Legal Registration: Things to Consider Before Registering Your Groundup
Groundup Connexion is a series of workshops that take place on a quarterly basis, designed to build the capabilities of groundup founders and core volunteers. In this article, we round up what took place in the session “Legal Registration: Things to Consider Before Registering Your Groundup”.
You’ve seen your groundup grow from mere ideas into a fully functioning group that serves the community. No longer executing the vision alone, many have come onboard to support your cause. With an increasing number of hours being put into the work, thoughts about officially registering the groundup quickly form, accompanied by questions and uncertainties.
Do I really have to register my groundup? What does registering my groundup entail? What legal entity do I want my groundup to become, and how can I make an informed decision?
In this session of Groundup Connexion moderated by Jen Goh from Hopefull, we invited Abhishek Bajaj from 6th Sense, Jen Macapagal from Race2Share and Asher Low from Limitless to share their diverse lived experiences from their organisation’s legal registration journey:
6th Sense: Groundup → Company Limited by Guarantee (CLG) → Groundup
Race2Share: Groundup → Society
Limitless: Groundup → Social Enterprise → Company Limited by Guarantee (CLG) → Charity
About the panellists:
Abhishek Bajaj is the co-founder of 6th Sense, a ground-up initiative that is entirely run by volunteers where they serve as befrienders for children aged 7 to 12 years old living in Kebun Baru, a rental flat neighbourhood in Singapore. 6th Sense believes in the holistic development for these children and hold fortnightly sessions to engage them through free-play & art programmes.
Jen Macapagal is the founder of Race2Share, a non-profit organization that aims to utilise sports & fitness as a platform for positive change. Race2Share aims to create an impact in the community by advocating sport accessibility for foreign domestic workers (FDWs) in Singapore through sports like dragon boat.
Asher Low is the founder of Limitless, a non-profit organization that works with youths between 12 to 25 years old with a mission to provide mental health support to the youth. Limitless provides therapeutic treatment to youths who are currently struggling with mental health illnesses and reach out to their family and friends to create a supportive environment that will aid in the recovery process.
About the moderator:
Jen Goh runs Hopefull, a ground-up initiative that collaborates with their network of local expertise to gather and create engaging educational resources for children and youths from low-income families.
Need a refresher on the technical stuff? Check out the pre-reads that we sent to session participants before reading further:
On the registration journey
Jen Goh ("Jen G"): How did your initiatives start and evolve over the years?
Abhishek Bajaj ("Abhishek"): 6th Sense started as a ground-up initiative in April 2019, and when we started, we enjoyed the flexibility of being a groundup. But we also faced difficulties in accessing grant funding, and so we decided to register as a CLG in June 2019. The main reason we chose this legal structure was because we really resonated with its intended use case as a registered entity serving a charitable cause.
However, as we transitioned into a CLG, our team faced many challenges and ultimately, we made the tough decision to give up on being a CLG in April 2021. As such, today we are back to operating as a groundup as we believe that this structure is the best fit for us.
Jen Macapagal ("Jen M"): We started in 2015 as a sports-based team that raised funds to support other cause-based organisations. As I was already involved in another sporting association doing similar work that was registered as a society at that time, my natural inclination was to go with this same structure that I was already familiar with. So registration as a society took place relatively early into our journey.
Subsequently, I met a group of ladies who were part of a volunteering community making crafts for the patients at the Institute of Mental Health. I asked them randomly if they would be interested in trying out dragon boating and they said yes! One training led to another and this gave us the idea of offering dragon boat programmes for foreign domestic workers (FDWs), which is now our main focus area as we strive to provide an inclusive and safe space for FDWs in Singapore to access sports and fitness. Now, we have developed FDWs who are actual athletes!
I am proud of this impact, and to me, the struggles were all worth it. We maintained the status of a society throughout, and moving forward, we are looking at how to scale this program to make it more sustainable by pivoting towards a social enterprise model.
Asher Low ("Asher"): Limitless was founded in my living room in October 2016 with a group of young people that I had personally mentored. All of us had the desire to make an impact on the youth in our society. That was how Limitless was born as a groundup and subsequently registered as a social enterprise focusing on organising training programs to cultivate positive mental well-being in the youths.
As a social enterprise, we realised that our business model was not sustainable, and the market was saturated with competitors. More importantly, we found it tough finding alignment between the business side of things and our core values of impacting the lives of the youth. That was when I decided to transit Limitless from a social enterprise to a charity, diving deep into interventive work by starting with counselling and casework. In November 2017, Limitless obtained charity status, and currently, we are in the process of registering for IPC status.
On the challenges of being a registered entity
Jen G: I’m hearing that there are some challenges that each of you faced in registering your initiatives. Would you like to share more?
Abhishek: The main challenge we faced was the lack of administrative bandwidth. As a registered entity, we had to spend a large amount of time handling paperwork such as preparing audit and financial statements. Additionally, we had to communicate with various stakeholders to understand the requirements and operations of a CLG. This arduous administrative process took a toll on us as we all had our own commitments to fulfil. We also questioned whether it was worth the effort to raise the funds to engage corporate services – the reality for us was that the fees required to keep the CLG going administratively could instead be used to fund our activity sessions with the kids for 6-12 months, and we couldn’t reconcile that trade-off. As such, we decided to revert back to a groundup which we feel the most comfortable with.
Jen M: Similarly on administrative duties, I do have volunteers helping me but it is definitely hard to balance. If the key appointment holders – that is your president, secretary and treasurer – in your society do not have the same level of passion as you, it is very difficult to maintain the administrative load especially when everyone is holding full-time jobs while running your groundup on the side. It takes a lot of time for me to submit paperwork for grants, especially for the niche sector that we are in. That is why we have to be more creative by tapping into regional grants like those from the United Nations. Even after you have gotten the grants, the process of getting reimbursed for the funds spent is onerous and quite taxing.
