(NAR) VOL. 10 NO. 1 / JANUARY - MARCH 1999
(c) "Utilization" by an accredited NGO — shall refer to
(i) Which, not later than the fifteenth (15th) day of the third month after the close of the NGO's taxable year in which contributions are received, makes utilization directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated, unless an extended period is granted by the Secretary of Finance, upon recommendation of the Commissioner;(ii) The level of administrative expenses of which shall, on an annual basis, not exceed thirty percent (30%) of the total expenses for the taxable year; and
(iii) The assets of which, in the event of dissolution, would be distributed to another accredited NGO organized for similar purpose or purposes, or to the State for public purpose, or purposes, or to the state for public purpose, or would be distributed by a competent court of justice to another accredited NGO to be used in such manner as in the judgment of said court shall best accomplish the general purpose for which the dissolved organization was organized.
(d) "Accrediting Entity" — shall refer to a non-stock, non-profit organization composed of NGO networks, duly designated by the Secretary of Finance to establish and operationalize a system of accreditation to determine the qualification of non-stock, non-profit corporations or organizations and NGOs for accreditation as qualified-donee institutions. The Secretary of Finance and the Commissioner of Internal Revenue shall oversee, monitor and coordinate with the Accrediting Entity to ensure that the provisions of these Regulations are complied with. In this connection, the Secretary of Finance or the Commissioner of Internal Revenue or their duly authorized representative shall sit as ex-officio member of the Board of Trustees of the Accrediting entity with the right to vote. The Secretary of Finance may also designate an official of a concerned government agency, e.g. Department of Science and Technology, to assist the Board of Trustees in the accreditation of foundations.
(i) Any amount in cash or in kind, including administrative expenses, paid or utilized by an accredited NGO to accomplish one or more purposes for which it was created or organized; or
(ii) Any amount paid to acquire an asset used, or held for use, directly in carrying out one or more purposes for which the accredited NGO was created or organized; or(iii) Any amount set aside for a specific project which comes within one or more purpose or purposes for which the accredited NGO was created, but only if at the time such amount is set aside, the accredited NGO has established to the satisfaction of the Commissioner of Internal Revenue that the amount will be utilized for a specific project within a period not to exceed five (5) years, and the project is the one which can be better accomplished by setting aside such amount than by immediate payments of funds: Provided, That, the utilization requirements prescribed under Sec. 5 of these Regulations shall be complied with; or(iv) Any amount in cash or in kind invested in any activity related to the purpose for which it was created or organized.(v) Any amount in cash or in kind invested in capital sustaining and generating activities, such as but not limited to, endowment funds, trust funds, money market placements, shares of stock and similar instruments: Provided, That, any income derived from these investments shall be exclusively used in activities directly related to one or more purposes for which the accredited NGO was created or organized.
(h) "Character building and youth and sports development (or athletic) purposes" — shall refer to and include conducting basic and applied research on youth development, initiating and establishing youth organizations to promote and develop youth activities, including the establishment of summer camps or centers for leadership training, conducting a program on physical fitness and amateur sports development for the country; developing and maintaining recreational facilities, playgrounds and sports centers; and conducting training programs for the development of youth and athletes for national and international competitions.
(i) Basic research shall refer to an experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts without any particular application or use in view. It analyzes properties, structures or relationships with a view to formulating and testing hypothesis, theories or laws. The results of basic research are not generally sold but are usually published in scientific journals or circulars to interested colleagues.
(ii) Applied research shall refer to an original investigation undertaken in order to acquire new knowledge. It is directed primarily towards a specific practical aim or objective. It is undertaken either to determine possible uses for the findings of basic research or to determine new methods or ways of achieving some specific and predetermined objectives. It involves the consideration of the available knowledge and its extension in order to solve particular problems. Applied research develops ideas into operational form.
(iii) Scientific research will be regarded as carried on for public interest if the results of such research are made available to the public on a non-discriminatory basis; or if such research is performed for the Government of the Philippines or any of its agencies or political subdivisions; or if such research is directed to benefit the public.
It also includes upgrading of existing facilities to support the conduct of the above activities.
(i) Formal method of instruction refers to the institutionalized, chronologically graded and hierarchically structured educational system at all levels of education;(ii) Non-formal method of instruction refers to any deliberately organized, systematic educational activity carried on outside the framework of the formal system to provide selected types of learning to particular subgroups of the population, particularly out-of-school youths and adults, for the purpose of communicating ideas, developing skills, changing attitudes or modifying behavior or improve their character and to provide them with tools necessary for the achievement of a higher standard of living. For the purpose of this section, a certification from the Technical Education and Skills Development Authority (TESDA) is required for the accreditation of the non-formal educational program which is implemented or carried out by a non-stock, non-profit corporation, organization or an NGO.
