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Make a Difference by Starting a Non-profit Organization or Foundation in Indonesia

Starting a Non-profit Organization or Foundation in Indonesia

There are many business ideas out there but starting a non-profit organization or Foundation in Indonesia may be the best one of all.

Starting a non-profit organization (NPO) or Foundation in Indonesia is any philanthropists’ dream come true. Running a successful NPO can give you a great sense of achievement. It may even be the closest anyone will ever get to the top tier of Maslow’s Hierarchy of Needs.

Indonesia is globally the fourth most populous country and has a robust emerging market economy. It’s a great place to give back to society. 3E Accounting gives you a quick guide on how to get the ball rolling starting a non-profit organization (NPO) in Indonesia.


It’s All for a Good Cause

Starting a non-profit organization (NPO) in Indonesia can be legally complex, as the laws may be a bit unclear. NPOs are also known as Non-Governmental Organizations (NGOs) in Indonesia. They are governed by the Law on Societal Organizations. It consolidates everything into a single category subject to government regulation.

Generally, NPOs in Indonesia are:

  • Those with Legal Entity Statuses – such as Foundations and Incorporated Associations
  • Those without Legal Entity Status – such as Societies, Associations and other societal organizations

Foundations are the only type that can be started by both local and foreign entities – they are non-membership based legal entities. Foundations are regulated by the Law on Foundations (Yayasan) which states it can be set up for public or stakeholder benefit. Its purpose includes social, religious or humanitarian aims.

Associations (Perkumpulan) are membership-based and can be with legal personality (incorporated) or not (ordinary). Its formation requires a minimum of three Indonesian citizens. Incorporated associations require submission of Articles of Association and approval by the Minister of Law, and Human Rights confers legal personality. Ordinary associations are known as Perhimpunan, Ikatan or Paguyuban. All its transactions are considered as actions taken by individual members.

All types of social organizations without legal entity need a minimum of three Indonesian citizens to get started. It acquires formal status with a registration certificate from the Ministry of Home Affairs or the local government. This depends on whether its structure is tiered or not.

As far as taxation is concerned, it is the general rule that NPOs are subject to taxes. Public benefit status does not qualify NPOs in Indonesia for any tax benefits. Some tax deductions are available for charitable contributions such as natural disasters, etc. Exemptions are also given for

  • Donations
  • NPO income used for scholarship funds
  • NPO income reinvested in education or research and development

For more detailed information on the law and regulations applicable to NPOs, check out the non-profit law in Indonesia webpage.


Consulting With the Best to Start Your NPO

Starting a non-profit organization in Indonesia is an achievable goal for anyone. 3E Accounting has all the knowledge and expertise you need to succeed. With both local and international industry experience, 3E Accounting is the right partner for you.

Contact 3E Accounting today for all the help you need.

Starting a Non-profit Organization or Foundation in Indonesia