Image Alt

The Singapore Law Gazette

Facilitating Philanthropy: Taxation, Structures and Legacy Giving

On 23 February 2022, the Law Society of Singapore and the Singapore Management University’s Centre for Commercial Law in Asia hosted a webinar to discuss ways in which philanthropic purposes may be facilitated and encouraged in Singapore and elsewhere. Aptly titled “Facilitating Philanthropy: Taxation, Structures and Legacy Giving”, the distinguished panellists at the webinar provided an insightful overview of the appropriate taxation policy, structures and legacy giving options.

The seminar, moderated by Professor Tang Hang Wu (Singapore Management University), featured a diverse panel comprising Dr Giedre Lideikyte Huber (Senior Lecturer, Faculty of Law, University of Geneva), Ms Valerie Wu (Partner, Head of Tax & Private Wealth, Asia, Pinsent Masons MPillay LLP) and Ms Catherine Loh (CEO, Community Foundation of Singapore). It is notable that the panellists were joined by an audience which included policy makers as well as senior practitioners from the Bar.

Taxation and Philanthropy

Dr Lideikyte Huber kicked off the sharing with a comparative survey of the main tax aspects related to philanthropy in domestic and cross-border contexts. She shared about the various arguments for and against tax incentives for private philanthropy, the different types of tax incentives available and how they can be defined, as well as the common conditions for tax-exempt status. It was readily apparent from her presentation that the tax treatment for both philanthropic entities and donors is variegated internationally. Dr Lideikyte Huber emphasised the importance of appreciating the justification of tax incentives, which she suggested would facilitate open discussions about philanthropy generally and contribute to legislative changes. On the different tax incentives, she pointed out that some types of tax incentives may be more effective than others, and some taxpayers may be more responsive to certain types of tax incentives vis-à-vis others.

In relation to cross-border giving, Dr Lideikyte Huber helpfully summarised the present state of play. Generally, countries do not give tax incentives for individuals providing donations to foreign jurisdictions for various reasons, one of them being that it is onerous for states to control the administration of foreign philanthropic entities.

Dr Lideikyte Huber concluded her segment by sharing a case study which she worked on with her colleagues, on tax incentives in the Canton of Geneva. As part of the study, they analysed whether taxpayers in Geneva were adapting their charitable donations to a change in the deductible ceilings at cantonal and federal levels. It was found that most donors were not sensitive to the change in the deduction ceilings, as their deductions for charitable donations never reach them. However, a subgroup of donors (about 65 years old, single, regular donors and distinct from other donors for having higher wealth, lower income and higher donations) was identified as potentially having an increased sensitivity to deduction thresholds. Significantly, this subgroup of donors was responsible for between 30 to 54 per cent of all donations.

Facilitating a Client’s Philanthropic Purposes: Singapore’s Perspective

As a seasoned practitioner with remarkable experience in facilitating her clients’ philanthropic purposes, Ms Wu brought to the discussion a valuable perspective. She started off by outlining the current landscape for giving in Singapore, including the existing legal framework and vehicles for charitable organisations. She underlined the growing demand for more and better ways to give, as evident from the increase in single family offices and high net worth individuals (HNWIs) managing their assets in Singapore, as well as the trend of HNWIs focusing on environmental, social and governance (ESG) and impact investments. Ms Wu briefly reflected on the distinction between the terms “philanthropy” and “charity”. She opined that charity is focused on providing immediate relief to people and is often driven by emotions, philanthropy is focused on helping people and solving their problems over the long-term.

Ms Wu also provided her insights on a number of areas for improvement in terms of giving in Singapore.

First, she suggested an expansion of the definition of charitable purpose trusts. Currently, trusts which do not fall within the four traditional heads of charitable purposes would not be regarded as charitable trusts even if they are for the benefit of the public, or for philanthropic or benevolent purposes.

Secondly, she expressed the view that more can be done to facilitate the use of donor-advised funds (DAFs), and specifically she pointed to the limited awareness of DAFs in general. She drew attention to the fact that DAFs in Singapore are organised as segregated accounts managed by the sponsoring organisation – i.e. not a separate legal entity or arrangement (such as a trust). This may not be suitable for donors who wish to formally involve family members in the decision-making, contribute a large quantum of donation from different branches of the family and/or over a sustained period of time and/or have the DAF perpetuate and evolve over multiple generations of the donor’s family. Ms Wu then raised the possibility of structuring non-charitable purpose trusts (NCPTs) and discretionary or charitable trusts as DAFs, as well as using variable capital companies (VCCs) as an umbrella entity to house multiple DAFs. She also brought up the idea of managing and holding DAFs through licensed trust companies and fund managers, something which she says is already well-established in the US.

Thirdly, she encouraged the recognition of NCPTs. In her view, NCPTs could be more effective in promoting social development, as opposed to, for example, for-profit companies, which are arguably too rigid to serve as a social entity given its blended focus on shareholder value maximisation and social benefit. On the other hand, NCPTs are flexible, easy to set up, and to dismantle or change in the event another organisational entity becomes more suited to the social mission. Additionally, NCPTs can facilitate mixed purposes and are suitable to advance both charitable and philanthropic purposes. This is noteworthy since the existing state of law precludes trusts for charitable and philanthropic purposes from being regarded as charitable trusts since they are not exclusively charitable.

