Establishing a Non-Profit Organization in Hong Kong: A Comprehensive Guide

Understanding Non-Profit Organizations (NPO) in Hong Kong

A non-profit organization (NPO) in Hong Kong is set up for a purpose other than making a profit. It has no shareholders, and any income is used to support its mission. Areas of focus often include education, health, the environment, and social welfare.

Key differences are as follow:

• NGO: Any independent organization, whether for-profit or not.
• NPO: Always non-profit. Surplus funds must be reinvested.

Note: not all NPOs are automatically recognized as charities.

To gain tax-exempt status, an organization must be approved by the Inland Revenue Department (IRD) under Section 88 of the Inland Revenue Ordinance.

Eligibility Requirements:

• Operate exclusively for "charitable purposes"
• Profits must be fully applied to these purposes
• A governing document must define objectives, governance, and asset distribution upon dissolution
• Donations of HK$100 or more are tax-deductible

Without Section 88 approval, an NPO remains liable for tax even if it is not-for-profit.

List of Charitable Purposes

The IRD classifies charitable purposes under four heads:

1. Relief of poverty
2. Advancement of education
3. Advancement of religion
4. Other causes that benefit the community, like healthcare or environmental work

Types of Non-Profit Organizations in Hong Kong

Educational Institutions

These non-profits aim to promote education and improve learning access. They may offer scholarships, run tutoring programs, establish learning centers, or support education reform initiatives. 

Health Organizations

Health-related non-profits aim to improve the well-being of the public. They might operate clinics or support groups, run health awareness campaigns, or fund medical research.

Many also help vulnerable groups access affordable care.

Cultural Associations

These groups work to preserve and celebrate Hong Kong’s rich cultural heritage. They organize events, performances, exhibitions, and workshops to promote local traditions and foster a deeper understanding of the city’s cultural identity.

Charities

Charities provide help to people in need. They offer food, shelter, financial aid, or social services.

Some focus on specific causes, like poverty relief, disaster response, or supporting the elderly, children, or people with disabilities.

Why Set Up a Non-Profit in Hong Kong?

Now that you understand what a non-profit organization is and how it operates locally, here’s why Hong Kong is one of the best places to launch one.

Advantages for Founders and Communities

Hong Kong gives you the tools to turn purpose into real results. Whether your focus is poverty, education, social inequality, or the environment, this is a city that values innovation and collaboration.

Non-profits often work alongside government agencies, international donors, and local partners.

For founders, it’s creating something that benefits the public.

Tax Benefits

Hong Kong offers tax exemptions to recognized charities under Section 88 of the Inland Revenue Ordinance (Cap. 112).

To qualify, your non profit organization must be:

• Set up only for charitable purposes
• Providing public benefit
• Operating lawfully
• Not distributing income or assets to members

All profits and income must be used strictly for those purposes. No private gain.

A written governing document is required. It must clearly state your objectives, funding use, and governance structure, including how assets are handled if the charity is dissolved.

If your charity breaches these terms or shifts its focus away from its original purpose, the IRD may withdraw your tax exemption and issue tax assessments​.

Also, trading or business income is taxable unless it meets all conditions under Section 88:

• The activity aligns with the charity’s core purpose
• Profits are used only for charitable work
• The work is done mainly by the charity's beneficiaries (in some cases)

Misusing this exemption (claiming charity status while engaging in non-charitable business) can lead to loss of status, back taxes, and penalties​.

Access to Grants and Partnerships

Hong Kong offers a solid fundraising environment. You’ll find support from:

• Local foundations
• International NGOs
• Corporate CSR programs from banks, tech companies, and global brands

Many companies here actively seek nonprofit partners through their CSR teams. These partnerships can also provide training, media coverage, shared resources, and long-term support.

Because of Hong Kong’s international connections, being based here also gives you access to regional funding channels, global forums, and cross-border partnerships.

Donations to Section 88-approved charities are tax-deductible under Sections 16D (corporate donors) and 26C (individuals) of the Inland Revenue Ordinance.