Bear in mind also that for a society, you need to have a constitution set up and 10 founding members, with the majority of the key appointment holders to be Singaporeans.
Asher: Going down the registered non-profit route also usually means that you need to draft a constitution for your organisation, and every registered charity will fall under the care of a governing Ministry. There are default constitution templates available which are a good start and you can make the necessary edits from there, but I would also advise those looking to become charities to consult and involve your Ministry-in-charge in the drafting process so that they are able to guide you along as well.
On registration costs
Jen G: What’s the approximate cost of setting up a CLG or a social enterprise?
Asher: Franky speaking, to start a CLG or a social enterprise is not expensive. The total estimated cost would be in the range of $1,000–$1,500. This includes registration fees, website domains and subscriptions, and hiring a corporate secretary to keep track of the organisation’s books and managing regulatory filings.
Jen G: And how about for registering as a society?
Jen M: It was about $400 for us. Thankfully I can tap on my team of volunteers for things like bookkeeping. But do note that your registered address for your society cannot be a residential address, so we also have to factor in a virtual office address which costs about $180/year.
On registration and credibility
Jen G: As a groundup, do you think that your legal status affects your credibility? How do you build trust and demonstrate credibility as a groundup?
Abhishek: I believe that credibility lies in the effort we put in to gain the trust of our partners, instead of our legal status. Firstly, it is important we keep everyone accountable in order to grow further as a team. To gain credibility, I believe that groundups can also implement a board to maintain structure and order, even though there isn’t a requirement to.
Secondly, I believe that managing your finances well will also help you to build credibility. It is important that we adopt a disciplined approach in managing our day-to-day finances as this will really provide greater clarity in the long run. Also, to establish trust with our stakeholders, we must handle all financial transactions efficiently and transparently. For example, avoid holding back payments to others just because you have yet to be reimbursed yourself. Make sure any funds that you owe to others gets paid early.
Thirdly, at 6th Sense, we build trust by maintaining close relationships with our partners. It is important that we treat every connection genuinely and even a simple holiday greeting can go a long way in building your credibility. Other than that, we try to publish our work online as much as possible and we also provide frequent updates on what is happening on the ground. This not only increases our reliability, but also helps us to gain exposure.
Lastly, as a groundup, you have to put yourself out there and proactively introduce yourself to the public. You must always be prepared to pitch to others, providing a space for more people and partnerships to join you in your journey.
On registration and fundraising
Jen G: Is being a legal entity important in terms of raising funds?
Jen M: It really depends. If the intention is to raise funds that are to be channelled to a particular local charity, then it can be done on crowdfunding sites like Giving.sg without needing to be a legal entity. But if you’re planning to approach companies for funding, having a legal entity could help as some companies may have policies in place to only allow fund transfers to corporate bank accounts and not individual bank accounts.
Asher: To add to that, it also depends on the complexity of the intended use of funds. I’ve come across a number of animal welfare groundups formed by a group of animal lovers raising funds for straightforward uses to directly benefit the animals via a simple funding mechanism. But if funds raised are for scaling purposes, then I feel registering as a formal organisation would be the prudent path to take.
(Read also: Fundraising FAQs on the Groundup Central Learn page)
On registration and scaling
Jen G: On the note of scaling – do you think that scaling is possible without registering as a legal entity?
Abhishek: Yes, it is possible. In fact, there are many examples of ground-up initiatives who have been able to grow without registering. I believe that one of the most exciting ways for a groundup to expand is by collaborating with a charity organisation. Doing so will enable groundups to receive greater support and grow further by expanding your outreach efforts.
Asher: My opinion is that there isn’t a need to have any registered organisation to scale. It depends on what you are scaling on. To scale on volunteers, you can scale as massively as you want without any legal entity. However, the situation might be a little bit tricky if we are scaling on paid staff. This is due to the involvement of money, and legal registration may be required to comply with the legalities.
On going into it full-time
Jen G: Asher, how did you decide that the time was right for you to jump into Limitless full-time and how did you sustain yourself financially while growing Limitless?
Asher: There are several aspects that we have to take into consideration. I break it down into three components – finances, people and networks.
In the early stages of running a charitable organisation, you will usually face tight budget constraints and may even face the possibility of not being able to pay yourself. You absolutely have to be truthful with yourself on your current financial standing to determine whether you can afford to go for a prolonged period without stable income. I remember I had to work several part-time jobs to bring food to the table and keep Limitless afloat at the same time. It was only two years after starting Limitless that I was able to draw a small salary.
Next, it is about finding the right people to sit on the board of your organisation. I started out not knowing who to ask to sit on my board, so I turned to my friends. But while my friends may be well-meaning, and I love them very much for it, having people with the right skillsets that are complementary to yours is so crucial for the growth of your organisation. For example, I am a trained social worker so I can handle the counselling and stuff, but I was not well-versed in the business side of things such as reading profit and loss statements. Hence, I found people that could guide me along, and I’m still learning every day. Surrounding yourself with people who can help cover the various aspects of your organisation is really important if you want to take that leap.
Lastly, have in place a support network of partners. Till today, I am very thankful to the organisations like South East CDC and Singapore Children’s Society that supported and believed in Limitless when we were nobodies. Their affirmation and belief in Limitless’ work further reinforced my commitment to pursue Limitless full-time.
Jen G: I’ve really enjoyed and learnt a lot from your insightful sharing! In closing, what would you like to say to other groundups who are considering whether to register their initiatives