Finally, Ms Wu discussed the possibility of including thematic giving as part of the registration criteria for Institutions of Public Character (IPCs). Presently, the activities of IPCs have to be exclusively beneficial to the community in Singapore as a whole. To facilitate and incentivise giving, it may be beneficial to broaden the registration criteria to include organisations whose purposes and activities fall within “themes” that are closely related to the benefits of the community in Singapore, such as climate change and access to healthcare in Southeast Asia.

Community Foundation of Singapore and Donor-Advised Funds

As part of her presentation, Ms Loh provided a useful introduction to the Community Foundation of Singapore (CFS). It was manifest that CFS has made significant impact on fostering effective giving in Singapore. CFS was the first sponsoring organisation to introduce DAFs into Singapore and has to-date set up about 183 DAFs.

Professor Tang raised a concern on pay-outs for DAFs, which is relevant given that DAFs in other jurisdictions have been accused of simply hoarding funds and being vehicles for tax evasion. Ms Loh assured that CFS takes a proactive stance in working with donors to disburse the grants. In fact, CFS has in its mix, philanthropy consultants who will engage with donors to highlight societal needs and interesting programmes so that they would be influenced to donate more.

Ms Loh also introduced the key features of DAFs, and compared DAFs to standalone private foundations in some aspects, such as set-up, administration, governance and family involvement and succession. In closing, Ms Loh sounded a positive note on the future of DAFs in Singapore as she highlighted a growing trend in donations to DAFs. She also emphasised the importance of lawyers in philanthropy conversations, and reiterated CFS’s commitment to working with lawyers to facilitate legacy giving.

Donating Abroad from Singapore

Professor Tang asked the panel about the challenges involved in facilitating giving to foreign entities. He highlighted a commonly-held concern of domestic tax authorities that monies given to foreign entities may not be used for their intended causes.

Dr Lideikyte Huber admitted that the monitoring of how foreign entities use their funds is amongst the biggest challenges in this area. Notwithstanding, she stated that other jurisdictions have developed solutions for this problem. For instance, in some Swiss cantons, donors may apply for exemptions to qualify for tax incentives if they wish to give directly to foreign entities. The burden would be on the donor to demonstrate that the foreign entity’s work is legitimate. Dr Lideikyte Huber spotlighted the work of Transnational Giving Europe (TGE), a network of tax-exempt entities in various jurisdictions. TGE operates by enabling donors resident in one of the participating countries to offer financial support to non-profit organisations in other member countries. Donors would provide funds to a TGE partner organisation in one country, which would be transferred to the intended organisation in another country. It is for the partner organisations to conduct the necessary due diligence. Moving forward, Dr Lideikyte Huber suggested the possibility of an international certification system, where local authorities could accredit non-profit organisations to qualify for tax exemptions in other jurisdictions.

Both Ms Wu and Ms Loh recognised the growing demand from donors wishing to give beyond Singapore. They also noted that this group of donors is often concerned by the difficulties in monitoring and evaluating the work done by foreign entities. Ms Loh shared some ways to address these concerns, such as by working with reputable partner organisations in other jurisdictions.

Non-Charitable Purpose Trusts

The panellists also discussed the issue of non-charitable purpose trusts. Ms Wu shared that NCPTs would allow the entire family structure (be it the trust, management or the family office) to be entirely consolidated in Singapore.

Relatedly, Dr Lideikyte Huber explained that in Switzerland, any legal entity can be tax-exempt if it fulfils the requirements imposed by tax authorities. She also shared that in the UK, there are tax incentives for investors in social enterprises. The aim is to encourage the flow of funds to the social sectors. For example, there is a recent programme known as Social Investment Tax Relief which helps social enterprises grow by offering tax reliefs on investments.

Professor Tang reflected on the fascinating possibility of giving tax incentives to investors. He raised an interesting example of giving tax incentives for investing in for-profit enterprises which hire people with special needs. That would certainly be something for policy-makers to consider.

Donor-Advised Funds and Single Family Offices

It was clear from the questions that Ms Loh’s presentation on DAFs generated quite a buzz. One question was asked on the synergy between DAFs and single family offices. Ms Loh observed that some family offices may not have professional staff dedicated to philanthropy. By establishing DAFs, these family offices would have access to CFS’s philanthropy consultants and vast network of donors and charity partners.

Ms Loh also welcomed a more vibrant industry for DAFs, noting the establishment of other sponsoring organisations such as SymAsia Foundation. She added that the increased competition would incentivise improvement and product differentiation.

Other Interesting Ideas

Ms Wu was also questioned on her idea of using VCCs to house multiple DAFs, given that VCCs facilitate exits and returns for investors. Ms Wu shared about how the Gates Foundation has certain DAFs which are for specific purposes. Once the specific purpose is met, the relevant DAF would be closed. She noted that a VCC could potentially house open-ended and closed-ended funds within the same umbrella, although she considers the existing framework to be inadequate to support such use of VCCs.

Dr Lideikyte Huber explored the possibility of tax incentives on real estate. She explained that in some jurisdictions, tax incentives can be given for real estate transactions if it can be shown the real estate is indeed used for a worthy purpose.


It is clear that much more can be done to facilitate philanthropy, and it is hoped that there is continued dialogue and collaborations in this area. But if the exciting ideas generated in this seminar and the fervent interest of the audience are anything to go by, the future certainly looks bright.

TSMP Law Corporation