Types of Legal Structures for Non Profits in Hong Kong

In Hong Kong, non-profits can choose from three main legal structures. Each comes with its own setup process, governance standards, and level of flexibility.

The most common structure is a Company Limited by Guarantee. This is ideal for NPOs that want legal protection, transparency, and long-term growth.

A Society is simpler and better suited for smaller or informal groups. It's easier to register but offers fewer legal safeguards.

A Charitable Trust is flexible and quick to set up but doesn’t have a legal personality. That means it can't hold property or sign contracts in its own name.

Here's a quick comparison:

Only companies limited by guarantee offer full limited liability to members. Societies and trusts do not provide this same level of personal protection.

Legal Foundations and Compliance Requirements for Non-Profit Formation

Forming a non-profit in Hong Kong means complying with several key laws and ordinances. 

Regulatory Framework

Your legal obligations will depend on your chosen structure, but the framework is built around transparency, accountability, and public benefit.

The two main laws you’ll deal with are:

• Companies Ordinance (Cap. 622) — for companies
• Societies Ordinance (Cap. 151) — for societies

Additional laws may apply based on your operations, such as:

• Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615)
• Personal Data (Privacy) Ordinance (Cap. 486)
• Prevention of Bribery Ordinance (Cap. 201)

Before registering, make sure your non-profit’s name, objectives, and structure comply with all current legal standards. Some names or terms (e.g., “foundation,” “council,” “authority”) may require additional vetting or approval.

Compliance Requirements

Before registering your non profit organization, make sure you're fully aware of the compliance obligations that come with it.

Step-by-Step Guide to Incorporation

Now that you're clear on the legal framework and compliance requirements, here's a step-by-step guide to officially incorporate your non-profit in Hong Kong.

Registering an NPO requires following the traditional steps to register a company in Hong Kong.

1. Reserve and Approve Your Organization’s Name

• Choose a unique name that aligns with your mission and values.
• Check the availability and compliance of your desired name using the Companies Registry’s online system.

2. Prepare and Submit Documents

Draft the Articles of Association, clearly stating your objectives, governance rules, and dissolution terms.
Prepare the Notice to Business Registration Office for tax registration.
Gather supporting documents:

• Identity details of directors and members (at least 18 years old)
• A short operational plan or activity outline
• Proof of registered office address

Submit the full package to the Companies Registry with the appropriate fee.

3. Appoint Directors and Officers

Appoint at least one director. 

Assign a company secretary who is a local company secretary (individual resident or corporate entity)

All directors and officers must understand their legal and fiduciary responsibilities under Hong Kong law.

4. Obtain Certification and Open a Bank Account

Once approved, receive your Certificate of Incorporation.

Use it to apply for a Business Registration Certificate from the Inland Revenue Department.

Open a dedicated non-profit bank account.

Fundraising Strategies and Financial Management for Non-Profit in Hong Kong 

Raising funds is essential to keeping your non-profit running and expanding your impact. In Hong Kong, combining digital tools with traditional methods — while staying compliant — gives you the best shot at sustainable funding.

1. Crowdfunding and Online Donations

Platforms like FringeBacker (Hong Kong-based), GoFundMe, and Kickstarter can help you collect donations locally and globally. To run a successful campaign:

• Keep your message focused: What’s the goal? Who benefits? Where will the funds go?
• Use visuals like short videos, real photos, and infographics to build trust.
• Post regular updates showing how funds are being used. Transparency encourages repeat support.
• Set up a secure donation gateway on your website using tools like Stripe, PayPal, or local options like Tap & Go. Make it mobile-friendly to encourage impulse giving.

Note: Ensure payment gateways are compliant with Hong Kong’s personal data and cybersecurity regulations, especially if you're handling donor information.

2. Community and Event-Based Fundraising

Organizing mission-aligned events—such as charity walks, art auctions, benefit dinners, or public workshops—helps raise money while engaging the community.

