New to Hong Kong? Opportunities in Hong Kong’s Philanthropy and Social Enterprises Sector

Introduction

Settling into Hong Kong may initially be challenging for dependants of Hong Kong’s many new entrants’ schemes, particularly during their first entry, as they adapt to a new culture, lifestyle, and the absence of familiar faces. However, building a support network of like-minded friends can significantly ease this transition and bring greater meaning to life in the city. Hong Kong is renowned for its vibrant philanthropic landscape, with numerous NGOs and community groups dedicated to meaningful causes, offering opportunities for newcomers to contribute positively and find a sense of belonging while helping to make the city a better place.  

Building on Hong Kong’s vibrant philanthropic culture, dependants can actively contribute to the community by taking on leadership and meaningful roles such as sponsors, directors, or C-suite executives in charitable organisations or social enterprises. These roles not only allow them to engage in fulfilling and impactful work but also help them integrate more deeply into society, develop extensive social and professional networks, and, where permissible, earn a stable income. Additionally, such involvement enhances their family’s charitable reputation while reinforcing their position as valuable contributors to Hong Kong’s community and economy.  

Establishing a charity of their own allows individuals to not only build their personal reputation but also take a leadership role in driving initiatives aligned with their area of interest while promoting the city’s welfare. By creating and managing a charity, they can make a lasting impact and contribute to causes that benefit Hong Kong’s community. Such efforts often attract significant support from the government, including access to resources and potential tax benefits for registered charitable organisations, further incentivising their contributions to the city’s development and social betterment.

Step 1: Where to Start?

To begin, it is essential to identify a philanthropic cause that aligns with one’s personal values and interests. In Hong Kong, charitable efforts often focus on areas such as the advancement of education, the relief of poverty, the advancement of religion, or other purposes that benefit the community at large. These well-recognised categories align with Hong Kong’s legal framework for charities and are firmly grounded in addressing societal needs. In recent years, the promotion of Chinese culture, history, and values has also emerged as a growing focus of charitable work, falling under the broader category of advancing education.

By selecting a cause that resonates personally, individuals can bring genuine passion and commitment to their work, ensuring greater impact and long-term sustainability.  

Step 2: Should I join a charity or should I start a charity?

The decision to join or start a charity also depends on the level of involvement and influence one wishes to have. While volunteering is a meaningful way to contribute, serving on the board of a charity offers a deeper understanding of its operations, governance, and impact. However, gaining a board position often takes time, as charities need to ensure individuals align with their mission, work well with both volunteers and paid staff, and understand their specific ways of operating. For those eager to take immediate action and who possess the necessary resources and network, starting a new charity can be a compelling option. It allows the flexibility to shape the organisation from the outset, focus on a personally meaningful cause, and establish initiatives in a manner that reflects one’s vision and goals.

Step 3: How Do I Start a Charity and What Are the Benefits?

To start a charity in Hong Kong, one can establish it as a society, a company limited by guarantee, or a trust, each requiring a governing document such as a constitution, articles of association, or a trust deed. To gain tax benefits, the charity can apply for Section 88 status under the Inland Revenue Ordinance (Cap. 112), which exempts charities from profits tax if their income is used solely for charitable purposes, is not substantially spent outside Hong Kong, and aligns with their stated objectives.

Key Benefits of Section 88 Status:

• Full exemption from profits tax, maximising the charity’s financial resources;

• Exemption from stamp duty on property or stock donations;

• Tax deductions for donors, encouraging greater contributions; and

• Enhanced credibility with access to grants, partnerships, and funding requiring s.88 status.

Charities with s.88 status must maintain strict compliance through:

• Annual reporting of financial statements and audits;

• Operating solely for charitable purposes, avoiding for-profit activities; and

• Proper record-keeping of accounts, including donations and expenditures.

