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     FrontPage Edition: Tue 25 March 2008

Changes to 30/70 fund-raising rule for charities and IPCs


Changes to 30/70 Fund-Raising Rule to Facilitate Fund-Raising Efforts
The rule for computing the 30/70 fund-raising efficiency ratio, commonly known as the ''30/70 rule'', for charities and institutions of a public character (IPCs) will be revised.
The revised rule will apply to fund-raising events for charities and IPCs whose financial year ends after 31 March 2008. These changes to the 30/70 rule will facilitate fund-raising efforts of charities and IPCs without compromising the principle that the costs of fund-raising should not exceed 30% of the total funds raised.
Changes to 30/70 Rule
These changes were made taking into account feedback from the charity sector and the Charity Council's advice. The changes are:
a) ''Sponsorship'' in the fund-raising efficiency ratio will be re-defined to refer only to cash sponsorships and in-kind sponsorships where tax deduction receipts are issued. Non-tax deductible in-kind sponsorships such as the cost of jewellery donated for a charity auction need not be included. Nonetheless, information on all sponsorships received by a charity or an IPC conducting public fund-raising should still be separately disclosed in its financial statements for transparency and accountability.
b) For fund-raising done via sale of merchandise, only the net proceeds i.e. the gross amount received from sale of merchandise less cost of relevant goods, will be treated as receipts. The cost of merchandise need not be included as part of fund-raising expenses. In this way, charities and IPCs will not need to raise the price of their merchandise to an unrealistic level in order to meet the 30/70 rule. This will help them to attract more donors who would be able to purchase the merchandise at more competitive prices.
How Changes Will Facilitate Fund-Raising Efforts
Two examples are given below to illustrate how these changes will help facilitate fund-raising efforts:
a) Example on Sponsorship: An IPC conducted a charity auction to raise funds with donors sponsoring jewellery items worth $100,000 in market value. Total proceeds from the auction were $150,000 while the direct fund-raising expenses such as cost of venue, food and event management were $10,000. Based on the old computation, the fund-raising efficiency ratio would be 44%[1], which exceeds the 30% limit under the regulations. With the revised rule, the efficiency ratio would now be only about 7%[2].
b) Example on Sale of Merchandise: A charity raised funds by selling T-shirts with some public education slogans printed on them. There was no sponsorship. The T-shirts were procured at a cost of $30,000 and the total sale proceeds were $60,000 while direct fund-raising expenses such as marketing materials and rental of venue were $6,000. The fund-raising efficiency ratio based on the old computation is 60%[3]. Based on the new computation however, the ratio is only 20%[4] which meets the 30/70 rule.
Amendments to Charities Regulations
In view of the changes to the 30/70 rule, the Charities (Institutions of a Public Character) Regulations and the Charities (Fund-Raising Appeals) Regulations will be amended accordingly. The amended regulations can be found on the Charity Portal ( by 1 April 2008.
30/70 Fund-Raising Efficiency Ratio - The fund-raising efficiency ratio is the total fund-raising and sponsorship expenses of a charity or an IPC to the total gross receipts from fund-raising and sponsorships of the charity or IPC for that financial year. According to the regulations, all charities and IPCs are expected to keep their fund-raising efficiency ratio below 30%, which is commonly known as the 30/70 rule.
The formula is given below:

(E + S)/ (R + S) x 100% < 30%

where E refers to the total expenses relating to fund-raising; R refers to the total gross receipts from fund-raising, other than receipts from sponsorships; and S refers to the total cost or value of sponsored goods and services relating to fund-raising.
Issued by
The Office of the Commissioner of Charities
25 March 2008
[1] Using the old computation, E is $10,000; R is $150,000; S is $100,000. Hence, [10,000 + 100,000] / [150,000 + 100,000] * 100% = 44%.

[2] Using the new computation, E is $10,000; R is $150,000; S is $0 because the non-tax deductible in-kind sponsorship of jewellery need not be included now. Hence, [10,000 / 150,000] * 100% = 6.7%.

[3] Based on the old computation, E is ($30,000 + $6,000 = $36,000); R is $60,000; S is $0. Hence, [36,000 / 60,000] * 100% = 60%.

[4] Using the new computation, E is $6,000; R is ($60,000 - $30,000 = $30,000); S is $0. Hence, [6,000 / 30,000] * 100% = 20%.

Source: Press Release 25 Mar 2008

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