• Partner with local businesses as sponsors or in-kind contributors.
• Invite influencers, community leaders, or celebrities to boost reach.
• After the event, share impact results and thank donors publicly (via newsletters or social media).

If you fundraise from the public:

• You must prepare audited financial statements for each campaign.
• These records must be made available to the public if requested.
• Ensure your fundraising activities remain compliant with IRD rules under your Section 88 status.

Section 88 status doesn’t automatically exempt you from public fundraising regulations. Depending on the scale and nature of the campaign, you may need permits from relevant government departments (e.g., Food and Environmental Hygiene Department for street fundraising).

3. Corporate Sponsorships

Many companies in Hong Kong run Corporate Social Responsibility (CSR) programs and are open to partnerships with non-profits.

Approach them with clear proposals:

• What’s in it for them? What social value are you creating?
• Offer visibility, such as logos on materials, mentions at events, and co-branded campaigns.
• Track outcomes and share reports regularly to retain long-term support.

4. Grant Applications and Matching Gifts

Apply for local and international grants from:

• Hong Kong government agencies
• Charitable foundations
• Multinational corporations with regional programs

Many large employers in Hong Kong also offer matching gift programs—where they match their employees’ donations to approved charities (often 1:1). Promoting these programs can double your donations at no extra cost.

Make sure your Section 88 approval is clearly stated on your website and donation materials, as this helps corporate donors confirm your tax-deductible status.

5. Financial Management Best Practices

Good financial management is just as important as fundraising itself. To stay on track:

• Set up a realistic budget and review it monthly.
• Monitor cash flow to avoid delays in salaries or program delivery.
• Appoint a financial coordinator or establish a finance committee to oversee spending and ensure accountability.
• Keep donors in the loop with thank-you notes, impact updates, and progress reports.

Stay Compliant with Tax and Reporting Rules

If your NPO is approved under Section 88 of the Inland Revenue Ordinance, you're exempt from profits tax. But that status comes with obligations.

You must:

• Submit audited financial statements each year
• File annual activity reports to the Inland Revenue Department (IRD)
• Show that all income is used for approved charitable purposes

You must not:

• Use funds for non-charitable or personal purposes
• Engage in commercial activities unless they directly support your mission and meet all IRD conditions

Non-compliance may result in loss of tax exemption, back taxes, and penalties.

Challenges and Growth Opportunities

Overcoming Common Hurdles

Running a non-profit in Hong Kong comes with real challenges: competition for funding, tight operating margins, and strict regulatory requirements.

To stay resilient:

• Combine individual donations, grants, corporate sponsorships, and where appropriate, earned income (e.g. training services or merchandise).
• Use donor CRM systems, budgeting software, and workflow automation to manage limited resources more efficiently.
• Stay informed on legal updates by consulting compliance experts, like Air Corporate, or following IRD/Companies Registry circulars.

Leveraging Global Collaborations

Partnering with international NGOs, regional alliances, and global foundations can expand your visibility and impact beyond Hong Kong.

Opportunities include:

• Joint campaigns or shared service delivery models
• Access to shared technology, training resources, or research
• Cross-border grant programs and multi-country funding calls

Future Outlook

The non-profit sector in Hong Kong is evolving. Public awareness around social issues is growing, and more businesses are engaging in CSR and impact funding.

To stay ahead:

• Adopt digital solutions: Tools powered by AI or data analytics can help you understand donor behavior, streamline reporting, and forecast funding needs.
• Build a strong, values-led brand: Transparency, impact storytelling, and community engagement help build trust and recognition
• Be adaptable: Successful non-profits stay relevant by listening, learning, and responding to emerging needs (e.g. mental health, youth unemployment, aging population).

Last Words

Starting a non profit organization in Hong Kong is a rewarding endeavor that combines passion with purpose. With the right approach, your organization can make a lasting impact, empowering communities and driving meaningful change.

Let Air Corporate assist you with the process of registering your company. Get in touch with us now!