Non-compliance can lead to the loss of s.88 status and reputational harm. Notable tax-exempt charities in Hong Kong include The Hong Kong Jockey Club Charities Trust, Caritas Hong Kong, and Crossroads Foundation Limited. It is advisable to include legal and accounting professionals on the charity’s board to provide guidance on compliance and governance. Engaging a legal representative experienced in charity work will not only ensure the establishment process is handled correctly but also help build the charity's reputation, strengthen its credibility, and expand its network within the community and beyond.

Q&A: What are Social Enterprises? Are they Charities too?

Where charities are non-profit entities primarily funded through donations, social enterprises are for-profit businesses, generating revenue through the sale of goods or services while being mission-driven to address social, environmental, or community issues through sustainable practices. Unlike charities, which rely on donations or grants, social enterprises reinvest their profits into their missions, making them less dependent on external funding and more self-sustaining.

Although social enterprises may share objectives with charities, such as reducing poverty or promoting education, they operate under a different model. Some may qualify for Section 88 tax-exempt status under Hong Kong’s Inland Revenue Ordinance, but only if their activities and profits are exclusive for charitable purposes. Many, however, opt for business structures like companies limited by shares for greater flexibility, even without tax-exempt status.

Hong Kong provides a supportive environment for social enterprises, with backing from entities like The Hong Kong Council of Social Service (HKCSS) and the Home Affairs Department, increasing consumer and investor demand for ethical and socially responsible businesses, and evolving government policies focused on sustainability and community development. These factors offer significant opportunities for social enterprises to balance profitability with social impact, contributing to a more inclusive and sustainable economy.  

Impact Investing and Opportunities for Charities

Impact investing refers to investments made with the intention of generating measurable social or environmental impact alongside financial returns. This approach has gained significant momentum globally, including in Hong Kong, as investors increasingly seek opportunities to align their capital with causes that drive positive change. Charities established by dependants can position themselves as compelling subjects for impact investing by demonstrating the tangible outcomes of their work and the potential for sustainable, long-term impact on the community.

For charities, impact investing provides a unique opportunity to diversify funding sources beyond traditional donations and grants. By adopting innovative and scalable initiatives, such as social programmes with measurable benefits or income-generating projects that align with their charitable objectives, these organisations can attract investors who prioritise both social impact and financial sustainability. Additionally, a well-structured charity that adheres to transparency, governance, and accountability standards can build credibility and strengthen its appeal to impact investors.

Charities supported through impact investing not only benefit from greater financial stability but also gain access to resources, networks, and expertise offered by investors seeking to actively engage in the success of their investments. For dependants establishing a charity, designing programmes that meet measurable social needs while offering sustainable operational models can position the organisation as a viable option for impact-driven funding, further amplifying its contribution to Hong Kong’s community and economy.

How We can Help?

For dependants of the New CIES, engagement in philanthropy and social enterprise offers significant personal, social, and strategic benefits beyond fulfilling residency requirements: purpose and integration, network building, impact and fulfilment.

Our firm provides comprehensive advisory services to ensure your philanthropic initiatives are structurally sound, compliant, and maximised for impact. We can assist with the legal and regulatory aspects, including setting up charities, providing tax advice, structuring and documenting collaborations with non-profits or social enterprises, acting as ongoing legal advisor, and drafting trust deeds or charitable foundation constitutions.

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Disclaimer: Nothing herein shall be interpreted as legal advice to any person. Readers are encouraged to consult their legal representatives for independent advice. The information provided is based on overall observations and the experience of the practitioners of the firm at the time of writing. The content may change without prior notification depending on changes in the law. If there are two versions of the article in different languages, the English version will prevail in case of discrepancies.

About Us:

Rendy Ng Law Firm is a law firm based in Hong Kong, providing a full range of commercial legal services for all sectors, with particular focus on supporting professionals and businesses in the medical and veterinary, consumer goods and retail and entertainment industries to achieve sustainable success. By combining legal guidance with understanding of business practicalities, we ensure that our clients receive support tailored to their business goals and individual needs. Please feel free to reach out to our team should you have any questions about our services.

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