6 Legal Tips to Fundraise Successfully as a Groundup

Organised by Groundup Central, NVPC, Groundup Connexion is a series of quarterly workshops, aiming to enhance the capabilities of groundup founders and their core volunteers. In this article, we summarise the key takeaways from our recent session “Fundraising as a Groundup – How To Do It Successfully”, jointly organised by Pro Bono SG and Groundup Central.

Funding is one of the key resources a groundup requires. It not only supports the work groundups do – from getting your idea off the ground to sustaining current initiatives, tapping on funding could also help scale your operations further to have a wider reach and benefit a greater number of beneficiaries. In addition to self-funding and applying for grants, it is no surprise that most founders do explore the idea of crowdfunding or fundraising, at some stage in their groundup journey.

However, are you familiar with the “dos and don'ts'' of fundraising as a groundup in Singapore? Are there legal guidelines on fundraising you should be aware of as groundup founders?
 

In this session of Groundup Connexion, we invited Gabriel Li, a senior legal associate and volunteer lawyer from Pro Bono SG, to share about the legal guidelines and best practices for fundraising as a Groundup.

The legal fundraising tips shared in this article are largely referenced from the Charities Act 1994 (hereafter referred to as “Charities Act'') and Charities (Fund-raising Appeals for Local and Foreign Charitable Purposes) Regulations 2012. Although the Charities Act is intended for the regulation of charities and their fundraising activities, it is prudent for groundups, regardless of officially registered or unregistered status, to abide by these regulations.

For more information on the regulation of non-profit and charitable ground-up community groups, you can refer to the latest parliamentary response from January 2022. It is addressed that, “Anyone (including businesses, organisations and individuals) conducting fund-raising appeals in Singapore for charitable, benevolent or philanthropic purposes are regulated by the COC (Commissioner of Charities) under the Charities (Fund-Raising Appeals for Local and Foreign Charitable Purposes) Regulations 2012.”.

Thus, it would still be best practice for groundups to follow these guidelines and hold themselves to the same standards when conducting fundraising appeals. 

Here are some tips to help you navigate fundraising as a groundup legally and successfully.

1. Check If You Need Any Permits Before You Start Fundraising

Before making any fundraising appeals, do apply for permits if you need them and are sure that it is for a legitimate cause.

Generally, you’ll need a permit for fundraising if:

• You are fundraising for foreign charitable causes, such as for overseas humanitarian causes to support refugees or victims of natural disasters
• You are intending to conduct public fundraising through house-to-house or street collections which you’re required to obtain a “House to House or Street Collection (HHSC) Licence”

Be sure to check if you need to comply with other special licences or permits. For example, you might need waste collection permits if you are a sustainability-focused groundup running a waste collection initiative.

Quick tip: You can check if you need to apply for any permits on the GoBusiness Licensing website. For groundups, look under “social services'' and complete the e-Advisor questionnaire which will list out any relevant licences you may need. A good practice would be to go through all the licences listed from A to Z, at least once, to see if there are any others that you might need to apply for.

If you still have doubts about whether your groundup needs to apply for any permits before fundraising, assistance is available! You can write in to help@probono.sg to register for a legal clinic.

2. Provide Accurate Information to Potential Donors

When crafting your fundraising appeals to solicit support from potential donors, it is good to make sure that any information provided is accurate and not misleading. Doing so will help you avoid any potential misunderstandings or disputes with donors and regulatory authorities such as the Commissioner of Charities (COC). Thereafter by taking the follow-up actions you said you would do, you show donors and other stakeholders that you can be trusted which is important in building your groundup’s credibility.

Before communicating any material to your donors, it is good to always triple-check information in your fundraising appeal to avoid misleading or misrepresentation of your groundup. Be mindful that if you are a groundup fundraising on behalf of a registered charity, your appeal should not misrepresent or give off the impression that your groundup is a registered charity (Refer to Section 20: False representation as to registered charity under Charities (Fund-raising Appeals for Local and Foreign Charitable Purposes) Regulations 2012 for more information).

3. Be Transparent with your Donors

When communicating to donors about how your groundup intends to use the funds, be transparent. This will help to build long-term trust and give peace of mind to your donors, as well as potentially also open doors to partnerships and collaborations.

As a start, you should provide information to donors about:

• What does your groundup do and its mission statement
• Purpose for which donations are used and your intended beneficiaries.
• Whether any portion of the funds are going towards other expenses such as a *commercial fundraiser as outlined in the legislation (Refer to Section 4: Duty to Donors under Charities (Fund-raising Appeals for Local and Foreign Charitable Purposes) Regulations 2012 for more information) or any other operating costs for your ground-up initiative, and if yes what proportion will go towards these expenditures instead of the beneficiaries or local charitable causes you are fundraising for.

