2. NON-STOCK, NON-PROFIT
CORPORATIONS/ORGANIZATIONS
• A type of corporation formed for social welfare
and/or development, educational, scientific
research, religious, socio-cultural, fraternal,
trade/professional leagues and others
• All revenues shall be used in pursuit of purpose/s for
which the non-stock, non-profit has been organized
• No part of its revenues and assets is used for the
benefit of its Board, management, staff and other
persons
3. SEC REGISTRATION
• Verify and reserve the proposed corporate
name
• Prepare the Articles of Incorporation and By-
laws.
• For non-stock/non-profit corporation, amount of
capital or money contributed or donated and by
whom must be specified (for foundations, a
minimum cash of P1 million must be deposited in
the bank in the name of the org.)
4. BIR REGISTRATION
• SEC will assign a tax identification number
(TIN) upon release of the certificate of
incorporation
• TIN shall be formally registered with BIR
• Registration of books of account, official
receipts/invoices
• Application for tax exemption
• Application for “donee institution status“
through PCNC
5. BUSINESS PERMITS & LICENCES
• From the LGU (town or city) where you will
operate:
– Community tax certificate
– Barangay clearance
– Fire permit
– Occupancy permit
– Others
6. TAX EXEMPTION – Sec. 30 - NIRC
It is said that:
• Tax exemption is applicable to revenues
derived from donations, contributions, grants
and similarly natured income are tax exempt
• Subject to tax are revenues derived from any
of its properties, real or personal, or from any
other activities conducted for profit, even if
used for the pursuit of the purpose of the
non-stock, non-profit organization
7. Tax Exempt Organizations
Per Section 30 of the National Internal Revenue
Code of 1997, among the organizations that can
avail of tax exemption are:
• Non-stock corporation or association organized
and operated exclusively for religious, charitable,
scientific, athletic, or cultural purposes, or for the
rehabilitation of veterans
8. Tax Exempt Organizations
• Civic league or organization not organized for
profit but operated exclusively for the
promotion of social welfare;
• A non-stock and non-profit educational
institution;
These organizations must ensure that no part of
its net income or asset shall belong to or inure
to the benefit of any member, organizer, officer
or any specific person
9. SEC & BIR REGISTRATION
• It is best to seek the help of a lawyer/accountant
who is/are experienced in the:
– Registration of non-stock, non-profit
corporations/organizations
– Preparation and submission of required reports
to SEC and BIR
10. DONEE INSTITUTION STATUS
• Corporate and businessmen donors of
non-stock, non-profit organizations with
Donee Institution Status are entitled to:
–donor’s tax exemption (30% of donation plus
12% value added tax)
–100% deductibility of donation from gross
income
12. ELIGIBLE NGOs
• Non-stock, Non-profit Domestic Corporations
organized under Philippine Laws and operated
exclusively for any or a combination of the following
purposes:
Type of Main Program
Charitable Religious
Cultural Scientific Research
Educational Social Welfare
Health Youth Development
Rehabilitation of Veterans Sports Development
13. ELIGIBLE NGOs
• Civic league or organization not organized for
profit but operated exclusively for the
promotion of social welfare;
• Non-stock, non-profit educational institution.
14. THE BEGINNINGS OF PCNC
• 1997 – PCNC was organized by six of the
largest networks of NGOs in the country
• 1998 – PCNC was authorized by the
Department of Finance to certify NGOs for
“Donee Institution Status”, subject to the final
approval of the Bureau of Internal Revenue
• 1999 – PCNC was publicly launched
16. BEYOND DONEE STATUS CERTIFICATION
VISION OF PCNC – as of 2009:
A Filipino nation blessed with a culture of
giving:
• Matched by responsible stewardship within
the NGO community:
• Sought by donors
• Recognized by government;
• Treasured by its members
17. RESPONSIBLE STEWARDSHIP
The exercise of due diligence by NGOs in
the management of entrusted:
• Resources by donors, contributors
grantors, and other partners aimed at
• Contributing to the well-being of the
target disadvantaged
groups/sectors
18. BEYOND DONEE STATUS CERTIFICATION
MISSION OF PCNC – as of 2009:
Improve the effectiveness of Philippine NGOs
so that they become increasingly:
• Accountable, credible and capable in providing
services to those in need
• Instrumental in creating a culture of giving
19. SEAL OF
GOOD GOVERNANCE AND MANAGEMENT
AND TRANSPARENCY AND ACCOUNTABILITY
FOR NGOs and FOUNDATIONS
20. Setting PCNC Standards
To measure NGO Legitimacy and Efficiency
and Effectiveness:
• Review of standards used by NGO donors and
accrediting institutions in other countries
• Guidance from experts
• Consultations with local networks of NGOs
and more than 300 NGOs
21. SIX AREAS OF ORGANIZATIONAL
FUNCTIONING
• Vision, Mission, Goals
• Governance
• Internal Management
• Program Operations
• Financial Management
• Collaborative Linkages
22. VISION, MISSION AND GOALS (VMG)
• Clarity of purpose, sector served and functions
in its pursuit of a public good
• Common understanding of the VMG by Board
Members, Management, Staff, Beneficiaries
and Partners
• Degree to which the
