Charities in Hong Kong: Section 88 Tax Exemption Status and Related Matters

If your charitable organization holds tax exemption status under Section 88 of the Inland Revenue Ordinance, it is important to be aware of the ongoing compliance requirements that must be fulfilled to maintain that status. In addition, a charity’s Section 88 status does not guarantee that all of its income will be tax-exempt, so it is important to understand the specific conditions for tax exemption before embarking on revenue-generating activities.  

With the contribution from Ernst & Young (EY), PILnet has created a practical guide on these topics, covering the ongoing compliance requirements for Section 88 organizations (e.g. notification and reporting obligations owed to the Inland Revenue Department), the conditions for income to be tax-exempt, and practical tips for charitable organizations. 

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Let’s say you have organized a successful fundraiser to raise money to support the impactful work of your organization or partner organizations. People from within and outside your network have poured in generous donations for your cause. Because the fundraiser was successful and the donations essential to the continuous operation of your organizations or partner organizations, you will probably want to organize a fundraiser again.

Cultivating Donor Relationships

How do you get people interested in supporting your cause again? 

One of the best ways is to provide transparency in how the donations were spent and what kind of impact was enabled by the donations. This can be done through an impact report. In addition to expressing gratitude to the donors, the impact report also enables you to retain your relationship with existing donors and develop new relationships with potential donors.

Demonstrating Organizational/Program Effectiveness 

With more funders transitioning to trust-based philanthropy, a comprehensive review of how donations are making a difference is more important than ever for organizations to effectively fundraise to ensure their financial resilience. 

A fundraiser impact report offers an overview of the goals, objectives, and outcome of the fundraiser. This provides donors with the knowledge that their donations are efficiently spent on worthwhile causes. Additionally, the report enables (potential) donors, volunteers, partners and collaborators etc. to learn more about the organizer, its mission and impact, and its efficiencies of donation utilization. This could attract potential donors and partners to support the organization and its initiatives. 

When communicating the impact of your fundraiser, you want to include both qualitative and quantitative data. For example, in addition to reporting the number of people benefiting from the funded projects, you should also include testimonials from the beneficiaries about the projects.

Transparency and Accountability 

An impact report provides donors with insight into how their contributions were used and the positive impact created as a result. Through clearly communicating program outcomes, financial management, and the organization’s/project’s overall impact, you can build trust and credibility with your donors.

What are the Key Components of a Fundraiser Impact Report? 

Introduction

In the Introduction section, provide a brief overview of the fundraiser: 

• What are its goals and objectives?
• Who was it organized by?
• When and where did it take place?
• What is the total amount of funds raised (amount allocated for grant)?
• Who/what are the beneficiaries?
• What is the total number of beneficiaries?/What is the total benefit?

Organization/ Project Description

If your fundraiser was held to raise funds for your organization or a particular project, describe it in detail. This section is especially important for a fundraiser supporting multiple projects and organizations. 

Let’s use FSI’s 2023 Annual Holiday Fundraiser as an example. In the impact report, you can see a detailed breakdown of each of the six funded projects all over the world. Each project description includes:

• Timeline of the project
• Location of the project
• Organizer/manager of the project
• The reason it receives funding: the credentials of the organizer/manager of the project, the solutions it offers to address challenges in the community
• The amount of funds allocated to the project
• What the funds were spent on
• The number of beneficiaries
• Photos and/or videos of the project
• Testimonials from the beneficiaries and organizer/manager of the project
• Links to the organizer/manager’s website and/or contact information and social media

Financial Transparency

Provide a breakdown of how donations were allocated in as much detail as possible to provide transparency. For an example of how to do this, please refer to the “Funds Raised” section in the FSI 2023 Annual Holiday Fundraiser Impact Report.

Acknowledgments and Conclusion

Don’t forget to thank the people who made this fundraiser possible! These people include the donors, the volunteers who help with data collection and drafting the impact report, the funded organization(s)/project(s) for doing the impactful work they do etc. 

Take the “Conclusion” section as an opportunity to call for action for future donation and support. Invite funders, partners, and collaborators to join your next fundraiser to create even greater shared impact, for example.

