Not for love of money, but of Humanity. "Greater is he who works for the good of all, then he who works for the good of himself only" ~ Matthew 25:40: "The King will reply, 'I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.'"- (NIV). I live in Singapore where the Emperor must not be disturbed.

Tuesday, March 23, 2010

Resolution of the Charity/ NFPO taxation dilemma.- My opinion

Spirits remain high at City Harvest Church
09:10 AM Mar 22, 2010
by Alicia Wong
SINGAPORE - Spirits remained high at City Harvest Church (CHC) yesterday, in spite of recent news that authorities are seeking clarifications on its business venture.
The mega church announced two weeks ago that it had become co-owner of Suntec Singapore International Convention and Exhibition Centre.
The venture, which is expected to cost about $310 million, raised eyebrows as the church did not create a separate business entity to undertake this acquisition.
As a registered charity, CHC's income - expected to include profits and dividends from space rental and tenant leases in Suntec Singapore in the future - is non-taxable.
MediaCorp understands that the church was supposed to meet with the Commissioner of Charities yesterday.
In response to queries on Saturday night, a church spokesperson said: "The CHC Management Board is currently in discussion with the relevant parties and a statement will be issued shortly."
Church members gave the thumbs-up when asked for their thoughts on CHC's co-ownership of Suntec Singapore. Most of those that MediaCorp spoke to said they were happy with the centralised location of the new premises, and trusted the church to put the profits earned to good use.
Businessman Mr Koh believed the church would sort out the issues with the relevant authorities.
"It's only been two weeks since the announcement ... we should give them time," said the 64-year-old businessman who declined to give his full name.
Mr Reuben Lim said the church would "plough back the money into charitable causes". The 45-year-old manager noted that CHC has helped countries that have experienced natural disasters.
But while operations executive Pamela Lim, 42, felt that CHC should not be taxed, fellow church-goer Purandi Kertonugroho, 39, said it should pay taxes on profits derived from the venture.
During its service yesterday, the church told its members it would update them next week on the progress of its fund-raising for the new premises. Alicia Wong
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Resolution of the Charity/ NFPO taxation dilemma- my opinion.
I think I now understand what all this hullabaloo about the purchase of Suntec City is all about. Though I think that there isn't anything currently legally wrong, I frown upon this purchase.
[pls post scripture related issues at my other thread: 'City Harvest Church members should read bible more often' (my concern here is about if and when Charities should be taxed)].

I believe that the question of whether Charities/Not-for-profit-organizations (NFPO)should be taxed relates to the the nature of income from their operations and how such income is spent. I define 2 types of income- donations and fees, note 3 possible current situations of income dilemmas and suggest a mechanism of audit for their expenses.

As the name portends, NFPO organizations ought not earn profits, however, this may inadvertently occur in 3 scenarios:
a) Investments of capital (Non property/ utility nature): e.g. Equities, unit trusts, commodities, foreign currencies: These should NOT be allowed, being NFPO organizations, their focus ought to be in helping their charges, all excess shall be in cash deposits or fixed deposits not exceeding 2 years. Foreign currency deposits of 6 months, or up to 3 years projected expenditure may be allowed with written permission from the COC, renewable upon expiry. WRT to the rest, the COC may grant temporary exceptions: e.g. buy grain to feed poor bc anticipated drought anticipated in 6mths etc.
NFPOs should be prepared to support their charges in good times and bad. The recent Madoff scandal [wiki], recession have showed such reserves to be at severe risk of erosion during crisis. NPOS if allowed to be affected by such economic fluctuations, would result in a very unstable country, easily overcome by any recession. NFPOs, given their limitations of investment, would strive everyday to stabilize society, so that the risk of economic/ physical disaster is well anticipated and damage minimized.
'Mega-charities' may find off-putting these limitations, however, I believe that it is the presence of mega-charities that cause many a willing heart to skip helping out, all because of the overbearing presence of so-called 'Mega-charities'

b) Property, Vehicles: allowed, however, should a NFPO property be underutilized, NO rent in excess of the maintenance cost proportional to the property may be collected. It is recommended that NFPO organizations embrace the spirit of community, helping to develop other NFPOs/ develop new synergies to provide better services to the community.

