from society to non-profit company

Recently-retired NAC Deputy Director Lim Mee Lian who worked with me in the early 1980s as Organiser (Music Programmes) remarked a while ago that these days, anyone starting a new arts group would opt for the status of “company limited by guarantee”.  No one would apply for “society” status these days.

This wasn’t always the case! 

In the early 80s, nearly all the arts groups were societies and the Ministry’s grant scheme stated that only societies were eligible for its project grants, which were extended for events on an ad hoc basis.  However, when we introduced the annual grant scheme in 1985/6, we found the status of “society” rather disadvantageous.  Art society leaders would say “How can I commit us to an 18-24 months plan of activity when I am not even sure I will still be in charge after the next AGM?”  To the best of my recollection, bickering was not rampant in the arts community although it affected one or two groups.  Nonetheless, we knew that frequent changes to a society’s leadership would not offer a stable enough existence to plan ahead and take advantage of the annual grant, SRSITS and Arts Housing Scheme which were devised to nudge groups into professionalism.

After some research and an appreciation of the legalities, we nudged the art societies to convert into “companies limited by guarantee”. They also needed to apply to become “Institute of Public Character” to enable them to offer tax exempt receipts on donations received and “Charity” status to enjoy income tax exemption. The idea was not new but it struck us one day that there was no reason why the arrangement enjoyed by the SSO could not be tapped by the other groups.  We simply transplanted the idea!

Such “limited by guarantee” companies would typically be founded by two or three equally-committed and compatible individuals who shared a common artistic vision, who needed to put out only a modest capital of their choice, hence, the term “$2 dollar company”.  “Limited by guarantee” companies were soon set up by Goh Soo Khim and Anthony Then (Singapore Dance Theatre), Kuo Pao Kun and Goh Lay Kuan (Practice Performing Arts Company) with many others following suit. TheatreWorks, which started as a “private limited” company, also decided to convert to “company limited by guarantee” status.

In line with this change, at the Ministry’s end, we tweaked the criteria for our schemes to allow companies limited by guarantee to enjoy access to them.  So, such companies enjoyed the best of all worlds – the much-valued organisational stability and access to annual and project grants, the SRSITS and Arts Housing Scheme, all of which demanded an organisational and financial stability and continuity; income tax exemption and the facility to offer tax exempt receipts on donations. Directors of such companies would not earn dividends as all operating surpluses would be ploughed back into the company but we did not prohibit them from earning a salary as artistic directors or company managers.

The only downside they had to contend with was that such companies could not get bank loans to pay for major productions or renovation works. Years later, in the 1990s, at a NAC Cultural Plan meeting, I suggested to NAC to front a bank loan on behalf of art companies, to tide them over in deserving situations, but I’m not sure they saw the merit in the idea.  Thankfully, committed, well-heeled board members of some of the art companies have secured credit lines on their company’s behalf.

In the late 1990s when I started to administer the Singapore Pools donation programme for charity and sports groups, I cross-pollinated the ideas for the annual arts grant scheme and SRSITS  to hatch a system of annual grants for the national sports associations, uniformed groups and for grassroots organisations (“SPIN” for “Singapore Pools in the Neighbourhood”) under which we ”bartered” an annual donation for an annual calendar of four events. 

It was déjà vu for me to watch some of the sports associations in turmoil as executive committees got overthrown at AGMs.  I wondered if it would be appropriate for them to consider conversion to “companies limited by guarantee” but despite the big difference that it had made to the arts landscape over the then ten (now >20) years, I realised that this was somebody else’s call to make!