Data Collection and Prep Work for the Impact Report 

Now that you know what needs to be included in the impact report, you should have a clear idea of the qualitative and quantitative data you will need to collect to compile a comprehensive impact report. Here are some tips to help you plan your workflow: 

•  Work with your colleagues to list out the different kinds of data and metrics you will need to collect. 
• Think about how you will collect the data and metrics, and discuss division of labour with your colleagues. 
• Brainstorm the time needed for each and all tasks, and draft a timeline to hold everyone accountable for their work tasks and deadlines.
• Include regular check-ins with the FSI team, which can be done online or in person. Take these check-ins as meetings for progress updates or raising whatever queries you may have about your work.

PS!

FSI recently published our 2024 Annual Holiday Fundraiser Impact Report. Check the report out and use it as a reference!

At FSI, we’re always seeking to improve, so if you have any feedback on this guide/template, please do not hesitate to let us know.

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Our heartfelt thank you to Robin Wong, Monita Cheang, William Skannerup, Nicolas Mayor, Lamia Sreya Rahman, and Jarl SmidtOlsen for helping us enhance the Business Plan Toolkit!

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Introduction to AI for SMEs and NGOs

As artificial intelligence (AI) continues to revolutionize industries, small to medium enterprises (SMEs) and non-governmental organizations (NGOs) can also make use of the opportunities to harness these technologies. This guide provides practical tips for SMEs and NGOs to utilize AI to enhance their efficiency and suggests affordable AI tools that can assist the areas of Customer Relationship Management (CRM), Marketing, and Design.

AI Tools for Marketing

Marketing, particularly through social media and other digital communications, can significantly benefit from AI technologies. These tools can automate tasks, personalize outreach, and optimize content, making them ideal for small businesses with limited resources. Here are a few tools that you can start with:

• Buffer: Buffer offers powerful automation tools for social media management, allowing businesses to schedule posts, analyze performance, and manage all their accounts from a single platform. This tool is particularly user-friendly and affordable for small businesses.
  
• Mailchimp: Known primarily for email marketing, Mailchimp has expanded its services to include AI-driven marketing automation. This can help small businesses target their communications more effectively and manage campaigns with ease.
  
• Hootsuite Insights: Powered by AI, Hootsuite Insights offers real-time data on social media trends and public sentiment, helping businesses tailor their digital marketing strategies more accurately and responsively.

AI Tools for Design Support

For SMEs or NGOs needing assistance with creating logos, promotional materials, and other design elements, AI can provide quick and cost-effective solutions.

• Canva: Canva uses AI to streamline the design process, offering templates and design elements that can be customized to create professional-looking graphics for social media, flyers, business cards, and more.
  
• Looka: Looka is an AI-powered logo maker that generates brand logos based on user preferences in style, color, and icons. This is a great tool for businesses looking to establish a visual identity quickly and affordably.
  
• Vistacreate: Formerly known as Crello, Vistacreate provides tools similar to Canva, with a focus on creating visual content like social media posts, videos, and other promotional materials easily.

AI Tools for Customer Relation Management 

AI can also help SMEs and NGOs save time in customer relation management through automating customer interactions through chatbots that handle inquiries and complaints, analyzing customer data, or through personalized email marketing that adapts the content based on user behavior and preferences.

• Zoho CRM: Zoho CRM offers AI features through its Zia AI assistant, which helps predict trends, automate tasks, and provide sales insights. It’s designed for scalability, making it suitable for small businesses that anticipate growth.
  
• HubSpot CRM: HubSpot provides a free CRM that is great for small businesses. It includes features enhanced by AI, such as email scheduling, meeting booking, and lead and pipeline management.

The Need for Empathy in AI Implementations

While AI can handle many tasks, it lacks the human touch needed for empathy, which is crucial in customer interactions and in understanding nuanced human behaviors. For instance, an AI system might analyze customer feedback as negative or positive but may miss the underlying tones of frustration or delight that can be critical for relationship management. Organizations should balance AI automation with human oversight to ensure that customer service remains genuine and empathetic. Training AI models on a broader spectrum of emotional data or using sentiment analysis tools can help, but they aren’t replacements for human sensitivity.

More Tips on Using AI Tools Effectively

Here’s more tips on how SMEs and NGOs can start integrating AI:

• Assess and Identify Needs: Pinpoint areas within your organization where AI can have the most impact, such as customer service, data analysis, or administrative tasks.
  
• Select Suitable AI Tools: Choose AI technologies that fit your specific needs. For example, if improving customer engagement is a priority, tools like Salesforce Einstein for CRM might be beneficial.
  