In addition, under the Charities Act, be mindful of the 80:20 fundraising rule which requires that at least 80% of funds raised for foreign charitable purposes be applied towards charitable causes in Singapore. This is to ensure that donations from the Singapore public are used primarily to benefit locals and address locals’ needs.

*The Charities Act defines a “commercial fundraiser” as any person who for reward solicits or otherwise procures money or other property, or purportedly for, the benefit of a charity or any charitable, benevolent or philanthropic purposes.

4. Keep Proper Records

When receiving donations, it is always a good practice to issue an invoice or receipt to the donors and to keep copies for your own record-keeping.

When fundraising, be accountable to your donors by ensuring that donations are used in accordance with the purpose communicated to them before or at the time when donations are received. For example, if your fundraising appeal has stated that donations received will be used to buy clothing to support children from disadvantaged families, you should not use donations received for any other charitable purposes such as buying food items for your beneficiaries.

By maintaining proper accounting records of how much funds were raised, from whom, and how funds were spent, they help to establish that your groundup has fulfilled and acted in accordance with its duty to donors. Keeping proper records assures that there are checks and balances to keep your groundup accountable for funds received. In the event of disputes about the use of funds, your records can protect your groundup’s credibility and avoid any potential misunderstanding with donors.

The Charities Act recommends keeping donation records for at least 5 years, even after your groundup has ceased its operations, in case anything is called into question.

5. Be Personal Data Protection Act (PDPA) Compliant

Personal data refers to information about an individual which an organisation has or is likely to have access to. Some examples of personal data include (but are not limited to) an individual’s full name, NRIC number or FIN, passport number and personal email address.

Groundups are not exempt from adhering to PDPA, even if they are an unregistered organisation. Thus, you need to be mindful of being PDPA compliant when collecting information for record-keeping purposes, which may include donors’ personal information.

Some tips on how to be PDPA compliant:

• Always obtain consent. It can be as simple as getting donors to opt-in to giving consent by ticking a box at the end of a donation form.
• Safeguard any personal information of your donors. You may need to password-protect confidential documents containing personal data of your donors and not store any donors’ personal data information in unsecured cloud storage or file-sharing services. In the unfortunate event that your devices are misplaced or accounts are compromised, have safeguards in place to prevent the information from being easily accessed by unauthorised personnel.
• Avoid collecting personal data that you do not need. Does your groundup need each donors’ residential addresses or are contact details like phone numbers sufficient? Is there a specific need for the entire NRIC or would the last 3 characters suffice? Only collecting the necessary personal data will help to simplify the process in being PDPA compliant.

(Read also: 9 Simple Actions to Stay PDPA-Compliant)

6. Have Proper Governance Structures and Controls

As a groundup seeking to fundraise, it is pertinent to have proper governance structures and controls in place, regardless of whether you are a registered organisation or not. This strengthens accountability and builds trust with your donors and other stakeholders. Having proper governance structures helps instil more confidence in your fundraising appeal to potential donors and garner more support and funding for your cause.

One good way is to have more than one key figure handling monetary transactions to prevent misuse of funds. An example is having a decision-making structure in place that requires consent from 2 to 3 key members or co-founders on how much funds should be used. Thereafter, these decisions to take out funds are documented before they are acted upon. Lastly, the funds should only be used in accordance with donors’ stated intentions.

Other useful links mentioned during the session

If you would like to seek legal advice on fundraising as a groundup, please write in to help@probono.sg to register for a legal clinic.

About the speaker:

Gabriel Li is a senior legal associate from Withersworldwide and a member of Pro Bono SG. Gabriel advises corporate and venture capital clients in cross-border investments, acquisitions, and joint ventures. His main area of interest is venture capital investments and he frequently works on fundraising projects, specifically in the technology sector for venture capital clients and founders.

About Pro Bono SG:

The Pro Bono Services Office is an initiative by the Law Society of Singapore to help bring free legal assistance to those in need in our community, as part of the Law Society's stated mission to ensure access to justice for all. Born from a collaborative commitment by the Singaporean legal profession to donate 25 hours per lawyer per year towards pro bono work, Pro Bono SG manages and develops all of the Law Society's pro bono programmes. 

About the author:

Hwee Jen is currently an undergraduate, and intern at Groundup Central. She envisions a kinder world with more open hearts and minds and hopes to share the joy of giving.