(m) "Health purposes" — shall refer to include the pursuit of any of the following:
(i) undertaking and/or assisting in the amelioration of the living conditions of distressed citizens particularly those who are handicapped by reasons of poverty, youth, physical and mental disability, illness, old age, and natural disasters, including assistance to cultural minorities;(ii) pursuing a program for the protection and development of children and youth, such as providing services for drop-outs, pre-school children of low-income working mothers, and physically handicapped children;(iii) providing for the rehabilitation of the youth and disabled adults, released prisoners, drug addicts, alcoholics, mentally retarded, hansenites and similar cases; and(iv) providing for services to squatter families and to displaced workers.
SECTION 2. Accreditation of non-stock, non-profit corporations/NGOs by the Accrediting Entity. —
(i) control, prevention and treatment of communicable and degenerative diseases, accidents and other health disabilities;(ii) family planning program designed to indicate knowledge and understanding of population, human growth and development of family life;
(iii) environment sanitation, such as, public sewerage system and sanitary toilets; and(iv) nutrition, which aims to reduce the prevalence of malnutrition and increase the energy and protein intake among households.
(c) The Accrediting Entity shall evaluate and accredit non-stock, non-profit corporations/NGOs using the following major criteria:
(i) Articles of Incorporation and By-laws; (ii) Certificate of Registration with the Securities and Exchange Commission; (iii) Affidavit of Modus Operandi showing:
- the character of the organization;
- the purpose for which it is organized;
- the lists of projects/activities for the past two (2) years, or list of proposed projects/activities for the first two (2) years of operations for newly-organized non-stock, non-profit corporations/NGOs;
- the source of income and the utilization thereof, or target fund sources for newly-organized non-stock, non-profit corporations/NGOs; and
- other facts relating to their operations which are relevant to their qualification as donee institutions;
(iv) Duly audited financial statements for the past two (2) years showing the assets, liabilities, receipts and disbursements of existing organizations, or financial projections for the first two (2) years for newly-organized non-stock, non-profit corporations/NGOs.
(d) The Secretary of Finance, upon the recommendation of the Board of Trustees of the Accrediting Entity can waive the submission of duly audited financial statements for newly-organized non-stock, non-profit corporations/NGOs which have been organized to carry out programs of national significance, e.g. foundation to build the National Museum. They shall be eligible to apply for a three (3)-year probationary accreditation and registration as qualified donee institutions with the Accrediting Entity.
(i) Mission and Goals The mission and goals of the non-stock, non-profit corporation/NGO should justify its existence. Statements of mission and goals shall serve as guideposts for its planning and operations and a framework for decision-making.(ii) Resources The criterion focuses on the adequacy of the resources and the effectiveness of the structure and systems of the non-stock, non-profit corporation/NGO. Areas that should be evaluated under this criterion include the organization structure, human, financial and physical resources. Evaluation shall take into account the names, positions and qualifications of the individuals or committee members who manage and make decisions for the non-stock, non-profit corporation/NGO, its sources of funds and distribution of financial resources, and the following exhibits at the time of examination, among others:
- Minutes of the Board meetings
- Table of organization;
- Policy Manual, if any;
- Personnel Manual, if any;
- Budget for the past two (2) years, or proposed projects for the first two (2) years of operations for newly-organized non-stock, non-profit corporations/NGOs; and
- Audited financial statements for the past two years for existing non-stock, non-profit corporations/NGOs.