• Establish Clear Objectives: Set achievable goals with AI, such as reducing email response times from 24 hours to 3 hours.
  
• Educate and Train Your Team: Provide resources and training so your staff can effectively utilize AI tools. Online courses or partnerships with AI experts can be valuable.
  
• Learn how to ask effective questions on AI tools: When dealing with AI, it’s important to ask specific and detailed questions to get the most useful answers.
  • For example, instead of asking a broad question like “What do customers think of our service?”, a more detailed question could be “How have customer satisfaction ratings for our new product line changed over the past three months?” This specificity helps in drilling down into the data to fetch actionable insights.
    
• Start Small and Scale: Implement AI solutions on a small scale first, evaluate performance, and then gradually increase their use based on the results.
  
• Measure Outcomes: Track how well AI solutions meet your objectives and adjust your approach as needed.
  
• Adapt and Stay Updated: AI evolves rapidly, so keep learning about new technologies and methods that could benefit your organization.

Conclusion

For SMEs and NGOs looking to implement AI, the key is to start with a clear understanding of both the potential and the limitations of AI technologies. By focusing on specific applications, balancing automation with empathy, and scaling efforts based on success, these organizations can leverage AI to not only survive but thrive in the digital era cost-effectively.

The article was drafted by Robin Wong, a Business Strategist/ Advisor who has been supporting FSI’s community of entrepreneurs and currently is one of the mentors of FSI’s Mentorship Program for Ethnically Diverse Entrepreneurs. Robin made use of ChatGPT-4 to write this article, which he found extremely useful and highly recommended for businesses to assist with research, customer service, content generation, and more, thanks to its advanced language understanding and generation capabilities.

The post Harnessing AI: Practical Guide and Tips for SMEs and NGOs appeared first on Foundation for Shared Impact.

Introduction

Welcome to our Financial Reports template. Compulsory financial statements are reports that businesses are required to submit to regulatory authorities by law. These documents should provide transparency into the financial performance of the business. Bookkeeping software like Xero or Quickbooks generates various financial statements based on accounting entries, but if you are drafting up your own reports, these templates will give you a great base to start from!

Financial Reports Template (empty)

Download this to your own device to add your inputs and customize for your use.

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Guide to using the Financial Reports Template

1. Income statement (also known as  Profit and Loss statement):This is a quarterly or yearly report that will be readily available to the public. Should clearly outline the inflow of new assets as well as the outflow incurred to produce revenue. It is recommended that you start with your revenue. Expenses and costs are then deducted closely followed by taxes. This leads to the calculation of your profit.
2. Balance sheet: Instead of showing your funds over a given period, the balance sheet shows your assets (what you own) and liabilities (what you owe) and the difference between them at the moment you produce the balance sheet. The difference between the assets and liabilities reveals the book value of the stakeholders’ stake in the company. Assets must be listed from most to least liquid (what can be made into money/ sold fastest). Liabilities are listed in order of immediacy.
3. Statement of cash flows: this statement reveals where the funding comes from and what it is used for (e.g. operations or investments). A statement of cash flow should show the ability of your company or organization to pay bills while funding future growth.

For your additional reference, further information about financial statements with examples can be found here.

Relevant Templates

FSI has prepared for you the essential templates that facilitate your bookkeeping. Click the links below to check them out!

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A Guidebook for Entrepreneurs to Build Accessible and Inclusive Businesses (Serving Visually Impaired Persons)

Brought to you by Seekr

Established in 2021, Seekr (Vidi Labs) is an accessibility technology company dedicated to fostering an inclusive environment for VIPs (Visually Impaired Persons). Led by CEO Turzo Bose, COO Lamia Rahman, and Machine Learning Engineer Reshika P V, they developed the Seekr device, a wearable assistive technology designed to help VIPs navigate the world independently.

This is Seekr’s first guidebook to provide entrepreneurs with the insights, and practical strategies to create accessible and user-centric businesses, especially for Visually Impaired Persons. Whether you’re a seasoned entrepreneur or an aspiring change-maker, this guidebook is ready to support your work.

Guidebook for Entrepreneurs: How to Build Accessible and Inclusive Businesses

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Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

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Free legal assessment to identify the legal issues and operational risks of your organization

Brought to you by PILnet

Are you a civil society organization (social enterprise, charity, non-profit organization)? PILnet‘s Legal Health Check will help you identify the existing and potential legal issues and operational risks in your organization and create a plan to address them. The health check enables you to be better prepared to respond to a rapidly changing environment, so you can become more resilient and focus your resources on achieving your core missions of serving the community.