NFPOs should in general not profit from services provided, however, due to understandable variances in service-demand, profits might arise e.g. a nursing service, anticipated to treat x patients, ends up treating exceeds its target by 25% resulting in surplus collection- this should NOT be taxed, however, immediate notification of the COC and special mention in the annual accounts be made, should an anticipated income (donations and profits) surplus of $100,000 or 15% existing reserves, whichever higher, occurs.

That said, every registered charity, prior to beginning the work-year (decided by the charity), shall submit to the COC and make publicly available, its income expense budget plans, current assets and liabilities for that work year. Immediate notification of the COC is required should the anticipated income-expense plans change or deviate by more then 50% for the given year. (charity work years should not need to be IRAS/COC specified because NFPOs are not expected to pay taxes).

By my current opinion, City Harvest Church (CHC) should thus NOT be allowed to purchase the Suntec property as Suntec City is obviously a commercial property, and as I described, unsuitable for NFPO ownership. Should CHC wish to own Suntec City, it must apply to URA to convert the status of Suntec City to that of a NFPO one before attempting to purchase it. Otherwise, CHC, with it's enormous budget may apply to rent the said premise to cater to its well-to-do congregation.

Of course, embracing the power of immense faith, I'm hopeful that CHC, its leaders and strong 30K congregation, would not fail in its endeavors whilst abiding by the true spirit of God and Laws of the land.

Truly am I sorry to disappoint, but past evidences such as the monies that charities lost in the Madoff scandal; 'Is this $10m site the reason behind the PKMS fracas?'- "... a struggle for control over this money and potential fortune..."- have both proven the fallibility of man. Any religious organization, holding this immense amount of property/ money remains a potential victim of such large fall out, a tear to our social fabric and a threat to national stability.
So sorry, it is with the spirit of charity that register my objection to the CHC purchase.

In addition, I believe that all properties designated NFPO should be charged property tax at the current concessionary rates payable. Property taxes should be charged on ALL properties- the concessionary rate being enough as recognition for the good that any NFPO does for society. Sure, you argue that the 'Mega' NFPOs get penalized more, then again, do NFPOs really need to be mega, do we need another 'too big to fail' scenario? All these regulations would serve well to keep Charity leaders on their toes, less they loose track of their mission and experience fall outs like the PKMS case above. I'm certain that comments by some esteemed comrades at CHC have realized their slight mis-judgment and are relish to the challenge of running a real charity.

Matthew 25:40-
And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.
If numbers, collections, followers is what Pastor KH wants, then I wont bother disputing the figures on his website. However, if you ask me what 33,000 young, healthy, educated people can deliver to this world, I'd say that they are under-performing.

So in peace do I humbly leave with a quote from Romans 13 , my reference though, yours (#17) is viewable at: fundamental teachings of City Harvest Church.

Romans 13 (New International Version)

Romans 13
Submission to the Authorities
1Everyone must submit himself to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God. 2Consequently, he who rebels against the authority is rebelling against what God has instituted, and those who do so will bring judgment on themselves. 3For rulers hold no terror for those who do right, but for those who do wrong. Do you want to be free from fear of the one in authority? Then do what is right and he will commend you. 4For he is God's servant to do you good. But if you do wrong, be afraid, for he does not bear the sword for nothing. He is God's servant, an agent of wrath to bring punishment on the wrongdoer. 5Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also because of conscience. 6This is also why you pay taxes, for the authorities are God's servants, who give their full time to governing. 7Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.
Love, for the Day is Near
8Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law. 9The commandments, "Do not commit adultery," "Do not murder," "Do not steal," "Do not covet,"[a] and whatever other commandment there may be, are summed up in this one rule: "Love your neighbor as yourself."[b] 10Love does no harm to its neighbor. Therefore love is the fulfillment of the law.

11And do this, understanding the present time. The hour has come for you to wake up from your slumber, because our salvation is nearer now than when we first believed. 12The night is nearly over; the day is almost here. So let us put aside the deeds of darkness and put on the armor of light. 13Let us behave decently, as in the daytime, not in orgies and drunkenness, not in sexual immorality and debauchery, not in dissension and jealousy. 14Rather, clothe yourselves with the Lord Jesus Christ, and do not think about how to gratify the desires of the sinful nature.[c]
Love and God Bless,


Full version w valid links at: HWZ forum

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