(iii) Program Implementation and Evaluation The non-stock, non-profit corporation/NGO must demonstrate that it is effectively using its resources to accomplish the purposes for which it was created. There should be clearly defined policies, priorities and guidelines for implementing the various programs and projects. Evaluation shall consider programs and projects implemented within the last two years; description of how its programs/projects/services are managed; how the following procedures are carried out; record keeping, monitoring, evaluating and contingency planning; programs/projects vis-a-vis the needs and priorities of its beneficiaries; the present documentation or results of evaluation and provisions for adequate training, people participation, development of leaders and eventual self-sufficiency.(iv) Planning for the Future The non-stock, non-profit corporation/NGO must provide evidence that it has the capability to plan, implement and monitor its programs and projects. Evaluation shall provide evidence that the non-profit corporation/NGO has mechanisms for planning, implementing and monitoring its programs and projects and for ensuring the continuity of programs/projects even when external funding has ceased. Evaluation shall also rely on the presentation of the following exhibits at the time of visit:
- Organizational plan
- Monitoring and evaluation tools
(i) | The accredited NGO shall make utilization directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated, not later than the fifteenth (15th) day of the third month after the close of the accredited NGOs taxable year in which contributions are received, unless an extended period is granted by the Secretary of Finance, upon recommendation of the Commissioner. |
For this purpose, the term "utilization" shall have the meaning as defined under Sec. 1(c) of these Regulations. | |
(ii) | The level of administrative expenses of the accredited NGO, shall, on an annual basis, not exceed thirty percent (30%) of the total expenses for the taxable year; |
(iii) | In the event of dissolution, the assets of the accredited NGO, would be distributed to another accredited NGO organized for similar purpose or purposes, or to the State for public purpose, or purposes, or to the state for public purpose, or would be distributed by a competent court of justice to another accredited NGO to be used in such manner as in the judgment of said court shall best accomplished the general purpose for which the dissolved organization was organized. |
(iv) | The amount of any charitable contribution of property other than money shall be based on the acquisition cost of said property |
(v) | All the members of the Board of Trustees of the non-stock, non-profit corporation, organization or NGO do not receive compensation or remuneration for their service to the aforementioned organization. |
(a) the nature and purpose of the specific project and the amount programmed therefor;Amounts set aside shall be evidenced by book entries and documents showing evidence of deposits or investments, including of the funds so set aside, or other documents that the Commissioner may require.
(b) a detailed description of the project, including estimated costs, sources of any future funds expected to be used for completion of the project, and the location or locations (general or specific) of any physical facility to be acquired or constructed as part of the project; and
(c) a statement by an authorized official of the organization that the amount to be set aside will actually be disbursed for the specific project within five (5) years from the date of approval by the Commissioner, unless the nature of the project is such that the five-year period is impracticable.
(a) | Original copy | - | Donor |
(b) | Duplicate copy | - | BIR |
(c) | Triplicate copy | - | Donee |
(a) | Time of Filing. — Claims for limited or full deductibility of donations and contributions by the donors shall be filed by the donors at the time of filing their income tax returns. |
(b) | Place of Filing. — The income tax return and/or the annual information return of the donor or of the accredited non-stock, non-profit corporation/NGO shall be filed in the Revenue District Office where the place of business of the donor or the donee, as the case may be, is located. |
(i) Actual receipt by the accredited non-stock, non-profit corporation/NGO of the donation or contribution and the date of receipt thereof; andOn the other hand, donors claiming exemption from donor's tax on their donations and contributions to accredited non-stock, non-profit corporations/NGOs should submit evidences or proofs showing the amount of donation, if in cash; if real property, the zonal value thereof at the time of donation; and if personal property, the acquisition cost thereof, but if said personal property had already been used at the time of donation, the depreciated or book value thereof.
(ii) The amount of the charitable donation or contribution, if in cash; if property, whether real or personal, the acquisition cost of the said property.
(i) | A list of the donations and income received during the year, showing the name and address of the donors; the sources of income; the amount or market value of each donation and items of income and the disposition thereof; |
(ii) | A list of the activities and/or projects undertaken by the institution and the cost of each undertaking indicating in particular where and how the donations has been utilized. |
(iii) | A list of projects, their corresponding costs; the amount "set aside" and the status of funds balances at the end of the year; |
(iv) | A declaration that the utilization requirements under Section 2(c) and 8 of these Regulations have been sufficiently complied with; |
(v) | A declaration that no part of the net income of the accredited non-stock, non-profit corporation/NGO inures to the benefit of any private stockholder or individual; and |
(vi) | A declaration of the status of project implementation. |
(a) | Lending any part of its income or property without adequate security and/or a reasonable rate of interest unless the institution has a formal micro-credit or micro-finance program as approved by their Board of Trustees; |
(b) | Purchasing any security and/or property for more than an adequate consideration in money or money's worth; |
(c) | Selling any part of the security or other property for less than adequate consideration in money or money's worth; |
(d) | Diverting its income or transferring its property by way of lease or sale to any member of its Board of Trustees, founder/s or principal officers or any member of their families or to any corporation controlled directly or indirectly by the aforesaid individuals or their families in accordance with the attribution of stock ownership under Section 73 (A) and (B) of the Tax Code; |
(e) | Using any part of its property, income or seed capital for any purpose other than that for which the corporation was created or organized; or |
(f) | Engaging in any activity which is contrary to law, public order or public policy. |