Topics covered in the legal health assessment include areas such as organizational structure, financial health, fundraising, and information technology and systems.

The health check can be requested and offered in English and Chinese. Read more about the health check process and submit the intake form below.

Legal Health Check

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Disclaimer

The Pro Bono Team conducting this assessment will not legally represent the CSO and will not provide legal advice. However, the Team will flag areas of concern, which can be then discussed with PILnet, who can identify available resources and help course specific legal advice.

Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

Email (Optional)

Please let us know your email if you'd like us to follow up with you or contact you separately!

Submit

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Free legal assistance from volunteer lawyers

Brought to you by PILnet

Are you a civil society organization (social enterprise, charity, non-profit organization) looking for legal assistance?

PILnet collaborates with civil society organizations around the world to obtain free legal assistance from volunteer lawyers who have the relevant skills and expertise to bolster their operational health and resilience and to advance their missions. PILnet works with organizations to pinpoint their needs and connect them with a qualified pro bono lawyer, at no cost. PILnet supports organizations all around the world through our large legal network of pro bono lawyers.

Legal assistance is offered in English and Chinese. Submit the intake form below in your preferred language.

English

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Chinese

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Disclaimer

The Pro Bono Team conducting this assessment will not legally represent the CSO and will not provide legal advice. However, the Team will flag areas of concern, which can be then discussed with PILnet, who can identify available resources and help course specific legal advice.

Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

Email (Optional)

Please let us know your email if you'd like us to follow up with you or contact you separately!

Submit

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Resources to help you build mental resilience

Brought to you by Ascension Associates

Are you looking for resources to help you build mental resilience for your personal and professional life?

Check out these resources by Ascencion Associates, established in 2018 by Larraine Chang as a Hong Kong-based boutique management consultancy supporting clients in Asia and beyond through sustainable business model design, leadership development, team coaching, strategy facilitation, and executive search.

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Special Offers to the FSI Community

Ascension Associates offers a 10% discount for FSI community members for its MasterClass series (per class ticket price around 250HKD). For more information on upcoming classes and events, please directly reach out to Larraine Chang at lchang@ascension-associates.com.

Please share any feedback you may have!

What did you find helpful, or how can we improve? What other kinds of resources do you think we should be providing?

Email (Optional)

Please let us know your email if you'd like us to follow up with you or contact you separately!

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Mark Uhrynuk and Charlene Wong welcome you to module 6, all about how a successful start-up is built!

The learning objectives within the module include:

• To understand the key themes and drivers of successful start-ups
• To understand the structure of and the different forms of a business plan
• To understand the basics of funding and monetising your start-up business
• To review strategies for growing your business from start-up to sustained success

Common themes and drivers of successful start-ups

• Here, Mark Uhrynuk and Charlene Wong outline key themes and drivers of successful start-ups. Although, there is no “one size fits all”, investing time into your business canvas will help build a successful start-up.

Developing and Executing Business Plan

• A business plan is a document that describes your plan for starting and operating your new business. Here, Mark Uhrynuk and Charlene Wong will go into depth on the structure of a business plan and the different forms a business plan can be written out in order to optimise business success.

Funding your Start-Up Business

• Funding your start-up business is one of the most important parts of building a successful start-up that will allow you to build capital and maintain a successful start-up. Here, Mark Uhrynuk and Charlene Wong will discuss the basics of funding your start-up business, from the types of financing that you might consider to the types of investors that might provide that financing.

Strategies for Growing your Business

• Here, Mark Uhrynuk and Charlene Wong will briefly review strategies for growing your business from start-up to sustained success. To complete the start-up lifecycle, we will review the options to consider when looking to monetize your start-up endeavours.

Relevant Toolkits

For more detailed guidance on building a successful start-up:

• Legal, Tax, Compliance Toolkit
• Fundraising Toolkit

The information provided on this website should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This guide is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are limited to the laws of Hong Kong as at the date of writing and is intended for general informational purposes only. You are urged to consult your attorney concerning any particular situation and any specific legal question you may have. This website contains links to other third-party websites, and such links are only for the convenience of the reader, user or browser. These links to third-party websites or information are not intended as, and should not be interpreted by you as, constituting or implying our endorsement, sponsorship, or recommendation of the third party information, products, or services found there.

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