS)

Bangunan (Buildings)

Aset pelaburan (Investment assets)

Aset Tidak Nyata (Intangible assets)

Tanah (Land)

Kenderaan (Vehicles)

Mesin/jentera (Machines)

Perabot (Furniture)

Kelengkapan Pejabat/Peralatan (Office supplies/Equipment)

B.JUMLAH ASET SEMASA (TOTAL CURRENT ASSETS)

Tunai di tangan (Cash in hand)

Tunai di bank (Cash in bank)

Akaun belum terima (Accounts Receivable)

Inventori (Inventories)

Pelaburan semasa (Short-term investments)

Deposit tetap (Fixed deposits)

Cukai terakru (Accrued tax)

C. JUMLAH ASET (TOTAL ASSETS)

2. LIABLITI (LIABILITIES)

A. LIABILITI SEMASA (CURRENT LIABILITIES)

Pemiutang (Creditors)

Cukai belum dibayar (Unpaid taxes)

Pinjaman (Borrowings)

LIABILITY JANGKA PANJANG (LONG TERM LIABILITIES)

Cukai tertunda belum bayar (Tax payable, unpaid)

Hutang jangka panjang (Long-term debts)

Pinjaman (Borrowings)

D. JUMLAH LIABILITI = TOTAL LIABILITIES

Questions for Non-Profit Board members

INVESTMENT DECISIONS

Do we have enough money to fund this?

Will this investment be cost efficient?

Does this investment meet our strategic objectives?

Look at budget of prorgamme, cost per beneficiary pre and post investment, incremental cost per beneficiary, composition of expenses by programme/type of beneficiary/location pre-and post investment.

ONGOING MONITORING

How are our programmes doing against budget?

Where is the money from?

Where is the money going to?

How much of our activities have committed funding?

Have there been any changes in our funding priorities over the years?

Look at : Actual expenditure to date vs budget, composition of income, composition of expenses and whether funding priorities change over time.

OUTCOME MEASURES

How cost efficient were our investments?

How effective were our fundraising efforts?

For every dollar spent, where did the money go to and how much reached our beneficiaries?

Look at : cost per direct beneficiary, cost per indirect beneficiary, amount raised per $ on fundraising, composition of every dollar spent by programme/type of beneficiaries/type of expense, % spent on admin vs programmes.

Tips on fundraising for non-profit board members

This article shares tips that non-profit board members can use while raising funds for their non-profit organisations. Read the article here :
http://www.bizjournals.com/bizjournals/how-to/growth-strategies/2015/06/effective-nonprofit-fundraising-tips-for-board.html?page=all

From a regulatory standpoint, it would be a good idea to first prepare a brief containing relevant information on your organisation. Potential donors would be interested to know more about the cause itself, a brief history of your organisation, future plans and details as to what specifically, their donation might be used for, and also a snapshot of the organisation's financial position.

Agreements for non-profit executives

Interesting article on exit agreements for non-profit CEO's.

https://nonprofitquarterly.org/governancevoice/23315-exit-agreements-for-nonprofit-ceos-a-guide-for-boards-and-executives.html?utm_content=13804650&utm_medium=social&utm_source=twitter

Auditing your non-profit organisation

In the interests of good corporate governance and transparency, non-profit organisations should conduct annual external audits. Such audits provide potential and existing donors, stakeholders, beneficiaries, sponsors and regulators, with key insights into the workings of the organisation. 

Annual external audits also help non-profit organisations to improve their systems of internal control and risk management, and identify areas where best practices can be optimised in order to achieve the best possible impact given available financial resources and manpower.

Appointing an external audit firm can be a costly exercise, but you might be able to come to some sort of arrangement based on the non-profit status of your organisation. 

The audit should be carried out after the close of the non-profit organisation's financial year-end. 

Here are some of the steps that a non-profit organisation would need to take in order to appoint an auditor, complete the audit fieldwork, table the audited accounts before the members of the society (if your non-profit is a registered society registered under the Societies Act, 1966) at the next AGM and lodge the annual returns within the deadline. 

Basic steps: 

• Close the books (check the financial year end of your organisation, which will be stated in the Constitution);
• Identify an audit firm ;
• Prepare and circulate a resolution to appoint audit firm;
• Issue a nomination letter to the audit firm;
• Get a consent to act letter issued by the audit firm;
• Meet with the auditor and hand over the relevant files, receipts and other documents;
• Liaise with the auditor during the audit fieldwork period - this will entail answering questions and providing additional documentation where needed;
• Review the draft audit report once ready;
• Obtain signatures of the President and Treasurer (or other authorised signatory) 
• Prepare and circulate a resolution to approve the audited accounts for the financial year under review;
• Table the audited accounts for adoption by the members, at the next AGM; and
• Once adopted, prepare to submit annual returns with the Registry of Societies (ROS) by extracting the relevant sections from the audited accounts and key into the online e-ROSes system under the financial section.