VMG are achieved
23. GOVERNANCE
• Active involvement of Board Members in:
– Policy formulation and direction setting
– Approval of strategic plan and budget
– Evaluation of program accomplishments and
financial performance
– Resource generation for sustainability
• Compliance with legal requirements of
concerned government agencies
• Delineation of responsibilities of the Board
and Executive Officer
24. GOVERNANCE
Dept. of Finance (DoF)/Bureau of Internal Revenue
(BIR) Mandated Provisions in the Articles of Inc./
By-Laws of non-stock, non-profit corporations:
• “In the event of dissolution, assets of the
accredited NGO would be distributed to another
NGO of similar purpose/s or to the State for public
purpose/s”
• “No part of net revenue or asset of which shall
belong to or inure to the benefit of any person”
25. GOVERNANCE
DoF Mandated Provisions in the Articles of
Incorporation of non-stock, non-profit
corporations:
• “Members of the board do not receive any
compensation”
• “Level of administrative expenses not
exceeding 30% of total donations received and
total expenditures for the year”
26. GOVERNANCE
Per Executive Order 720
• “Registration, licensing and/or accreditation
from government agency (e.g. DSWD, DOST,
DepEd, etc.) that has regulatory functions over
the type of programs and services
implemented by the NGO/Foundation”
27. GOVERNANCE
Additional PCNC Polices for Foundations
organized by religious congregations:
At least one (1) Independent Trustee who has
no working/monetary and/or membership
connection with the foundation, its affiliate
organizations, and grantees
Chair/President and Treasurer must not be
related by affinity or consanguinity up to the
second degree
28. INTERNAL MANAGEMENT
• Clear inter-relationships and delineation of
duties and responsibilities and authorities of
staff
• Sufficiency of staff and appropriateness of
knowledge, skills and attitudes
• Compliance with government labor and
employment laws
• Written and practiced administrative and
personnel guidelines
29. PROGRAM OPERATIONS
• Mechanism for involvement of stakeholders
• Criteria for selection of beneficiaries and
programs and services
• Program guidelines are in place and practiced
accordingly:
– Development & Planning
– Implementation
– Monitoring and Evaluation
• Tracking of program disbursements
30. FINANCIAL MANAGEMENT
Internal control guidelines applying checks
and balances in handling and utilization of
funds
• Accurate and up-to-date four books of account
• Check disbursements covered by pre-numbered
check vouchers and with supporting documents
• Approving party, cash custodian and bookkeeper
are three (3) different persons
31. FINANCIAL MANAGEMENT
Internal Control Guidelines
• Funds are kept in a bank account in the name
of the organization, except for petty cash
• Check vouchers and all supporting documents
are stamped when check is released
• Monthly preparation and review of:
– Financial Statements
– Bank Reconciliation Statements
32. FINANCIAL MANAGEMENT
• Annual external audit by independent
Certified Public Accountant registered with
the Professional Regulatory Board, BIR and
Board of Accountancy
• Regular sources of funds
• Reporting of, at least, the sources of funds
generated and corresponding utilization
• Preparation of Board approved three-year and
annual budgets
33. COLLABORATIVE LINKAGES
• Resource generation
• Criteria and system for partnering
• Program partnership with other institutions
(GOs, NGOs, Funders)
• Sharing of “good practices”
34. Major Hindrances to Full
Organizational Development of NGOS
• Deficient:
–Resources
–Access to capability building assistance
• Handcuffed organizational culture
36. MAJOR STEPS IN THE PROCESS OF
PCNC CERTIFICATION
• Conduct by applicant of organizational self-
assessment (optional) using:
– Tools developed by PCNC along the standards and
indicators used to measure compliance with:
• Statutory requirements of the government (legitimacy)
• Efficiency and effectiveness of operations
• Organization by applicant of all documentary
requirements of PCNC for evaluation
37. MAJOR STEPS IN THE PROCESS OF
PCNC CERTIFICATION
1. Submission of complete documentary
requirements
2. Payment of application dues (range from
P10,000 to P30,000 based on assets of the
NGO/Foundation)
3. Organization of team of two (2) or three (3)
trained Volunteer Peer Evaluators (management
staff of PCNC certified organizations and/or
PICPA member)
38. MAJOR STEPS IN THE PROCESS OF
PCNC CERTIFICATION
4. Conduct of NGO Evaluation guided by the
standards and indicators set:
– Documentary Review
– Interview of Board Members, Management and
Staff, Beneficiaries and Partners
– Project Visits
5. Rating of results and identification of
recommendations for improvements
6. Board deliberation and approval/denial
39. MAIN PREMISE IN THE EVALUATION
OF NGOs
• More than certification, the evaluation
conducted by PCNC should be seen as an
opportunity for:
– Identification of organizational strengths and
areas for improvements
– Determination of actions that could be taken to be
compliant with standards of NGO legitimacy and
efficiency and effectiveness or “good
housekeeping”
40. PCNC
…owes much to its Volunteer Peer
Evaluators, without whose help,
PCNC would not be able to achieve
its Vision and Mission
