Legal forms of philanthropic organizations included in the law: Association, Foundation, Limited Company
Main social issues addressed by these organizations: Basic Needs, Early Childhood Education through High School, Health and Medical Research, Religion, Disaster Response
Average time established by law to register a philanthropic organization: 0-30 days
It takes approximately seven days for both foundations and associations to register at the Ministry of Law and Human Rights. The registration can be done online. The more prepared the foundation/association with their statutory documentation, the shorter the time. Sometimes it takes several more days for the notaries as well as for the system at the Ministry to validate if the name of the foundation/association has been taken and then recommend the Ministry to issue an approval. After issuing an approval of the name of the foundation, the initiator of a foundation needs to submit a few statutory documents including the tax number required for the issuance of the foundation’s operational license.
Apart from the online system, the registration process for associations has been more straightforward in the last two years thanks to the Regulation of Minister of Law and Human Rights No. 10 of 2019, which outlines a clearer requirement and direction around legalization of an association and approval of changes in an association’s article of association.
Average cost for registering a philanthropic organization: USD 210 - 350
The estimated total cost for establishing a foundation or association is between IDR 3 million to IDR 5 million (around USD 210 to USD 350). The bulk of this cost is to cover notarial services which differ by regions and size of organization. The cost for obtaining a legal entity status is minor, less than USD 50 for foundations and USD 20 for associations.
The registration of organizations that opt-out of legal entity status is done at the local government offices with the cost generally less than USD 50.
The Government Regulation No. 6 of 2008 on Foundation requires the founders of a foundation to set aside a minimum of IDR 10 million (around USD 700) as the foundation’s initial asset which is separated from the founders’ personal asset. This asset separation must be validated with a letter of statement from the founders. Initial asset is not mandatory for association.
Government levels primarily regulating the incorporation of philanthropic organizations: Central/Federal Government, Local Government
In a unitary state of Indonesia, the central government makes and enforces all laws and regulations pertaining to philanthropic organizations (POs). Registration of POs can be done at the Ministry of Law and Human Rights, a national government body, or at a local government office. According to the Law on Societal Organizations (2013), the local government can do registration for POs with and without legal entity status. The other role of the local government is issuing a domicile letter which is mandatory for registering a foundation/association.
The control of government on POs also extends to operational activities. For public fundraising, any PO must obtain a special permit from the Ministry of Social Affairs or the Office of Social Affairs of a local government, depending on the scale of their fundraising. The permit is obtained through a complex, hence lengthy, procedure but is valid only for three months; and it must be renewed for every new fundraising event. This is stipulated in the archaic, yet still valid, Law on Raising Money and Goods promulgated in 1961. The Indonesia Philanthropy Association and its networks have advocated for legal reforms on resources mobilization to enable philanthropy groups to be responsive to emerging challenges and adapt its sector to societal changes chiefly driven by digital technology advancement.
To be able to mobilize Islamic philanthropy (zakat, infaq, sadaqah, and waqf), POs must establish a special entity, either Lembaga Amil Zakat (LAZ), a zakat management institution, or badan wakaf, a waqf agency. This provision is based on the Law on Zakat and Waqf. Both LAZ and waqf agency are registered in the Ministry of Religion with recommendation from Baznas, the government zakat management agency. A limited scale of fund mobilization, generally carried out by mosques and Islamic boarding schools, is allowed without having to establish a zakat or waqf management entity.